Cambridge A Level Business (for first examination in 2016) 9609 — 2025 Oct/Nov Paper 4 · Variant 2

2 Advise KK on the likely impact of the new government’s policies on its future business strategies. [20]

Mark scheme: 2 Advise KK on the likely impact of the new government’s policies on its future business strategies. 20 AO1 Knowledge and understanding of government policies and strategic management Knowledge (max 1 mark) can be awarded for any relevant business knowledge about government policy or how it works OR knowledge of business strategy, including: • Government policies are rules and regulations that affect how businesses are run in the economy. • Government policies help the government to meets its objectives in running the economy. • (Any policy) will help to increase demand in the economy (Award only) • (Any policy) will help to increase productivity in the business (Award only) • (Grants/trade barriers) will help reduce costs to the business (Award only) • (Min Wage/University educated workforce) will increase the costs of the business. (Award only) • Definition of inflation – General rise in price. • Definition of government grant (Award only) • (Monetary policy to stabilise inflation no K mark for this see below) – the use of interest rates by a central bank to affect the money supply and aggregate demand. • Fiscal policy - the use of government revenue collection and expenditure (taxation) to influence a country's economy. If successful will change aggregate demand (AD) in the economy. • Supply side policy - attempts to increase productivity and increase efficiency in the economy. If successful, they will shift aggregate supply (AS) to the right and enable higher economic growth in the long-run. • Exchange rate policy - how a country manages its currency in respect to foreign currencies and the foreign exchange market. The exchange rate is the rate at which the domestic currency can be converted into a foreign currency. • Strategic management – the process of strategic analysis, strategic choice and strategic implementation to achieve the objectives of the business. Award for any explanation of a policy that affects a business’ strategy, up to a max of 2 marks. 2 Some basic knowledge about Fiscal policy . government policy, so only K. 1 K for identification and 1 DEV Fiscal policy , is collecting and using taxes in the economy. . for a point of explanation 1 K for identification and 2 DEVs Fiscal policy , is collecting and using taxes in the economy , this may for two points of explanation change the level of aggregate demand in the economy. . Note: Candidates can gain full marks for AO1 from one term that is explained ( + + ) or from two terms partially explained ( + and + ). Monetary policy cannot be awarded for knowledge as it is stated in the case study but knowledge of how monetary policy works can be awarded. No other AO2, AO3 OR AO4 marks can be awarded without AO1. AO2 Application Application (max 2 marks) can be awarded for applying knowledge, analysis or evaluation of a government policy and its impact on KK between 2020 and 2024. Candidates MUST apply this to KK’s business model – a lot of this will come from the appendices • Use of monetary policy to stabilise inflation • Government grants to support carbon efficient businesses • Minimum wage to be increased by 40% by 2028 • Reform of country W’s education system, including government funded university tuition • Elimination of trade barriers for primary sector businesses • Primary sector business • Kelp has a low impact on the environment • KK has been trading for five years prior to 2020 • KK is labour intensive • KK is a social enterprise • Kelp refinery creating a pulp used in biodegradable plastic – starts in 2020 2 • 2025 – new government in country W • Any element of the case study • Any element of the appendices AO3 Analysis Analysis is likely to be based on the impact of the policies on KK’s strategy ( and and ) , including: • Monetary policy – if interest rates fall then this may mean any borrowings that KK have are at a lower cost – increasing profitability. May also have an effect on customers (B2B) costs and their ability to afford KK’s prices. • Fiscal policy – government grants may decrease costs – leading to higher profitability. Alternatively increased costs from higher taxation rates may increase costs and reduce profitability. • Supply side policy – likely to reduce the skills gaps in country W – however likely to take time which may not help KK soon. • Exchange rate policy – may decrease cost of importing raw materials – reducing costs and increasing profitability. Candidates may choose to contrast two or more of these policies, but they must analyse the policy in the context of its impact on KK’s strategy, and not just be an analysis of the policy on its own. Candidates need to identify a policy and provide developed analysis to get to L2, this then needs to be counterbalanced to get to L3. If a candidate does this twice, they will gain 8 marks. AO4 Evaluation Evaluation ( and and ) including: Evaluation will largely depend on the points raised in the analysis. Candidates MUST answer the question – what is the likely impact on the KK’s strategy? The development and support of this judgement will help them to move through L2 and L3. 2 To award L3 the answer must be in context and draw upon the previous analysis. • A judgement over the impact of individual government policies on KK. • A judgement over the overall impact of the combined government policies on KK. • A judgement over the most positive/negative impacts of the government policies on KK. • What the judgement(s) may depend upon; the dynamism of the external environment, competition in the market, the international economic outlook, the reactions of customers to KK’s refined products etc. • Weighing up of the likely ability of KK to survive in light of the government policies. No credit L1 including: L2 including: (developed L3 (developed supporting evidence (limited supporting evidence) with context) supporting evidence) Supply side Supply side Supply side policies will help KK’s Supply side policies will help KK’s business policies will policies will help business as they may receive as they may receive grants from the help KK. KK’s business as grants from the government. This government. This is more likely with the new they may receive will reduce the costs and help processing factory and its new technology. grants from the increase production level unlike Therefore, costs will reduce and this helps government. increases in interest rates. increase production levels unlike increases in interest rates. Accept all valid responses.

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