CAIE A-Level Business 6.1.6 International Influences

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Indicative content
AO1 Knowledge and understanding
Limited knowledge ${ }^{\mathrm{K}}$ will be demonstrated through knowledge of international trading agreements or knowledge of how
the international trading agreement could impact SF.
Developed knowledge K+K will be demonstrated through knowledge of international trading agreements and
knowledge of how the international trading agreement could impact SF.
- Free trade area removes tariffs and quotas between member states but allows country B to set tariffs against non-
member states.
- Reduce cost of trading between countries.
- Increased competition.
- Reduce import costs.
- Increased potential ability to export products.
AO2 Application
Limited application, ${ }^{\mathrm{APP}}$ applies knowledge to SF once.
Developed application, ${ }^{\triangle \mathrm{PPO}}+{ }^{\mathrm{APP}}$ applies knowledge to SF twice.
- Reduce cost of fertiliser imports from country D.
- A member of the NFTA is one of the largest producers of soya in the world.
- High income of NFTA member states.
- Membership will facilitate exports of Sosoy Ice Cream.
- Country B currently has tariffs on agricultural commodities and processed food products.
- SF's manufactured products are likely to be income elastic.

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AO3 Analysis

Limited analysis ${ }^{\mathrm{AN}}$ - candidate shows one link in the chain of analysis.

Developed analysis L2AN - candidate shows two or more links in the chain of analysis.

- Removal of tariffs will reduce the cost of importing fertiliser and therefore reduce the costs of producing soya and maize AN. Therefore, potential increase in profit margins or can reduce prices to increase sales L2AN.

- Free trade will increase competition from member states of NFTA which may result in lower sales for SF AN and reduce revenue and profit L2AN.

- Increase in consumer incomes due to free trade will increase demand for food products that SF sells AN.

- As member states are high income countries free trade should enable SF to take advantage of likely demand for its food products AN and can increase exports L2AN.

AO4 Evaluation

Limited evaluation ${ }^{\text {гval }}$ - limited supported judgement and/or a weak attempt at evaluative comment.

Developed evaluation ${ }^{\text {L2 }}$ - supported judgement and/or reasonable evaluative comment.

Developed evaluation in context ${ }^{\left\lfloor\text {L3 }^{\text {ruat }}\right\rfloor}$ — supported judgement in context and/or reasonable evaluative comment in context.

- Elements that the evaluation/judgement might depend on:

- Impact on costs depends on proportion of imported inputs used in the production process.

- Increased competition in the soya market likely to have significant impact as the product is undifferentiated so SF will have to reduce the price of its soya beans sold to manufacturers of soymeal and soy oil.

- Export success of SF manufactured foods will depend on brand loyalty that exists in country D and other member states.

- Supported identification of most important factor or consequence.

Accept all valid responses.