PICS PEANUT BUTTER

AS 90988 Economics 1.6

Demonstrate understanding of the interdependence of sectors of the New Zealand Economy

Credits: 3
Version 3

Achievement Criteria:
Achievement Achievement with Merit Achievement with Excellence

Demonstrate understanding of the interdependence of Demonstrate in-depth understanding of the sectors of the Demonstrate comprehensive understanding of the
the sectors of the New Zealand economy. New Zealand economy. interdependence of sectors of the New Zealand
economy.
Definitions:

Interdependence refers to the two-way relationships that exist between different sectors.

Sectors of the New Zealand Economy refers to the household, producer (primary, secondary and tertiary), financial, government and overseas sector.

Demonstrate understanding would typically involve:

Identifying, defining or describing sectors and flows
Providing an explanation of how or why sectors are interdependent
Providing an explanation of the impact of an event on a sector and/or the flow on effects to other sectors;
Constructing an economic model (e.g. to show interdependence, the effect of an event on a sector, or flow-on effects to other sectors).

Demonstrate in-depth understanding would typically involve:

Providing a detailed explanation of how or why sectors are interdependent, using an economic model;
Providing a detailed explanation of the impact of an event on a sector and/or the flow on effects to other sectors, using an economic model.

Demonstrate comprehensive understanding would typically involve:

Providing a detailed explanation of how or why sectors are interdependent, using an economic model;
Linking detailed explanations of the impact of an event on a sector with detailed explanations of the flow on effects to other sectors, using an
economic model.
I ntroduction
This assessment activity requires you to demonstrate an understanding of the interdependence of sectors of the New Zealand economy. We
will be using Pics Peanut Butter as the focus (context) for this assessment.

To complete this assessment activity you will:

Collect information about Pics Peanut Butter (from your own research);
Illustrate how Pics is interdependent with other firms and sectors of the New Zealand economy; and
Explain how events in one sector can have an impact on Pics and how these impacts can flow on to other sectors.

You may (but are not limited to) collect information for this assessment by:
Watching this link://www.youtube.com/watch?v=7QTBxkQ4vIk
Watching peanut butter production videos
Using the resources below and/or
Printing off evidence from the Pics Peanut Butter website http://picspeanutbutter.com

Resources
http://picspeanutbutter.com
http://www.stuff.co.nz/life-style/food-wine/82042981/Which-is-the-best-peanut-butter-We-test-three-leading-NZ-brands
http://supermarketnews.co.nz/pics-peanut-butter/
http://tvnz.co.nz/seven-sharp/if-i-stop-being-peanut-butter-guy-ll-just-old-man-behind-runaway-success-pic-s-video-6508904
https://www.specialtyfood.com/news/article/peanut-butter-lovers-rejoice-pics-peanut-butter-new-zealands-1-now-available-in-us-123841/
https://blog.hootsuite.com/pics-peanut-butter-social-media-case-study/
https://www.nzte.govt.nz/en/news-and-media/blogs-and-commentary/2015/11/23/spreading-the-word/
https://www.facebook.com/picspeanutbutter
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11322166
http://www.stuff.co.nz/nelson-mail/news/9844275/Pics-peanut-butter-empire-spreads-rapidlyPart 1, 2 and 3
http://stoppress.co.nz/news/ownermarketer-bruce-pic-picot-pics-really-good-peanut-butter

Please note: Task 1 will not be assessed but the more information you collect the better prepared you will be to complete task 2. You must
submit all your research notes with your assessment.
Appendix 1
Define the following sectors of the economy using your own words
Financial Sector The financial sector uses the savings of households for funds for investments within the firms and businesses.
Investments mean buying capital goods. The financial sector also provides a safe and easy way of managing funds.
Pics example:
Gets loans from the financial sector to buy machinery/resources for productions uses. Pics will be getting loans to
help pay for its new factory which is going behind placemakers. Pics is with ASB bank.

Households Households are groups of consumers who buy goods and services from the firms. They also supply workers to the
firms. They also put their savings into the banks to collect interest.
Pics example:
Households buy pics peanut butter from supermarkets and direct from the factory.

Government Sector The group of officials who have the authority to govern the country and citizens. They also collect taxes and PAYE
payments. They give out welfare payments as well as subsidies to firms.
Pics example:
Pics has no subsidies from the government, however they do get money from New Zealand trade and enterprise.

Overseas Sector The overseas sector is used to export and import goods/supplies to and from the producers overseas.
Pics example:
Pics imports its peanuts and its salt from australia. Pics exports its peanut butter to overseas countries and firms. It
also imports some of its machinery, for example its american lid machine. 20% of pics peanut butter jars go overseas.

Producer sector Producers are companies (firms) which use resources from the primary sector and combine them with others in the
production process and create product.
Pics example:
Pics imports australian peanuts and salt and refines it into its product, which is peanut butter.
2. Construct a Circular Flow Diagram:
Illustrate on a poster (A3 format) a flow diagram which shows how Pics Peanut Butter is interdependent with other sectors of the economy ( households,
the government, the financial sector and overseas markets.). Use the template provided in Appendix 2 to help you.
You must illustrate an interdependent relationship so you need to show how Pics Peanut Butter relies on each sector and how each sector relies on Pics
Peanut Butter.
3. Construct a Productive Sectors Chart/Diagram:
i) Identify other firms in the primary sector, the secondary sector and the tertiary sector that have an interdependent relationship with Pics Peanut Butter
(who are these firms, what resources, goods or services do they provide). Illustrate on a poster (A3 format) a chart showing how these other firms
(producers) in the primary, secondary and tertiary sectors have an interdependent relationship with Pics.
Primary Sector Firms these firms harvest or
extract natural resources:
Australian Nuts- Kingaroy Nuts
Australian Salt now- but used to be from Dominion
Salt Company.
Kingaroy Peanuts: Kingaroy peanuts is in the primary sector as they grow, harvest and export their peanuts
to Pics in exchange for import payments. If there is ever a scarcity of peanuts in Kingaroy, Pics will then
import peanuts from Argentina. Pics then processes the natural resource into Peanut butter.
Dominion Salt Company : The dominion salt company harvests the salt from the sea and then sends it off
to Pics in exchange for import payments and then pics refine it into peanut butter.

Secondary Sector Firms these firms process raw O-I Jars : O-I jars use about 40% recycled glass to make jars that package Pics Peanut Butter. They also have
materials into finished or semi-finished goods: a recycling glass policy.
O-I jars. Lids - Spain

Tertiary Sector Firms these firms are engaged in PBT Transport: PBT transport is used to transport pics final, finished peanut butter all around New Zealand
the provision of services: to the stores that they are going to be sold/stocked at. They also transport the product to the Ocean Bridge
PBT transport Shipping firm.
Ocean Bridge Ocean Bridge: Ocean bridge transports Pics finished peanut butter overseas in shipping containers to the
places they are going to be sold at. Pics teams up with other local businesses like Proper Crisps to reduce
the cost of shipping.

Explain what productive sector Pics Peanut Butter is in and why you believe it is in this sector:
Pics Peanut Butter is in the Secondary producer sector because it uses the natural products that they import from Australia to make their peanut butter. They
use machinery in their factories to refine their product and make it available for domestic and overseas product. They arent in the primary sector because they
pay to import their ingredients and they arent in the tertiary sector as they pay shipping companies such as Ocean Bridge and PBT to transport their product
domestically and internationally.
Task 2
This task will be completed under formal assessment conditions (test conditions) in class time on: TBC
It is important that you bring both Pics Peanut Butter Posters (Circular Flow Diagram & Productive Sectors Chart) to the in-class test. These posters are
able to be used as a resource during the assessment.
In the in class test you are to work independently to:
(i) Explain in detail by referring to your poster how and why Pics Peanut Butter has an interdependent relationship with the household sector and
TWO of the following sectors: the government, the financial sector, overseas markets. Your answer must be in terms of real and money flows, this will
mean you need to start off by explaining what money and real flows are.

As you can see in my poster pics peanut butter relies on the household sector as the household sector provides workers and buys Pics
products. Pics peanut butter needs employees so that they can keep on making their product, without them, business would be slow and they
wouldnt have much product to sell. Pics peanut butter needs the workers to keep up with the supply demand to keep expanding the business
to grow. This allows pics to build new factories, hire more people, buy more equipment and sell more product. Without the workers they
wouldnt be able to make a profit. Employing the workers is a real flow of a service and paying the employees is a money flow of wages to the
household sector as you can see in my poster.
The household sector relies on these jobs supplies by pics so that they can have money to live and provide, and is this reliance is also relevant
to the financial sector, as the household sector puts its savings and wages that they make, into the bank and collect interest and pay for the
bank with their excess savings, and you can see these money flows in my poster.
Pics peanut butter relies on the household sector for the sales of their peanut butter. The households use their wages and savings to purchase
the peanut butter. This is an exchange of money flow for real flow which can be seen on my poster. Without the household sector Pics peanut
butter would not have to make as much peanut butter resulting in less sales, which leads to less money being made. Without the household
sector, there would be nobody to buy the product putting pics out of business. The households relies on Pics peanut butter to supply them with
peanut butter because pics is the number one brand of peanut butter. People choose Pics peanut butter because pics is a healthy peanut
butter choice and households are often health conscious as well as the fact that pics is the number one brand of peanut butter in the country.
This is a real flow of peanut butter from pics to the households that can be seen in my poster.
As you can see in my poster, Pics peanut butter relies on the overseas sector as they export their ingredients to make the product from
Australia in exchange for import payments from pics, this is a real flow and money flow exchange that can be seen on my poster. The real flow
of peanuts from Australia (overseas sector) to pics is important because peanuts is the most important thing for pics peanut butter to have in
order to make their products and then in turn make revenue and profit. Pics Import their peanuts from Kingaroy nuts because Australia is close
to New Zealand and so the peanuts are easier and cheaper to import and they are still very high quality nuts. Without the overseas sector Pics
would not be able to continue to make their product as they would not have the necessary supplies and they would have to shut their company
because they can not get peanuts from within New Zealand.
The overseas sector relies on the pics peanut butter to buy their nuts from the overseas sector because the overseas sector needs the import
payment that pic's peanut butter pays them for the nuts so they can continue to grow nuts and expand their business. Pics relies on the
overseas sector or buy their peanut butter because the overseas sector is 20% of pics total market. They send this 20% of their sales is sold in
countries like australia and it is also sold online and is available to all countries online. This 20% of Pics peanut butter that is sold overseas is
important to pics because without those overseas sales pics would have much less profit and they would not be able to keep making peanut
butter. This money from the overseas sales of peanuts is a money flow and real flow exchange between pics and the overseas sector and this
can be seen on my poster.

Pics peanut butter relies on the financial sector for money to make new capital investments, like buying new machines and building new
factories. At the moment pics is building a third factory which they may need loans for, or get money from NZTE (New Zealand Trade &
Enterprise). The bank pics is with is ASB bank. ASB loans pics money that they need to expand and grow their business, like money to buy
capital goods and build their third factory. The financial sector relies on Pics to pay the interest from the loans that they give to pics, and the
financial sector needs this interest from these loans so that they can give out more loans and expand their business as well. This exchange of
money flow shows the reliance between these two firms and you can see this on my poster.
(ii) Explain in detail, with examples from your poster, how and why Pics Peanut Butter has an interdependent relationship with firms in TWO of the
following productive sectors: the primary sector, the secondary sector, the tertiary sector. Your answer must be in terms of real and money flows. Use
appendix three to help you with this.

As you can see in my poster Pics peanut butter has an interdependent relationship with the primary sector because it uses the natural
resources that these firms in the primary sector produce. Pics imports peanuts from Kingaroy Nuts from Queensland, Australia. Kingaroy Nuts
grows and harvests the produce and then exports it to Pics in exchange for import payments. The nuts are a real flow and is exchanged for
money flow by pics. This is an interdependent relationship between the firms as Kingaroy nuts grows and harvests the nuts, relying on Pics to
import them which creates jobs within the household sector. Pics relies on Kingaroy to grow and harvest the nuts so that they can be imported
by pics and then made into Pics Peanut Butter. If there is a scarcity of peanuts from Kingaroy, pics will then import the peanuts from Argentina.

As you can see in my poster Pics is interdependent with the primary sector as it used to import its salt from the dominion salt company in
Blenheim. It now imports from Australia so that Australians will think it is a completely Australian ingredient product so they will buy it,
whereas people in New Zealand will be thinking it's made here and so they will too purchase it. This is a marketing scheme. The salt company
harvests the salt from the sea so that it can be shipped off to Pics in exchange for import payments which creates more jobs within the
household sector as well. This is an exchange of real flow for money flow. Pics relies on the salt company to harvest the salt and the salt
company relies on Pics to purchase the salt. This shows an interdependent reliance relationship between the two firms.

As you can see in my poster Pics Peanut Butter has an interdependent relationship with the tertiary sector because it relies on the transport of
PBT couriers to ship the peanut butter within New Zealand and Ocean Bridge shipping to ship its product. These shipping companies rely on
Pics to want to export its product domestically and internationally, as this results in money flow coming into the shipping companies which
creates more jobs for the workers from the household sector. Pics relies on the shipping companies in the tertiary sector to export its product
so that they can sell more product in more places. Pics exports to many countries including Australia, US, UK, Malaysia, Japan, Taiwan, China,
Hong Kong, Vietnam, Thailand and Norfolk Island. Pics pays the shipping companies and the shipping companies ship the product which is a
service, so this is an example of an interdependent exchange of money flows and real flows between these firms.

(iii) Select ONE of these events:

Overseas demand increases for New Zealand made peanut butter
Explain how the event you have chosen above will have a direct affect on ONE sector in the flow diagram and explain in detail the flow-on effects the event will have on other sectors and/or other firms you have
identified in the productive sectors chart (appendix 3). Please note: To secure an excellence for this part you must clearly link impacts of the event to the circular flow model and productive sector diagram and
discuss both real and money flows to one sector and the flow on effect in terms of real and money flows to 3 other sectors. These flow on effects may involve Pics Peanut Butter but there will be consequences and
effects throughout the NZ economy. These should also be discussed.
If the overseas demand for peanut butter increases this means that Pics would have to simply produce more peanut butter, but the flow on
effects are much more drastic. Pics would have to increase the production of their product which means they will need the supplies to do so.
Pics will need to exchange more money flow for more real flow. Pics will need to import more peanuts and salt. However, Pics have to make an
order to get their peanuts within the primary sector, so if this change happens after they have already made their order they may have to wait
a while to receive their peanuts. This would mean less peanut butter is being produced meaning less money flow coming into pics. With an
increase of imports pics will have to pay more for shipping which is an increase of money flow and realflow in between the tertiary sector and
pics, and pics will have to be paying more for larger quantities of the peanuts and salt itself which is an exchange of real flow and money flow
in between the primary sector and pics. This is a flow on effect to the primary and tertiary sector as in general these firms will be collecting
more money flow and pics will be receiving more real flow.
Because more peanut butter is having to be produced, this results in needing more workers to assist in making the peanut butter. This has a
flow on effect to the household sector as more jobs will become available resulting in money flow going into the households which also means
more savings going into the bank which means more interest for the household resulting in more money flow going into the households. This
also means an increase in domestic sales of the peanut butter meaning more real flow and money flow exchanges between pics and the
households and you can see this relationship in my poster.
Pics will also require more loans from the financial sector as they will be needing more machinery and factory upgrades to produce more
product to keep up with this newly found demand from the overseas sector bigger loans also mean more interest on the loans. This is a money
flow out of pics as they will be having to pay more interest on larger and more loans which is a money flow going into the banks so this is a
money flow and money flow exchange between the financial sector and pics which is shown on my poster.
 If Pics is making more peanut butter then the indirect taxes (GST) will increase to the government because they will have more income from
producing more product so the 15% GST will be higher and pics will be paying more to the government. This is just a single money flow going
into the government sector as Pics does not receive funding from the government and you can see this on my poster.

Assessment Schedule: Economics 1.6: Pics Peanut Butter

Task Evidence required for Achievement Evidence required for Merit Evidence required for Excellence

Task 1 The student has used collected information to As for achieved As for achieved
construct a flow chart that identifies, defines or
describes the sectors and flows.

The student has completed a table that identifies

and describes firms in different production sectors.

Task 2 The student identifies a two-way relationship
between households and the firm AND between
2(i) the firm and at least TWO other sector. The
explanation does not give reasons why
interdependence exists of specific evidence for the
interdependence.
The student explains a two way relationship between As for merit
households and the firm and between the firm and at
least TWO other sectors. This is based on evidence from
their flow diagram poster.
For each sector all interdependent relationships are
covered e.g. households are shown as both the resource
(real and money) and the goods and services (real and
money) flow.

The student provides a partial explanation of The student explains in detail how or why the firms are As for merit
2(ii) interdependence between Pics Peanut Butter and interdependent in at least TWO productive sectors. This
other firms in at least ONE productive sector. The is a description of the interdependence with a relevant
explanation does not give reasons why example.
 interdependence exists or specific evidence for the
interdependence.

2 (iii) The student has chosen ONE scenario from the
list provided and partially explains the direct
effect on the relevant sector.
AND/OR
The student identifies the flow-on effects for at
least ONE other sector. It may not include
reference to the flow diagram or chart of the
production sectors.
Precise money flows may not be used but the
idea will be clearly communicated.
The student has chosen ONE scenario from the list
provided and explains in detail the direct impact
identified on the relevant sector.
AND
The student identifies the flow-on effects for at least
TWO other sectors. The explanation is supported by the
flow diagram poster OR chart of productive sectors.
Correct money flows are identified.
The student has chosen ONE scenario
from the list provided and explains in
detail the direct impact identified on the
relevant sector.
AND
The student identifies the flow-on effects
for THREE other sectors which show an
on-going flow of activity. The explanation
is supported by reference to the circular
flow diagram AND the table of
productive sectors. It will show how the
direct impact and the flow on effects are
integrated.

Overall Judgement:
The evidence (or similar) in each column has been supplied.
Any numerical requirement (such as at least two) is indicative only. It should not, of itself, preclude the achievement of any particular grade.
Final grades will be decided using professional judgement based on an holistic examination of the evidence provided against the criteria in the Achievement Standard.

Circle Overall Grade N A M E

Comments:

I accept the grade awarded and the material that has been submitted by me (the student) has been submitted for assessment and is entirely my own work.
Student: _________________________________ Teacher:__________________________________Date: ____________________________________