CAIE A-Level Business A2 6.1 External Influences on Business Activity Questions

Evaluate the impact on CD of the appreciation of country K's exchange rate.

5

Indicative content

Responses may include:

AO1 Knowledge and understanding

- Exchange rate measures the value of one currency in terms of another.

- Appreciation means the value of a currency has increased in terms of another i.e. it buys more of another currency than previously.

- Makes imports cheaper but exports more expensive.

AO2 Application

Limited application, ${ }^{\text {APP }}$ applies knowledge to CD once.

Developed application, ${ }^{\text {APP }}+{ }^{\text {APP }}$ applies knowledge to CD twice.

- Chemicals are currently produced in country K.

- Chemicals could be imported more cheaply.

- Increase in price of CD exports to country C.

- CD's plans for expansion.

- Cost push inflation in country K - including energy costs and raw materials.

- Environmental responsibility of CD.

AO3 Analysis

Limited analysis AN - candidate shows one link in the chain of analysis.

Developed analysis AN L2 AN - candidate shows two or more links in the chain of analysis.

- Appreciation could enable CD to import chemicals at a lower cost and thus reduce cost pressures to increase the selling price AN. This could prevent a reduction in sales in country K L2 AN .

- CD's products will be a higher price in export markets such as country C therefore reducing sales AN.

- Appreciation of country K's currency will reduce the cost of CD's plans to expand operations abroad AN.

- Appreciation could increase the price competition from MNC products produced outside of country K AN , reducing the sales of CD L2AN.

PUBLISHED

5

AO4 Evaluation

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

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

Developed evaluation in context ${ }^{\mathbf{L 3} \mid \text { Eval } \mid}$ - supported judgement in context and/or reasonable evaluative comment in context.

- Depends how much country K's currency appreciates and for how long.

- Depends on PED.

- As sustainability is important, CD may prefer to continue purchasing chemicals domestically rather than importing so appreciation won't bring any direct benefit.

- Depends whether energy costs will be reduced by the appreciation - this could happen if oil and gas are imported to country K to generate electricity.

Accept all valid responses.

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3 & & & & $\begin{array}{l}\mathbf{5 - 6} \text { marks } \text { Developed evaluation in } \text { context } \text { • } \text { A developed } \text { judgement/conclusion } \text { is made in the } \text { business context. } \text { Developed evaluative } \text { comments which } \text { balance some key } \text { arguments in the } \text { business context. }\end{array}$

2 & $\begin{array}{l}\mathbf{2} \text { marks } \text { Developed knowledge } \text { of relevant key term(s) } \text { and/or factor(s) is used } \text { to answer the question. }\end{array}$ & $\begin{array}{l}\mathbf{2} \text { marks } \text { Developed application } \text { of relevant point(s) to the } \text { business context. }\end{array}$ & $\begin{array}{l}\mathbf{2} \text { marks } \text { Developed analysis } \text { that identifies } \text { connections between } \text { causes, impacts and/or } \text { consequences. }\end{array}$ & $\begin{array}{l}\mathbf{3 - 4} \text { marks } \text { Developed evaluation } \boldsymbol{-} \text { A developed } \text { judgement/conclusion } \text { is made. } \text { Developed evaluative } \text { comments which } \text { balance some key } \text { arguments. }\end{array}$

Level

AO1 Knowledge and understanding 2 marks

3

5-6 marks

Developed evaluation in context

- A developed judgement/conclusion is made in the business context.

- Developed evaluative comments which balance some key arguments in the business context.

3-4 marks

Developed evaluation

- A developed judgement/conclusion is made.

- Developed evaluative comments which balance some key arguments.
\end{tabular}}}

5

Indicative content

AO1 Knowledge and understanding

Limited knowledge ${ }^{\mathrm{K}}$ will be demonstrated through knowledge of CSR or knowledge of how CSR could impact GBS's decision to expand into new land.

Developed knowledge K+K will be demonstrated through knowledge of CSR and knowledge of how CSR could impact GBS's decision to expand into new land.

- Knowledge/explanation of CSR, including social or environmental audits.

- Business should take into account impact of decision on society and the environment.

- Stakeholder view vs shareholder view.

- Role of pressure groups.

- Cost of implementing CSR policies.

Benefits to GBS of CSR approach:

- Image

- Retention of employees

- Increased sales

- Adds value

- Possible objectives of GBS

- Use of financial investment appraisal methods in making the decision.

5

AO2 Application

Limited application, ${ }^{\mathrm{APP}}$ applies knowledge to GBS once.

Developed application, ${ }^{\text {APP }}+{ }^{\text {APP }}$ applies knowledge to GBS twice.

- Paying an incentive to local government official is unethical.

- Economy requires increased supply of building materials.

- Need for permission from local government.

- Gordy has objective of expansion.

- Using renewable energy to extract materials.

- Job creation from expansion.

- Protests from villagers about pollution and noise.

- Mo is concerned about the cost of CSR to GBS.

AO3 Analysis

Limited analysis AN - candidate shows one link in the chain of analysis.

Developed analysis ${ }^{\text {L2AN }}$ - candidate shows two or more links in the chain of analysis.

- Failing to take account of CSR when making decisions could result in negative publicity and a loss of reputation AN this could result in losing contracts to supply building materials resulting in a loss of revenue and profit L2 AN.

- Implementing socially responsible actions such as using renewable energy could increase costs and therefore reduce the profitability of the expansion ${ }^{\mathrm{AN}}$.

- Businesses are part of society and therefore have a moral responsibility to consider the impact of their decisions on society AN.

- Making profit is the primary goal of private sector business and therefore it is acceptable to make any decision as long as it is within the law ${ }^{\mathrm{AN}}$ to increase profit on behalf of the owners L2AN.

- Due to the housing shortage society will benefit significantly by GBS producing more building materials ${ }^{\text {AN }}$ therefore GBS does not need to take account of other CSR issues L2AN.

PUBLISHED

5

AO4 Evaluation

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

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

Developed evaluation in context ${ }^{\text {L3 }}$ - supported judgement in context and/or reasonable evaluative comment in context.

- Weighing up the financial vs non-financial considerations.

- If expansion is a primary objective this may be more important than profit as long as costs are covered.

- How committed are Gordy and Mo to CSR or to maximising profit? At the moment we are not sure.

- Does practising CSR actually lead to an increase in costs? Short term costs vs long term savings.

- How important is CSR to GBS's customers? Construction businesses are more likely to be interested in minimising their costs rather than purchasing supplies from a business practicing good social responsibility.

- Conclusion as to extent of influence of CSR.

Accept all valid responses.

Analyse two ways technological change might impact on CP's decision to develop nanopaints.

2

Note:

- Impacts can be positive or negative.

- If more than two impacts are referred to, reward the best two.

Indicative content

Responses may include:

AO1 Knowledge and understanding

Limited knowledge K will be demonstrated through knowledge of the concept of technological change or knowledge of possible impacts of technological change.

Developed knowledge K+K will be demonstrated through knowledge of the concept of technological change and knowledge of possible impacts of technological change.

Definition or explanation of technological change - in product design, production techniques or marketing, such as data collection, use of IT/AI.

Possible impacts include:

- New product designs lead to company being known as an innovator.

- New processes may lead to greater efficiency in all areas of production and operations, including methods of distribution.

- Innovative marketing methods may lead to more effective customer relationship marketing (CRM).

- R&D into innovation and introduction of new technology is expensive.

- Firms who do not innovate are in danger of being forced out of the market.

AO2 Application

Limited application, ${ }^{\triangle \mathrm{APP}}$ applies knowledge to CP once.

Developed application, ${ }^{\text {APP }}+{ }^{\text {APP }}$ applies knowledge to CP twice.

Max one ${ }^{\text {APP }}$ for application for the first impact of technological change and max one ${ }^{\text {APP }}$ for application for the second impact of technological change.

- $\quad \mathrm{CP}$ has a research and development centre.

- Recent history of new technology-based products - external paint, specialist paints, plastic/nanopaints.

- Production of new paints will be costly, due to innovative materials and processes.

- CP a leader in nanopaints and plastic paints.

- Competitors currently not producing these new paints but will do in future.

- Technology gives the new paints a USP.

- CP creates technological change by research - the nanopaint is a technological change.

2

AO3 Analysis

Limited analysis AN - candidate shows one link in the chain of analysis.

Developed analysis L2AN - candidate shows two or more links in the chain of analysis OR offers a two-sided analysis.

- Development of knowledge and application points explaining the potential influences of technological change on CP.

- Paint industry has a history of new technological based products so important to keep producing these, to maintain market position. AN

- Keeping up with technological change will lead to innovative products, which will lead to higher sales and be an important factor in market success AN. However, may lead to more competition if competitors develop innovative products first, decreasing sales and market share. L2 AN

- Research centre has produced new ideas so important to maintain confidence in research, in order to move the business forward and expand the paint range, leading to increased sales, AN market share and profit. L2 AN

- Universities engage in research so market requires change and new products to avoid a company being left behind, AN but cost of new production line technology may make it uneconomic to go ahead even if the paint technology is good. L2AN

- The USP is likely to bring first mover advantage and commercial success. AN

Accept all valid responses.