SWQ owns 200 clothing shops in country A. All inventory is purchased from 3 local clothingmanufacturers. The Marketing Director has to decide whether to change suppliers. SWQ could buy4inventory from country C, a low cost country. He showed the newspaper article, see Figure 2, toother directors. He said: ‘Look at this newspaper article. We operate in a mass market and ourcustomers want low prices. Changing suppliers to manufacturers in country C will affect ourstakeholders.’Factory life in country CYou can see why many retailers arebuying from country C. 15-hour days forwages of $2 a week. A spokesperson forone pressure group said: ‘Today I saw8-year-old children sewing buttons ontosuits and it is legal in this country.’Figure 2: Newspaper articleWhat is meant by ‘pressure group’?(a)............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ [2]Identify two advantages to a business of selling to a mass market.(b)Advantage 1: ...............................................................................................................................................................................................................................................................Advantage 2: ............................................................................................................................................................................................................................................................... [2][Turn over06_0450_13_2019_1.9© UCLES 20199Identify two stakeholder groups of SWQ. Explain one possible objective for each stakeholdergroup.(c)Stakeholder group 1: ...................................................................................................................................................................................................................................................Explanation: .................................................................................................................................................................................................................................................................Stakeholder group 2: ...................................................................................................................................................................................................................................................Explanation: ................................................................................................................................................................................................................................................................. [4]Identify and explain two suitable methods of communication SWQ might use with manufacturersin country C if it decided to purchase supplies from them.(d)Method 1: .....................................................................................................................................................................................................................................................................Explanation: .......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................Method 2: .....................................................................................................................................................................................................................................................................Explanation: ....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... [6]06_0450_13_2019_1.9© UCLES 201910Do you think SWQ should start buying its products from country C? Justify your answer.(e).................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... [6]06_0450_13_2019_1.9© UCLES 2019
Question
SWQ owns 200 clothing shops in country A. All inventory is purchased from 3 local clothingmanufacturers. The Marketing Director has to decide whether to change suppliers. SWQ could buy4inventory from country C, a low cost country. He showed the newspaper article, see Figure 2, toother directors. He said: ‘Look at this newspaper article. We operate in a mass market and ourcustomers want low prices. Changing suppliers to manufacturers in country C will affect ourstakeholders.’Factory life in country CYou can see why many retailers arebuying from country C. 15-hour days forwages of $2 a week. A spokesperson forone pressure group said: ‘Today I saw8-year-old children sewing buttons ontosuits and it is legal in this country.’Figure 2: Newspaper articleWhat is meant by ‘pressure group’?(a)............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ [2]Identify two advantages to a business of selling to a mass market.(b)Advantage 1: ...............................................................................................................................................................................................................................................................Advantage 2: ............................................................................................................................................................................................................................................................... [2][Turn over06_0450_13_2019_1.9© UCLES 20199Identify two stakeholder groups of SWQ. Explain one possible objective for each stakeholdergroup.(c)Stakeholder group 1: ...................................................................................................................................................................................................................................................Explanation: .................................................................................................................................................................................................................................................................Stakeholder group 2: ...................................................................................................................................................................................................................................................Explanation: ................................................................................................................................................................................................................................................................. [4]Identify and explain two suitable methods of communication SWQ might use with manufacturersin country C if it decided to purchase supplies from them.(d)Method 1: .....................................................................................................................................................................................................................................................................Explanation: .......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................Method 2: .....................................................................................................................................................................................................................................................................Explanation: ....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... [6]06_0450_13_2019_1.9© UCLES 201910Do you think SWQ should start buying its products from country C? Justify your answer.(e).................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... [6]06_0450_13_2019_1.9© UCLES 2019
Solution
(a) A pressure group is an organization that tries to influence public policy or legislation to promote its own interests. They often represent a particular issue, cause, or a set of values and use various forms of advocacy to persuade decision makers to enact or change laws or policies.
(b) Advantage 1: Economies of Scale - Selling to a mass market allows a business to produce and sell goods in large quantities, which can lead to cost savings per unit due to economies of scale. Advantage 2: Large Customer Base - A mass market provides a large customer base, which can lead to higher sales and profits.
(c) Stakeholder group 1: Employees Explanation: Employees may want job security, fair wages, and good working conditions. Stakeholder group 2: Customers Explanation: Customers may want high-quality products at affordable prices.
(d) Method 1: Email Explanation: Email is a quick and efficient way to communicate with manufacturers in another country. It allows for clear, written communication that can be referred back to if needed. Method 2: Video Conferencing Explanation: Video conferencing allows for face-to-face communication, which can help build relationships and trust. It also allows for real-time discussion and problem-solving.
(e) Whether SWQ should start buying its products from country C depends on various factors. On one hand, it could lead to cost savings due to lower manufacturing costs, which could be passed on to customers in the form of lower prices. On the other hand, the working conditions and use of child labor in country C could lead to negative publicity and damage SWQ's reputation. Therefore, SWQ should carefully consider these factors and possibly look for other low-cost countries that adhere to better labor standards.
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We focus on the market of a particular good in Country A. Back in 2019, there were many (domestic) suppliers from Country A and many (foreign) suppliers from Country B all serving consumers in Country A. We ignore consumers of this good in any country other than Country A. The market is assumed to be perfectly competitive. Due to a trade war, all foreign suppliers from Country B disappeared. Consequently, the market supply was halved after the trade war at every possible market price. (a) [15 marks]Comparing the competitive equilibria before and after the trade war, do you think the quantity in the new equilibrium is higher than, equal to, or lower than half the quantity in the old equilibrium? Explain your reasoning. Your answer should not be specific to any particular demand and supply curves. (Limited to 100 words.) (b) [20 marks]For the rest of the question, assume that the market demand curve is 푞 = 21 − 3푝 and the market supply curve before the trade war is 푞 = 4푝. Hence, the market supply curve after the trade war is 푞 = 2푝. Find the competitive equilibria before and after the trade war. (c) [15 marks]Compute the change of consumer surplus due to the trade wa
We focus on the market of a particular good in Country A. Back in 2019, there were many (domestic) suppliers from Country A and many (foreign) suppliers from Country B all serving consumers in Country A. We ignore consumers of this good in any country other than Country A. The market is assumed to be perfectly competitive. Due to a trade war, all foreign suppliers from Country B disappeared. Consequently, the market supply was halved after the trade war at every possible market price. (a) [15 marks]Comparing the competitive equilibria before and after the trade war, do you think the quantity in the new equilibrium is higher than, equal to, or lower than half the quantity in the old equilibrium? Explain your reasoning. Your answer should not be specific to any particular demand and supply curves. (Limited to 100 words.)
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