Study Offshoring and outsourcing in the Pearson Edexcel A Level Business specification, with the knowledge and exam application needed for accurate mark-scheme responses.
Sources for use with Extract A Among signs of market saturation, streaming platforms seek new growth The global market for on-demand streaming platforms has shown signs of saturation for some time, forcing businesses to devise new strategies to stop the loss of subscribers and boost revenue and growth. At the start of 2022, Netflix, the market leader, had 221.6 million subscribers. However, by September 2022 it had lost 1.2 million subscribers. Nearly a dozen major streaming platforms, with Netflix and Disney+ in the lead, are locked in a fierce battle for subscribers. Experts predict that some platforms will have to merge or launch cheaper subscriptions with advertising if growth is to happen. One merger has already taken place, with HBO Max merging with Discovery+. It will start operating in the summer of 2023 as a single streaming service with around 100 million subscribers worldwide. Extract B Outsourcing can be a solution to Australia’s skills crisis Australia has a skills shortage problem that is the worst ever seen. There is a shortage of people as well as skills. This is where outsourcing can help, it provides people to fill the gaps. In Australia, more than 30,000 businesses have outsourced work to different countries. In Australia the outsourcing industry is worth $35bn and growing at 3.3%. This shows that there is a huge demand for it and not just in the traditional areas of finance, telecommunications and banking but now other areas of the service industry. In 2022 we work in a global world where work teams are connected by technology and leadership. Smart businesses will use this to their advantage. Outsourcing is one solution to the current skills crisis – but only if it is done well.
3 Extract C Malaysia’s 2021 Foreign Direct Investment (FDI) value is the highest since 2016 In 2021 FDI into Malaysia increased to RM* 48.1bn. This compared to RM 13.3bn in 2020 and was the highest since 2016, according to the Malaysian Department of Statistics. The manufacturing sector received the largest inflow of FDI with RM 29.5bn in 2021. The second highest was the services sector, mainly in financial services, followed by the mining sector. RM 22.5bn of the FDI came from other Asian countries, mostly from Singapore, Japan and the Republic of Korea. In 2021 the return on investment for FDI companies increased from RM 0.06 to RM 0.13 for every RM 1 of investment. * RM = Malaysian Ringgit
Assess the advantages of outsourcing for a business wanting to improve cost
competitiveness.
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
- Outsourcing means moving a business function or department to a specialist external provider which may or may not be overseas
- By reducing costs, profitability can be increased which may enable prices to be reduced and improve competitiveness
- Skilled workers can be found that may not be available at home, this is the case with Australia in Extract B
- Such workers may be specialists and offer a more skilled and efficient service than might be case within the business itself
- By outsourcing some support functions, the business can then
concentrate on its core competences
- Outsourcing can improve speed, flexibility and quality of the product or service
- Modern technology has made it much easier for a business to be run from different countries
- There may be communication problems arising as a result of language or
cultural differences
- It can be difficult to oversee events or guarantee quality of output from a
distance
- A business may risk losing its own identity and corporate culture if it relies too much on others
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
Assess the importance of the likely return on investment for a business when choosing a production location. (12)
Indicative content