10 Sample pages. Complete pack contains 42 pages of 3 complete past papers with mark schemes
and suggested answers - and 164 Power Point slides
Revision Pack Unit 3: International Business
For Edexcel’s Business Studies and Economics & Business
6BS03 and 6EB03
By Gerald Wood 1st edition, February 2010
Contents
1. CD with 164 slides covering the content of Unit 3:
a. most slides are in a ‘Question, Answer, Comment’ format. There are also 19
charts and tables. The slides are designed to be used in the classroom or put
on the school’s intranet.
b. they follow the order of the specification
c. a second set of slides contains just the questions, and is designed to be printed
out for homework / personal study if required
2. Three sample papers, following the rough outline of past examinations of this unit.
Each paper contains:
a. a set of questions
b. a mark scheme, outlining the general approach expected of the student
c. a set of suggested answers. These are rather longer than most students would
have time to produce in an examination setting, and also contain more analysis
and detail than students would be expected to know. They will therefore be
useful as a source of further study. They inevitably contain some points of
view personal to the author and should therefore be seen as an example of how
the questions might be tackled. Except in multiple choice questions, there is of
course no such thing as a single ‘right’ answer.
Licence
The printed material is sold with a licence to photocopy for the benefit of students within the
institution, but not further afield. Equally, the CD may be used by the staff of the centre,
copied for the use of other staff at the centre, placed on the centre’s intranet, and printed out
for the benefit of students within that centre, but not further afield.
February, 2010
Resource may be ordered from www.geraldwood.com
10 Sample pages. Complete pack contains 42 pages of 3 complete past papers with mark schemes
and suggested answers - and 164 Power Point slides
Write your name here
Surname
Other name
Other name
Centre Number:
Candidate Number
Sample Paper 1
Business Studies/Economics and Business
Advanced Subsidiary
Unit 3: International Business
Date:
Time: 1 hour 30 minutes
You do not need any other materials.
Paper Reference
6BS03/01
6EB03/01
Total Marks
Instructions
Use black ink
Answer all questions in both Section A and Section B
You may use a calculator
Information
Total marks for this paper is 80 (1 mark per minute, plus 10 minutes for reading)
Quality of written communication will be taken into account in questions 4 and 9. You
should take particular care on these questions over spelling, punctuation, grammar and clarity
of expression
Advice
Read each question carefully
Keep an eye on the time
Try to answer every question
Check your answers if you have time at the end
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10 Sample pages. Complete pack contains 42 pages of 3 complete past papers with mark schemes
and suggested answers - and 164 Power Point slides
SECTION A
Answer ALL the questions in this section
Evidence A
Exporting old photocopiers
Shipping costs have never been so low. In part this is due to the container revolution of the last 40
years which has revolutionised the way goods are transported round the globe. Exporting to China is
particularly cheap: there are so many goods flooding out of China that the shipping lines have vast
numbers of empty containers that have to get back to China for the next load – and they are desperate
for something to put in these empties.
Stephen Armistead, for 20 years a photocopier salesman based in Penrith, England, spotted a business
opportunity. Photocopier dealers were leasing out their machines to customers for 3 or 4 years and
then throwing them away, even though they were still perfectly usable. He now buys them up and
sells them on second-hand, with 50 % going to overseas markets such as China, Pakistan, India,
Uganda and Ireland. The first export deal for his company Trade Copiers was a container load to the
United Arab Emirates for about 100 copiers. He sells to local dealers who will be prepared to handle
reasonable volumes.
What about bad debts? Customers pay 25% of the price at the time of the order, and pay the other
75% when the goods are at their docks before collection – so bad debts are almost non-existent. As
for the transport costs, Stephen can get a container load from Penrith to China for a lower cost than
Penrith to the South of England just 300 miles away.
What about dealing in other languages? Stephen says most companies in the Far East and Middle
East speak English, with customers from other EU countries much more likely to need a translator.
Stephen, however, makes a point of travelling to meet his customers saying there is nothing like the
value of personal contact. Most of the deals are originally set up through the business-to-business
website called alibaba.com, where he advertised his wares and waited for enquiries to come in.
With a team of 9 staff, a 20,000 square foot warehouse and a turnover of £1 million, Trade Copiers
has come a long way in the 8 years since its foundation. What of the future? Stephen has his eyes set
firmly on China’s potential. With its steady growth rate of 9 % pa, there are not nearly enough
Chinese second-hand photocopiers from a few years ago to meet current demand.
1. Analyse the potential for second-hand photocopiers forming a profitable global market niche.
(6)
2. Analyse how Stephen Armistead might seek to overcome the cultural differences in doing
business overseas. (8)
Questions 3 and 4 not included in this Sample ...
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10 Sample pages. Complete pack contains 42 pages of 3 complete past papers with mark schemes
and suggested answers - and 164 Power Point slides
SECTION B
Answer ALL the questions in this section
Evidence A
Google ‘may pull out of China’ – 13th January 2010
Early in January, Google China was subjected to a sophisticated cyber attack aimed at accessing the
email accounts of known human rights activists. It suspected that the Chinese government was behind
the attack. In response, Google said it may pull out of China altogether. It is the Number 2 search
engine in China with 30% of the market behind the local company Baidu holding 63%. While Baidu
is a Chinese company, it is funded in part by investments from American venture capitalists.
When Google went into China in 2006, it reluctantly agreed to censor itself so that politically
sensitive results (such as campaigns over Tibetan independence) did not appear in its search results. It
appears that this latest attack on its integrity was the final straw. Google said that it would not stay in
China unless it could negotiate a deal with the Chinese government that enabled it to offer censorshipfree search results.
This approach is quite different to the normal business approach to China. The assumption normally
is that the Chinese market is too large a prize to let slip. Companies accept difficult commercial
decisions, government interference and censorship because of the pot of gold dangled in front of their
noses. In Google’s case the pot of gold from advertising revenue has been estimated at $600 million
from China coming through in 2010. As the president of the US-China Chamber of Commerce has
said, “As long as you aren’t involved in politics, the media or pornography, the [Chinese] government
will leave you alone”.
Others have wondered why Google has taken so long to adopt this ethical stance. As Evgeny
Morozov of Georgetown University said, “They knew pretty well what they were getting into. Now it
seems they are playing the innocence card ... It’s like they thought they were dealing with the
government of Switzerland and suddenly realised it was China”.
Interestingly enough, many Chinese citizens supported Google’s stance, leaving bouquets of flowers
outside Google’s Chinese HQ with messages such as “Thank you Google”, while others bowed in a
traditional mark of respect.
Evidence B
Business opportunity for Baidu and for Bing – 8th February 2010
The prospect of Google pulling out of China is great news for Baidu, its main search rival in China,
and also for Bing (the search engine owned by Microsoft) which is struggling to gain a foothold in the
Chinese market. Microsoft itself is not interested in challenging the Chinese government. As its
CEO, Steve Ballmer has said, "We have done business in China for more than 20 years and we intend
to stay engaged, which means our business must respect the laws of China. That's true for every
company doing business in countries around the world: we are all subject to local laws."
The stakes are high: in 2009 China had the largest number of Internet users in the world and the
second-largest number of searches conducted. However, it is not at all clear that if Google pull out it
will be Bing that is the main beneficiary. Users tend to stick with the search engine that they know
Resource may be ordered from www.geraldwood.com
10 Sample pages. Complete pack contains 42 pages of 3 complete past papers with mark schemes
and suggested answers - and 164 Power Point slides
and Baidu has a far bigger profile in China than Bing. Baidu originally attracted viewers by offering
free MP3 files, whether it was legally entitled to do so or not. Then Google gained customers by
offering search results that were (on political grounds) less censored than Baidu’s. Bing will face a
tricky path: the less censorship the more the Chinese people like you – but the less their government
likes you. As China is not a democracy, there is no simple mechanism whereby these competing
views may converge.
Evidence C
Google advertises for more staff in China – 24th February 2010
Harold Wilson famously said that a week was a long time in politics. And a month is a long time in
business. While Google is still ‘negotiating’ with the Chinese government it appears (depending on
your point of view) to have come to an accommodation with the Chinese government - or to have
waved the white flag of surrender. The first hint came a fortnight ago when Sergey Brin, one of the
founders of Google, said he was optimistic that Google would not have to pull out of China over
hacking and censorship disputes.
He saw the August 2008 Olympics in Beijing as a turning point – for the worse. Up until then, the
rules on censorship had been progressively relaxed, but “there’s been a lot more blocking going on
since then”. He also made an interesting claim about Google’s original intentions in going into China,
“Throughout all of the discussions on entering China our focus has been on what’s best for the
Chinese people. It’s not about our revenue or profit”.
The uncertainty created by Google’s original announcement in January that it was considering pulling
out of China has been effectively ended by its advertising for 30 new staff at its Beijing HQ – for
software engineers, sales staff and managers. Commented Qu Xiaodong, a technology consultant,
“Google may have seen Baidu’s success in the wake of its withdrawal statement and decided that if it
was going to stay in China, it needed to be more aggressive and win back the market share it had
lost”.
Google’s move opens the way for it to sell other products in China as well, including its Nexus One
mobile phone.
5. Assess the conflict Google faces between the pursuit of profit and its ethical beliefs on
freedom of information. (8)
Questions 6 to 8 not included in this Sample ...
9. Evaluate the impact of China’s growing economic power on the way multinationals in China
do business. (15, includes assessment for Quality of Written Communication)
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10 Sample pages. Complete pack contains 42 pages of 3 complete past papers with mark schemes
and suggested answers - and 164 Power Point slides
Unit 3 Sample Paper 1 Mark scheme
Q
1.
Analyse the potential for second-hand photocopiers forming a profitable global market
niche.
Answer
Knowledge 2, Application 2, Analysis 2
Knowledge – for understanding of global market niche
Application – to second-hand photocopiers
Analysis – for any suitable extension / comment
Level 2
Analyse how Stephen Armistead might seek to overcome the cultural differences
in doing business overseas.
Indicative content:
Knowledge 2, Application 2, Analysis 4
Discussion around attitudes to marketing techniques, credit, dispute resolution,
language barriers and expected behaviour patterns
Coherent response looking at different approaches and wrapping up with an
informed and balanced conclusion
Some independent commentary e.g. which barriers might be greatest, how great
are they
Some application of these to Stephen’s circumstances
Level 1
Some relevant understanding of cultural differences
Q
2.
Level 4
Level 3
Mark
1-2
1-2
1-2
Total:6
Mark
7-8
5-6
3-4
1-2
Questions 3 and 4 not included in this Sample ...
Q
5.
Level 4
Assess the conflict Google faces between the pursuit of profit and its ethical
beliefs on freedom of information.
Indicative content:
Knowledge 2, Application 2, Analysis 2, Evaluation 2
Discussion around potential conflict between socially responsible and ethical
behaviour and profit-based objectives
Informed and balanced conclusion, eschewing dogmatic assertion
Mark
7-8
5-6
Level 2
Some commentary – e.g. to what extent is there really a conflict? Is withdrawal
necessarily the most ethical response?
Some application of that conflict to the case of Google
Level 1
Some understanding of the potential conflict
1-2
Level 3
Questions 6 to 8 not included in this Sample ...
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3-4
10 Sample pages. Complete pack contains 42 pages of 3 complete past papers with mark schemes
and suggested answers - and 164 Power Point slides
Q
9.
Level 4
Level 3
Level 2
Level 1
Evaluate the impact of China’s growing economic power on the way
multinationals in China do business.
Indicative content:
Knowledge 2, Application 2, Analysis 3, Evaluation 8
Discussion could include traditional criticisms made of multinationals e.g. undue
influence on foreign Gov’ts, exploitation of labour, degradation of environment
Coherent and balanced response: at higher end, with informed & personal views
QWC – good-to-excellent spg, precise and effective business/economics
terminology, coherent and fluent response
Some assessment e.g. commenting on the Google / China argument
QWC – reasonable-to-good spg, business/economics terminology used quite well
Some application e.g. power of multinational relative to host country
QWC – reasonable spg, limited amount of business / economics terminology
Some understanding of relevant terms e.g. multinationals, economic power QWC
– frequent errors in spg, and/or weak style/structure and/or poor legibility
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Mark
8-15
5-7
3-4
1-2
10 Sample pages. Complete pack contains 42 pages of 3 complete past papers with mark schemes
and suggested answers - and 164 Power Point slides
Unit 3 – Sample paper 1 Suggested answers
SECTION A: 4 questions, 35 marks
You are advised to spend no more than 40 minutes on Section A – so you have roughly one mark per
minute.
1. Analyse the potential for second-hand photocopiers forming a profitable global market
niche. (6)
Photocopiers are an essential tool of modern business. Originally designed to copy sheets of paper,
they are now merging with printers such that the copier / printer can produce hard copies either from
another piece of paper or from an electronic file. Despite the enormous growth in computing as a
business tool, there is no sign yet of paper being phased out – though this development may yet come
to pass.
Meanwhile, millions of photocopiers are in use in Britain alone. Large ones are often leased, so that
the company that makes them is also responsible for keeping them in good repair. After they are past
their best, they become difficult to lease out and are often scrapped. However, as Armistead has
found out, there is plenty of demand for second-hand copiers. Just as second hand cars have a market
among the less well-off, so the same appears to be true of photocopiers. Given the very low costs
involved in international shipping, there is every reason to believe that these products form a
profitable and expanding global niche market. However, as the cost of the equipment comes down
over time, we may reach a point where there is no more of a global market for second-hand
photocopiers than there is for second-hand shoes.
2. Analyse how Stephen Armistead might seek to overcome the cultural differences in
doing business overseas. (8)
Business is a universal language, so it would be unwise to exaggerate the cultural differences of doing
business in different countries. Particularly as globalisation proceeds apace, people all over the world
get more used to dealing with each other. And with his background in sales, Stephen will already be
familiar with the basic requirements of selling yourself as well as the product, building trust and
delivering on what you promise. Furthermore, English is the international language of business and
we read in the Evidence that Stephen has found this acceptable pretty much worldwide with the
exception of some EU countries.
Nonetheless, Stephen has been careful to visit his customers even though it could be argued that this
is not strictly necessary. In his words, “there is nothing like the value of personal contact” – and
perhaps other orders will come at the time that he visits. Given that he is selling to dealers, he is
actually talking to people with a similar background to himself. Personal contact is often the best way
to understand each other and smooth over any difficulties.
With respect to selling on credit, Stephen has overcome potential differences by simply refusing to do
it. By insisting that goods are paid for in advance of delivery, he avoids the whole issue of credit
control, while the fact that 75% of the price does not have to be paid until the goods arrive at their
port of destination gives the buyers confidence that they will not be left without their products.
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10 Sample pages. Complete pack contains 42 pages of 3 complete past papers with mark schemes
and suggested answers - and 164 Power Point slides
Stephen will also be helped by the relative simplicity of his business proposition – selling secondhand photocopiers by the container-load. There is a limit to the level of understanding required of the
others’ business model.
In conclusion, Stephen comes from a sales background, is middle-aged, and is dealing with others in a
similar line of work. A good dose of common sense and extensive business experience will overcome
most cultural differences.
Questions 3 and 4 not included in this Sample ...
SECTION B: 5 questions, 45 marks
You are advised to spend about 50 minutes on Section B – so you have one mark per minute plus 5
minutes reading time.
5.
Assess the conflict Google faces between the pursuit of profit and its ethical beliefs on
freedom of information. (8)
There is no doubt that the profitable thing for Google to do is to stay in China, and if this means selfcensoring its search results at the behest of the Chinese government then that is the price it has to pay.
However, the company is committed to the free exchange and dissemination of information so there is
an argument for saying that it should not agree to provide a service in China on terms that it considers
fundamentally unethical – indeed, its own Board seems to have reached this view in January.
However, it can also be argued that ‘constructive engagement’ is an equally ethical approach. By
staying in China on less-than-ideal terms and arguing its point, it may well be that change is brought
forward sooner than would otherwise have been the case.
It is difficult to know which of these two approaches is the more ethical – and given that the latter
approach is much the most profitable one, it will be difficult for Google itself to come to an unbiased
view. But before we condemn Google for apparently changing its mind on this, it is worth pointing
out that where, as in Cuba, the US government has implemented a trade embargo on an unpleasant
regime the net effect seems to have been to make internal change harder rather than easier.
‘Constructive engagement’ may not have the apparent moral clarity of simple withdrawal, but if it is
sincerely meant (rather than being simply used as an excuse for carrying on business as usual) it may
actually deliver better results than the more hard line approach.
Questions 6 to 8 not included in this Sample ...
9. Evaluate the impact of China’s growing economic power on the way multinationals in
China do business. (15)
Multinationals are commonly criticised for bringing a number of potentially negative impacts to
overseas countries. These had some justification when a US multinational went into a small Latin
American country in the 1960s and 70s. However, the world has moved on since then and not least in
China where the balance of power now strongly favours the host government.
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10 Sample pages. Complete pack contains 42 pages of 3 complete past papers with mark schemes
and suggested answers - and 164 Power Point slides
Firstly, multinationals are criticised for using their economic muscle to gain concessions from foreign
governments. In the case of Google, the threat of withdrawal seems not to have bothered the Chinese
at all. And why should it? Google has no monopoly in China. We might also observe that the
assumption behind the criticism is that ‘influence’ on foreign governments has to be malign. In the
case of Google’s dispute, there is every indication in the response of ordinary Chinese people (see last
paragraph of Evidence A) that they would far rather have Google’s policy on access to information
than that of their own government. Be that as it may, the impact of China’s growing economic power
is that Google (and dozens of other multinationals) have to do business essentially on China’s terms.
Multinationals are also criticised for implementing working practices that would be unacceptable in
their home country. There is no doubt that all multinationals employ people in China at far lower
wage rates and for far longer hours than would be legal in Western Europe or North America.
However, this criticism is fundamentally misconceived. The proper comparator is not what workers
receive in America, but what the opportunity cost is to the Chinese workers themselves i.e. what they
would be paid if they were not employed by a foreign multinational. And on these criteria,
multinationals do consistently well. Were there some mechanism whereby foreign multinationals
could be compelled to pay American wage rates in China, then they simply wouldn’t go there – to the
loss of both American and Chinese workers and consumers. Furthermore, the ‘growing economic
power’ of China will eventually translate into higher wages within China so that the force of this
criticism (such as it is) will be blunted.
Finally, multinationals stand accused of degrading the local environment. China is now the world’s
largest emitter of CO2, despite the fact that its GDP is a fraction of the USA’s. And it is building a
new coal-fired power station every fortnight. However, this relative indifference to the environment
stems from the Chinese government itself. Its offer at the Copenhagen summit on global warming in
late 2009 was, for example, simply to reduce the amount of CO2 emissions per unit of GDP. With a
rapidly growing GDP, China is in reality offering no cut at all. In any case, a reduction in emissions
per unit of GDP is what we would expect to happen anyway, given the rising price of energy and the
year-on-year increases in efficiency that are one of the characteristics of economic life.
In conclusion, China’s growing economic power mean that multinationals have to do business very
much on China’s terms. Their ability to ‘influence’ government is much diminished. However, we
might question to what extent this is an outcome that either we in the West or the Chinese people
themselves particularly like. When faced with a one-party dictatorship, the ability of multinationals to
act as a locus of countervailing power may actually be a force for good – and its demise something to
be regretted. And finally, we may question whether multinationals should be treated as a separate
subject for discussion. With increasing globalisation, virtually every large company has already
become a multinational whereupon the criticisms directed at them are more properly directed at
business enterprise as a whole.
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