4.1 globalisation 4.2 global markets and resource

Edexcel A LevelBusinessUnit Assessment

4.1 Globalisation 4.2 Global markets and

business expansion

h 1 hour

h The maximum mark for this Unit Assessment is 50

UNIT ASSESSMENT

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This Unit Assessment covers:

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Edexcel A Level Business Unit Assessment

Edexcel A Level Business Unit AssessmentANSWER ALL QUESTIONS

Extract AJLR In 2008, UK car manufacturer, Jaguar Land Rover (JLR), was bought from its owner Ford by Tata, a large Indian multinational. Since the takeover, Tata has invested more than £11bn in JLR’s UK factories, helping it become one of the UK’s most successful manufacturing businesses. Sales are up by 100,000 cars to almost 360,000 – 80% of them overseas.

The turnaround in JLR’s performance under Tata’s ownership is illustrated in the company’s financial performance. In 2008, the last year under Ford ownership, JLR made a £41.6m pre-tax loss. In their most recent accounts, JLR reported a pre-tax profit of £2.6bn

Tata invested heavily in research, design and product development including expanding the use of aluminium platforms pioneered in the Jaguar XJ that meant lighter, more fuel-efficient and therefore more environmentally-friendly cars. New models like the Range Rover Evoque have been a huge success and exported around the world. JLR has also invested heavily in new production capacity and extended its already widespread use of robotic automation in production processes.

A global joint-venture with Chery Automobile will also see JLR vehicles assembled in China. This will not only allow JLR to more effectively serve its most important market (one in six Land Rovers, Range Rovers and Jaguars are shipped to China), but also enable JLR to overcome import tariffs.

Source: (adapted from) : http://www.telegraph.co.uk/finance/11876795/Jaguar-Land-Rover-is-back-and-purring-again.htmlSAM

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Extract BHeinz and Kraft Foods In 2015, H. J. Heinz Company and Kraft Foods Group merged to form the Kraft Heinz Company. Both US companies have a range of classic food brands such as Heinz ketchup and Kraft cheese singles. Prior to the merger, Heinz had a truly global business with 61% of sales coming from outside North America whereas Kraft Foods generated 98% of its sales from North America. The merger of the two businesses may therefore enable Kraft to sell its well-known brands in more international markets, boosting revenue growth.

Combined, Kraft Heinz will have sales of over $28bn. Heinz alone manufactures thousands of food products in plants on six continents, and markets these products in more than 200 countries and territories, with 150 market-leading and number-two brands worldwide.

Management aim to achieve annual cost savings of $1.5 billion by 2017 because of the merger, mainly due to higher economies of scale.

Source: www.forbes.com/sites/greatspeculations/2015/03/30/analysis-of-the-kraft-heinz-merger

Source: Wall Street Journal

Extract C

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Extract DNAFTA The North American Free Trade Agreement (NAFTA), is a trade bloc which removes barriers to trade between Mexico, the USA and Canada. Unlike the EU, it does not allow free movement of labour and still allows the member countries independence in negotiating trade deals with other countries outside the bloc.

Extract ESelected data on Vietnam and Columbia

Vietnam Columbia

GDP annual growth 6.68% 1.2%

Population 89.7m 47.1m

Average monthly salary US$ $145 $692

GDP per capita US$ $1,685 $7,447

Ease of doing business ranking /190 countries

90 54

Political stability (-2.5 very weak and 2.5 very good)

-0.05 106/194 countries -1.12 173/194 countries

Infrastructure Electricity is now available to most households. Access to clean water has risen to 75% of society. Ranks 99th/140 countries for quality of infrastructure. Traffic jams common in major cities. Improvements are being made to road and rail networks. Sea ports well established.

Sea ports on both sides of country. Good shipping access. Huge recent investments in road, rail and airport modernisation. Road infrastructure is ranked 108 out of 142 countries. Port infrastructure is 109/142.

Exchange rate trend £ has depreciated against Vietnamese Dong in the last year

£ has depreciated against Columbian peso in the last year

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1 a) Explain how Foreign Direct Investment (FDI) could allow JLR to improve their competitiveness.(4 marks)

b) Explain one likely effect of JLR’s joint-venture with Chery Automobile in China.(4 marks)


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c) Assess the possible impact of the merger between Heinz and Kraft Foods. (10 marks)


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d) Assess the likely impact, on an American firm like Kraft Foods, of being in the NAFTA trading bloc.

(12 marks)

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e) JLR are looking to find a new overseas market for selling their cars. The two markets they are considering are Columbia and Vietnam.

Evaluate these two options and recommend which one is most suitable for JLR to increase sales revenue.

(20 marks)

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4.1 globalisation 4.2 global markets and resource

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