Business activity · IGCSE Business

Explain one advantage and one disadvantage to DJU of using specialisation when making its products. Award 1 mark for identification of each relevant advantage/disadvantage (max 2). Award 1 mark for each relevant reference to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include: Advantages:

• Higher output/quantity produced [k] of clothing [app] so able to meet orders (on time) [an]
• Quicker/cheaper to train employees [k] so does not increase total cost costs [an] above $595 000 (per week) [app]
• Increased efficiency [k] which can increase output / lead to less waste [an] in the factory [app]
• Employee should become a skilled/expert / employee can specialise in what they are good at [k] becoming more efficient in that task [an]
• Easier to use machinery to perform tasks [k] which can speed up production [an]
• Fewer mistakes/errors made / better quality [k] leading to fewer customer complaints / lower costs of production / better reputation / less waste [an] Disadvantages:
• Workers less motivated [k] of the 90 employees [app] so maybe more likely to leave the business / more errors [an]
• Workers cannot cover for absent colleagues / may be the only person who can do that task/job [k] which could mean manufacturing may stop / slow down [an]
• Need to train employees [k] increasing training costs / increased cash outflows [an]
• Not spread risk [k] Other appropriate responses should be credited.

Explain two ways Brendan could increase added value for his business. Award 1 mark for identification of each relevant way (max 2). Award 1 mark for each relevant reference to this business (max 2). Award 1 mark for each relevant explanation (max 2). Points might include:

• Set high prices [k] which widens the gap between the cost and price [an] for the flowers [app]
• Lower (input) costs [k] by buying cheaper materials [an] for this new business [app]
• Branding/marketing/packaging [k] to give the idea of higher quality [an]
• Unique design/products [k] making it more desirable than similar products [an] which could influence its pricing method [app]
• Improve convenience [k] so products are immediately available [an] in the shop [app]
• (Improve) quality/service [k] Other appropriate responses should be credited.

Explain two advantages for KH of using specialisation in the production 8 process. Award 1 mark for each advantage (max 2). Award a maximum of 3 additional marks for each explanation of the advantage of specialisation in the production process – one of which must be applied to this context. Relevant advantages might include:

• Higher output - increased efficiency in production – lower average costs
• Quicker to train employees - production workers are trained in one task / they specialise in this one task - cheaper to train workers
• Keeps unit costs low - less time taken by workers moving between tasks in the factory – so prices may be reduced
• Higher quality - performing only one task makes worker expert - more efficient in that task
• Less waste – as keep repeating the same task - so fewer mistakes may be made
• Easier to introduce machinery to perform tasks – speeds up production process For example: Production employees are trained in one task (1) when manufacturing shoes (app) and will be quicker to train in this one task. (1) Therefore, it will be cheaper for KH to train employees and training costs will be lower (1). Application might include: shoes; large feet; private limited company; high- quality raw materials; natural rubber; large shoe sizes; batch production; niche market; good brand image; sells products at high prices; imports raw materials; 200 production employees; financial data from Appendix 3.