Trading blocs and business

Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with the
general marking guidance. The indicative content below exemplifies some of
the points that candidates may make but this does not imply that any of these
must be included. Other relevant points must also be credited.
Knowledge, Application, Analysis, Evaluation - indicative content
- A trading bloc is a group of countries with some form of trading
agreement between themselves
- Trading blocs may be based on free trade or preferential trading
agreements and reduced protectionism
- RCEP will become the world's largest trading bloc, mainly based in
Southeast Asia, reducing trade barriers for nearly a third of the global
population
- Businesses within such a trading bloc should find it easier to access
other member's markets as trade restrictions are eased thus
increasing potential sales and revenues
- Businesses may be able to import raw
materials/components/products and services more cheaply from
fellow members, thus reducing their costs which may give them a
competitive advantage
- Free trade or fewer trade restrictions should cause economic growth
as prices fall (reflecting reduced costs), this increases disposable
income and increases overall demand for local businesses
- However, domestic industries will have lost some or all of their
protective tariffs and barriers, meaning they are now relatively more
expensive and less competitive
- Low-cost manufacturing bases in other countries may find it easier to
penetrate home markets and provide competition for domestic
businesses
- China is a member of RCEP and may cause problems for its smaller
neighbours as it exploits its competitive advantages
- Increased competition for domestic producers may mean a drop in
sales causing a drop in profits
- If the trading bloc imposes a common external tariff it may increase
the cost of raw materials/components supplied from outside of the
trading bloc. This could increase costs for some businesses
- Nevertheless, many countries are in trading blocs and the formation of
new trading blocs such as the RCEP suggests that for many businesses
the advantages outweigh any drawbacks.


Level

Mark

Descriptor

0

A completely inaccurate response.

Level 1

1-2

Isolated elements of knowledge and understanding - recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.

Level 2

3-4

Elements of knowledge and understanding, which are applied to the
business example.
Chains of reasoning are presented, but may be assertions or
incomplete.
A generic or superficial assessment is presented.

Level 3

5-8

Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Analytical perspectives are presented, with developed chains of
reasoning, showing cause(s) and/or effect(s).
An attempt at an assessment is presented, using quantitative and/or
qualitative information, though unlikely to show the significance of
competing arguments.

Level 4

9-12

Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
A coherent and logical chain of reasoning, showing cause(s) and/or
effect(s).
Assessment is balanced, wide ranging and well contextualised, using
quantitative and/or qualitative information and shows an awareness of
competing arguments/factors, leading to a supported judgement.


Question
Number

Evaluate the extent to which a global business will benefit from adapting to
local tastes and preferences.
Indicative content