A Level

Business

SPECIMEN PAPER: PAPER 1

Pearson Edexcel Level 3 Advanced GCE in Business (9BS0)
Introduction

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 Write your name here
Surname Other names

Pearson Edexcel Centre Number Candidate Number

Level 3 GCE
Business
Advanced
Paper 1: Marketing, people and global
businesses
Specimen paper Paper Reference

Time: 2 hours 9BS0/01

You do not need any other materials. Total Marks

Instructions
• Fill
Use black ink or ball-point pen.
• centrein the boxes at the top of this page with your name,
number and candidate number.
• There are two sections to this question paper.
• Answer all questions.
• A– nswer the questions in the spaces provided
there may be more space than you need.

Information
• The total mark for this paper is 100.
• T–heusemarks for each question are shown in brackets
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Turn over

S48722A
©2015 Pearson Education Ltd.
*S48722A0117*
1/1/1/1/1/1
 Answer ALL questions.
SECTION A
Read the following extracts (A to C) before answering Question 1.
Write your answers in the spaces provided.
Extract A
Facebook’s mobile marketing strategy in emerging economies
Facebook earns revenue from selling advertising on its websites. In July 2014, Facebook
announced its new strategy of targeting emerging economies, such as China, India and
Brazil. Emerging economies are home to the next 5 billion consumers. The problem
for businesses such as Facebook is that as markets become saturated in developed
economies, these businesses must decide whether they should target emerging 5
economies rather than focus on existing markets.
High-profile brands such as Facebook, Amazon and Samsung must be innovative in order
to stay competitive. However, whilst consumers are keen to receive mobile content, the
technological infrastructure (phones and networks) of emerging economies is limited
compared to developed economies. 10

The fall in the price of smartphones relative to incomes, has led to increased ownership
of smartphones worldwide. This has increased the rate of growth in mobile commerce,
including the number of network providers. China and India are predicted to experience
more than 200 million smartphone sales by the end of 2015.
(Source: adapted from http://www.business2community.com/mobile-apps/will-facebooks-mobile-
marketing-strategy-developing-nations-pay-01132062#0OH1jSIjdw1q6gFg.99)

2
*S48722A0217*
Extract B
Global Mobile and Online Commerce

World mobile and online e-commerce

Growth (US$ billions)
$1,400

$119
$210
$1.2

2009 2015

Mobile Online

(Source: adapted from http://www.marketingcharts.com/direct/m-commerce-to-hit-119b-

in-15-18553/bitwizards-mobile-commerce-and-shopping-trends-2015-jul11gif/

Extract C
PureNet
PureNet Limited is based in York and has 43 highly skilled employees. It is an e-commerce
specialist business which designs or adapts websites for a wide range of clients including
B2B wholesalers and B2C global corporations. It has ambitious expansion plans and will
need to recruit new employees.
Director Paul Doherty said: “We have a commitment and flair for innovation and 5
have achieved returns on investments for our clients. We are extremely proud of the
e-commerce and digital marketing solutions we produce.”
(Source: adapted from http://www.yorkpress.co.uk/business/awards/profiles/11427676.PureNet/)

3
*S48722A0317* Turn over
1 (a) Using the data from Extract A, draw a supply and demand diagram to illustrate
the likely effects of falling Smartphone prices on the market for network
providers.
(4)

4
*S48722A0417*
 The market value of e-commerce (mobile and online) in 2009 was $211.2 billion and
in 2015 was $1519 billion.
(b) Using the data in Extract B, calculate the percentage change in the market share
of ‘Mobile’ between 2009 and 2015. You are advised to show your working.
(4)

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5
*S48722A0517* Turn over
 (c) Assess the reasons for PureNet Limited remaining as a Private Limited Company.
(10)

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6
*S48722A0617*
 (d) Assess the likely impact on a business, such as PureNet, of using an external
recruitment process when employing new staff.
(12)

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7
*S48722A0717* Turn over
 Facebook’s markets in developed economies are ‘saturated’ (Extract A). Two options
could be to target emerging economies or to develop existing markets.
(e) Evaluate these two options and recommend which one is most suitable for
Facebook.
(20)

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8
*S48722A0817*
. . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

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(Total for Question 1 = 50 marks)

TOTAL FOR SECTION A = 50 MARKS

Every effort has been made to contact copyright holders to obtain their permission for the use of copyright material.
Pearson Education Ltd. will, if notified, be happy to rectify any errors or omissions and include any such rectifications in
future editions.

9
*S48722A0917* Turn over
 SECTION B
Read the following extracts (D to G) before answering Question 2.
Write your answers in the space provided.
Extract D
Adidas to shift some production from Asia in quest for speed
Adidas has said it was testing automated production units that would allow it to shift
manufacturing from Asia closer to its consumers. “We will bring production back to
where the main markets are,” said Chief Executive Herbert Hainer, adding the current
six weeks it took to ship from Asia to Europe was too long. This move should allow it to
react more quickly to fast changing trends – like floral prints this spring – as it seeks to 5
challenge market leader Nike as well as fashion retailers like H&M which are moving into
sportswear.
Adidas said it would extend innovations pioneered by its NEO teen fashion brand which
gets products into store in 45 days, compared with a sports industry standard of 12–18
months. 10

It said it was working on innovations in robotics and machines which can “knit” sports
shoes rather than having them sewn by hand, which could allow it to move production
away from China, Cambodia, Laos and Vietnam.
Until 2005 Adidas only sold its products wholesale. It plans to open 500–600 stores by
2020 so that its own retail accounts for above 60 percent of sales, up from about fifty 15
percent in 2014.
(Source: adapted from http://www.reuters.com/article/2015/03/
26/us-adidas-strategy-idUSKBN0MM0KQ20150326)

10
*S48722A01017*
Extract E
Sports revenue growth vs GDP growth
(2010–2012)

United Kingdom

Europe, 3.9
North Middle East,
America France
and Africa
3.1

United States
1.6 Asia
Pacific
Latin
America China

Brazil 1.1

1.8

Sports market size

proportional to rest of the world

Income Elasticty of Demand

(Source: http://www.atkearney.co.uk/documents/10192/5258876/Winning+in+the
+ Business+of+Sports.pdf/ed85b644-7633-469d-8f7a-99e4a50aadc8)

11
*S48722A01117* Turn over
Extract F
Top 10 Nike manufacturing factories

% Total Workers who

Country Total Workers Line Workers*
are female
Vietnam 24 324 22 150 84.0
Vietnam 22 878 18 259 82.0
Vietnam 21 775 19 552 79.0
Indonesia 20 293 18 506 85.0
Vietnam 19 860 17 721 87.0
Vietnam 17 731 15 677 79.0
Vietnam 16 899 15 499 84.0
Vietnam 13 913 10 218 82.0
China 13 884 10 140 80.0
China 13 485 10 369 70.0

*This refers to the staff on the trainer production assembly line.

(Source: adapted from http://manufacturingmap.nikeinc.com/#)

Extract G
H&M’s struggle for ethical and sustainable fashion
H&M recently introduced a strategy called H&M Conscious which is a commitment to a
more sustainable future. This has seven commitments which include: recycling materials,
reducing its carbon footprint, using more sustainable fabrics and offering fair living
wages to its garment workers. However, its business model is based on producing several
collections per season and introducing hundreds of new designs per week does raise 5
a number of ethical issues.
The Swedish retailer currently produces over 550 million garments each year and
expanded its sportswear collection last year, whilst launching its new store concept and
other stores.
H&M also unveiled plans to open 375 new stores by the end of 2014, with its largest 10
store in Europe planned to open in Rotterdam while entering new markets such as
Australia and India.
H&M will also support factory owners to develop pay structures that enable fair living
wage, ensure correct compensation and overtime within legal limits. A trial of this
support was introduced successfully to three model factories, two in Bangladesh and 15
one in Cambodia.
(Source: adapted from http://www.fashionunited.co.uk/fashion-news/fashion/
hms-struggle-for-ethical-and-sustainable-fashion-2014041420744)

12
*S48722A01217*
2 (a) Explain how a business, such as Adidas, could use product differentiation.
(4)

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(b) Using the data in Extract E, calculate the percentage change in quantity demanded
for sports industry products in Brazil if GDP growth was 9%. You are advised to
show your workings.
(4)

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13
*S48722A01317* Turn over
 (c) Assess the likely value of behaving ethically, to a fashion business such as H&M.
(10)

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14
*S48722A01417*
 (d) Using the data in Extract F, assess the suitability of Nike adopting Taylor’s Scientific
management approach to motivate its staff in its Indonesian production centre.
(12)

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15
*S48722A01517* Turn over
 When choosing a production location, two of the options Adidas has are Asia
or Europe.
(e) Evaluate these two options and recommend which one is most suitable for
a business such as Adidas.
(20)

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16
*S48722A01617*
. . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

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. . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . .................................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ . . . . . . . . . . . . . . . . . . . . .

(Total for Question 2 = 50 marks)

TOTAL FOR SECTION B = 50 MARKS

TOTAL FOR PAPER = 100 MARKS

17
*S48722A01717*
Question
Answer Mark
Number
1 (a) Knowledge 2, Application 1, Analysis 1

Quantitative skills assessed:

QS3: construct and interpret a range of standard graphical

forms

Knowledge/understanding:

1 mark for correctly constructing supply and demand curves

1 mark for correctly labelling axes, price and quantity.

Application: 1 mark for

 Correctly interpreting the shift in demand curve to the

right due to a fall in the price of a complementary
good.

Analysis:

1 mark for drawing the original and new equilibrium and

consequences on the quantity and price axes

NB: candidates may, in addition also show an increase in

Supply as a reaction to excess demand in the market.

(4)
Question
Answer Mark
Number
1 (b) Knowledge 1, Application 3

QS2: calculate, use and understand percentages and percentage

changes
QS9: interpret, apply and analyse information in written,
graphical and numerical forms

Knowledge: 1 mark for

 Market share = sales of product or business/sales of whole

market x 100 (mobile sales/e-commerce sales x 100)

Application: up to 3 marks for

 Market share of mobile = 1.2bn/211.2bn x 100 = 0.57%

(2009) and 119bn/1519bn x 100= 7.83% (2015)

 Calculate percentage change = 7.83% – 0.57% =

7.26%

 7.26/0.57 x 100 = 1273.68% (accept rounded up)

(4)
NB: If answer given is 1273.68% award 4 marks
Question
Indicative content Mark
Number
1 (c) Knowledge 2, Application 2, Analysis 3, Evaluation 3

 A private limited company indicates that new shares

can only be issued to others directly known to the
current shareholders; current shareholders invite new
investment
 The inability to issue shares on the stock-market can
limit the ability of a business to raise finance
 Purenet’s possible limited access to share finance
could limit growth into mobile platforms which is what
their customers demand.

Potential counterbalance

 Compared to sole traders or partnerships this type of

ownership provides limited liability to the owners
 Other sources of finance such as bank debt will still be
available to a successful, growing business like
Purenet

Potential judgement

 For Purenet to remain as a Ltd instead of a PLC this

gives Paul Doherty the ability to control new
investment and therefore limits the scope for a hostile
takeover

 Remaining as a LTD could limit Purenet’s ability to (10)

raise the finance for their expansion plans.
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 5–6 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 7–10 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
Indicative content Mark
Number
1 (d) Knowledge 2, Application 2, Analysis 4, Evaluation 4

 External recruitment means that new employees are selected

from candidates who have not previously worked in the
business
 PureNet could reduce their training costs for website
developers if they are able to recruit employees who have
been trained by competitors/ other ecommerce specialists
 External recruitment usually brings new ideas and ways of
working and this could be important to a business such as
PureNet that operates in a rapidly changing, technology-
based industry

Potential counterbalance

 External recruitment is expensive, which is particularly

important for a small business such as PureNet
 External recruitment can be disruptive for existing staff and
have a negative effect on the business culture

Potential judgement
 As a small business in York of 43 workers, it is unlikely that
they would be able to grow sufficiently through internal
recruitment as any promotions would create vacancies
elsewhere in the business
 Managers will have to plan for the possibility that existing
staff might feel de-motivated if new staff are brought in, as
this may reduce their chances of promotion/career prospects (12)
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 is 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 Indicative content Mark
Number
1 (e) Knowledge 4, Application 4, Analysis 6, Evaluation 6

Indicative content for option 1

 The suggestion is that Europe and North America are

saturated for businesses such as Facebook, prompting
them to look at developing markets
 Developing markets will be at the introduction/growth
stage of the product life cycle and so provide
opportunities for Facebook to sell mobile marketing
products/services
 Selling to developing markets helps to extend the product
lifecycle of a concept or marketing products
 In developing markets, such as India, Facebook will face
less domestic competition than in saturated developed
markets, so there is greater scope to expand sales
 Ansoff’s Matrix suggests that market development is
more risky than market penetration as the business does
not fully understand the new market.

Indicative content for option 2

 Developing existing markets would mean selling more of

Facebook’s existing products to existing customers
(market penetration)
 It could also mean product development – still focus on
developed markets, but look to sell new products to
customers within these
 According to Ansoff’s Matrix market penetration is the
least risky option for a business because both variables
(market and product are known)
 Developing markets demand for Facebook mobile has
been restricted by the reliability and access to smart-
phones
 Facebook has a large market share in developed markets
and should be able to exploit this in selling new content
to existing customers

Potential judgement:

 That Facebook develops existing markets. In a market

such as India, there is still likely to be domestic
businesses selling mobile marketing content and this
might be better tailored to Indian tastes and preferences,
so it might be safer for Facebook to develop existing
markets.
 That Facebook targets emerging markets as they may
gain a first-mover advantage over competitors such as
Twitter.

 They can exploit the adaptations in technology, such as

the advertising call-back to attract new customers to
(20)
their new content.
Level Mark Descriptor
0 A completely inaccurate response.
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 cause(s) and/or consequence(s)/effect(s).

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 cause(s) and/or consequence(s)/
effect(s) 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 cause(s) and/or
consequence(s)/effect(s) are complete, showing an
understanding of the question. Arguments are well
developed.
Quantitative 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 use of relevant and effective use of
the business behaviour/context.
Uses well-developed and logical, coherent chains of
reasoning, showing a range of cause(s) 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
Answer Mark
Number
2 (a) Knowledge 1, Application 2, Analysis 1

Knowledge/understanding: 1 mark for

 For understanding what is meant by product

differentiation, e.g. the extent to which consumers
perceive one product as being distinctive from its
rivals.

Application: Up to 2 marks for contextualised example,

e.g.

 Adidas differentiates itself using its NEO fashion brand

 Adidas is using floral prints to respond to trends

 Adidas uses the three stripe branding and logo

Analysis: 1 mark for developing reason/cause/consequence

of product differentiation e.g.

 Product differentiation attracts customers to Adidas as

customers see that they are getting a more attractive
product to that sold by competitors such as Nike (4)

Question
Answer Mark
Number
2 (b) Knowledge 1, Application 3

Quantitative skills assessed:

QS7: interpret values of price and income elasticity of demand

QS9: interpret, apply and analyse information in written,
graphical and numerical forms

Knowledge: 1 mark for understanding how income elasticity of

demand is calculated
 Percentage change in quantity demanded/percentage
change in income

Application: up to 3 marks
 Therefore, income elasticity of demand x % change in
income = % change in quantity demanded.
 1.8 x 9%
 = 16.2 %

NB: If answer given is 16.2% award 4 marks.

(4)
Question
Indicative content Mark
Number
2 (c) Knowledge 2, Application 2, Analysis 3, Evaluation 3

 Behaving ethically means taking a moral judgement about

right and wrong in a decision, rather than just considering
the most profitable approach.
 H&M’s ethical image is demonstrated by their H&M
Conscious, e.g. recycling, reducing carbon footprints,
offering fair living wages.
 For H&M being ethical might help to differentiate itself
from its competitors which also might lead to increased
sales.
 Fashion customers are often younger consumers who
might be keener to consider issues such as sweatshops
and child labour, which are both ethical issues.

Potential counterbalance

 Behaving ethically can sometimes be more expensive due

to the increased costs of monitoring and checking the
business’ supply chain
 Customers may be sceptical about ethical claims and buy
from competitors instead
 Could possibly be a marketing ploy aimed at young
buyers.

Potential Judgement (10)

 Customers might be more concerned about price in the
fast-moving fashion world, so ethics is less of a buying
consideration
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 5–6 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 7–10 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
Indicative content Mark
Number
2 (d) Knowledge 2, Application 2, Analysis 4, Evaluation 4
Marks for application and analysis – include up to 2 marks for
quantitative skills.

Quantitative skills assessed

QS8: Use and interpret quantitative and non-quantitative
information in order to make decisions.
QS9: interpret, apply and analyse information in written,
graphical and numerical forms.

Indicative content (quantitative skills)

 91% of Nike’s staff in Indonesia work on a production

line (18 506/20 293X100), therefore it might be
suggested that these workers are suited to a Scientific
Management approach (QS8/9)
 In the final plant in the top ten in China the figure is
77% (10 369/13 485 X 100), where staff might be
involved in a wider range of tasks such as design,
which is less suited to Taylor’s theory (QS8/9)

Indicative content

 Taylor’s Scientific Management stated that repetitive

jobs such as workers on a line should have tasks
broken down and repeated in order to improve
efficiency
 The suitability of Taylor will depend on the nature of
the tasks being completed in each factory and the
degree to which a full production line is used.
 The objective of Taylor’s theory was to make tasks as (12)
simple as possible in order to improve specialisation
and therefore speed

Potential counterbalance

 Taylor’s theory could be considered de-humanising and

might have ethical implications for the way that
workers are treated
 Quality might suffer if speed and efficiency are seen as
the main aim and this could damage the brand
reputation of Nike.

Potential judgement

 Assembling sportswear such as trainers could be

argued to be suitable to this style of management due
to production being a series of relatively simple tasks
 Workers in countries such as Indonesia might be less
well-educated, so training and managing them in such
a scientific fashion might allow them to become
competent in their jobs quickly.
NB: to access levels 3 and 4, students will need to demonstrate
quantitative skills to support their judgements.

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 is 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 Indicative content
Mark
Number
2 (e) Knowledge 4, Application 4, Analysis 6, Evaluation 6

Indicative content for option 1

 Costs of production include raw materials, set up

costs and running costs for machinery, as well as
average wages for workers will generally be lower in
Asia
 For a mass market business such as Adidas costs of
production are a large proportion of the businesses
overall costs and therefore have a big impact on
profits
 Competitors such as Nike manufacture in Asia and
therefore enjoy the cost advantages this can bring
 The six week shipping time from Asia to European
markets is too long if Adidas are to respond quickly to
changing fashion tastes
 There may be more ethical issues with relying on
cheaper labour in Asia and this may damage the
brand of Adidas

Indicative content for option 2

 The skills and availability of staff can also be a big

consideration. In Adidas’ case the skills of designers
and creative staff will be important in the product
design – these are more located in Europe
 Being in Europe helps development of their NEO
fashion brand which has already cut development
times to 45 days
 Location within a trade bloc such as the European
Union will be important as it will affect where the
products can be sold to and the degree to which
tariffs and quotas are imposed on the products.
 The cost advantages of manufacturing in Asia might
be diminishing, so moving close to European markets
becomes more attractive

Potential recommendations

 Asia as this will be more appropriate for Adidas

because it will allow them to reduce their costs of
production, such as labour, materials and energy
costs, helping them compete with competitors such
as H&M.
 Europe as this will be more appropriate for Adidas
because it allows them to be closer to their main
consumer markets. This will also reduce shipping
times and will enable Adidas to react more quickly to
(20)
more fast-moving fashion trends such as those sold
by H&M.
Level Mark Descriptor
0 A completely inaccurate response.
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 cause(s) and/or consequence(s)/effect(s).

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 cause(s) and/or consequence(s)/
effect(s) 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 cause(s) and/or
consequence(s)/effect(s) are complete, showing an
understanding of the question. Arguments are well
developed.
Quantitative 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 use of relevant and effective use of
the business behaviour/context.
Uses well-developed and logical, coherent chains of
reasoning, showing a range of cause(s) 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.