Study Risk spreading and economies of scale in the Pearson Edexcel A Level Business specification, with the knowledge and exam application needed for accurate mark-scheme…
Source for use with Extract E Inside Thailand’s electric vehicle revolution Thailand is the world’s tenth largest vehicle manufacturer. The government has a range of policies to encourage investment in this industry. These include tax breaks, grants, subsidies and other incentives. Toyota of Japan, Great Wall Motor and SAIC Motor of China have all recently taken advantage of these incentives to expand production in Thailand. Mercedes, the German carmaker, has chosen Thailand as the location to manufacture its new electric car, the EQS. The batteries will come from its joint venture with local partner Thonburi Automotive Assembly Plant (TAAP). Foxconn has set up a joint venture with Thailand’s state-owned oil and gas giant PTT. It plans to invest between $1bn and $2bn to build electric vehicles for other manufacturers.
the benefits of entering a joint venture for a global business such as Mercedes. (20)
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 joint venture is when two or more businesses come together for a specific project. It is not a formal takeover or merger and the businesses remain independent of each other
- Joint ventures are common in many overseas markets such as China or Thailand where the host government insists that MNCs join a local partner
- For a MNC such as Mercedes there are many advantages of a joint venture with its local partner, TAAP
- TAAP will understand the culture and language of Thailand which will be
very different to that of the German business Mercedes
- TAAP will have local knowledge of Thailand's business rules and
regulations and can help guide the joint venture through government bureaucracy making it easier and faster to get the venture going and avoid future difficulties
- A local partner may have an existing supply chain or network of outlets which will reduce costs and time
- Using TAAP's existing production facilities to produce the batteries for its
EQS will save not only costs but time, maximising the chance of success in
capturing market share in a rapidly expanding market
- Local partners may have access to scarce resources, legal patents or brand names which the MNC wishes to take advantage of
- However, not all joint ventures are successful, it is estimated that
between 40% to 70% of all joint ventures ultimately fail
- There can be a clash of cultures that cause difficulties and prevent efficient operations
- Some local partners may even steal ideas from the foreign partner and set up as a rival business
- While joint ventures can be risky, a well-planned and well managed project can yield mutual benefits as is the case with Mercedes and TAAP
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-4
Isolated elements of knowledge and understanding.
Weak or no relevant application of business examples.
An argument may be attempted, but will be generic and fail to connect
causes and/or consequences.
Level 2
5-8
Elements of knowledge and understanding, which are applied to the business example.
Arguments and chains of reasoning are presented but connections between causes and/or consequences are incomplete. Attempts to address the question.
A comparison or judgement may be attempted but it will not successfully show an awareness of the key features of business behaviour or business situation.
Level 3
9-14
Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context.
Uses developed chains of reasoning, so that causes and/or
consequences are complete, showing an understanding of the question.
Arguments are well developed.
Quantitative and/or qualitative information is introduced in an attempt to support judgements, a partial awareness of the validity and/or significance of competing arguments and may lead to a conclusion.
Level 4
15-20
Accurate and thorough knowledge and understanding, supported throughout by relevant and effective use of the business behaviour/context.
Uses well-developed and logical, coherent chains of reasoning, showing
a range of causes and/or effect(s).
Arguments are fully developed.
Quantitative and/or qualitative information is/are used well to support judgements. A full awareness of the validity and significance of
competing arguments/factors, leading to balanced comparisons, judgements and an effective conclusion that proposes a solution and/or recommendations.
Question
Evaluate the impact of protectionism on global businesses. (20)
Indicative content