10 KEYS TO EXAMINATION SUCCESS IN COMMERCE

1. Study regularly and take effective notes

2. Use a textbook as the centre of your study
3. Make use of other support materials and take note of
what is going on around you
4. Plan your revision and start early
5. Get ready the night before the examination –
materials, stationery, extra pens, calculators, entry
document
6. Read the examination instructions and examination
questions carefully and spend time in Paper 2
choosing which questions to answe
7. Start with the question you are most confident about
8. Obey the command words of the questions and
follow the mark allocations for the part questions
9. Answer the correct number of questions
10. Stay calm. Don’t panic
REASONS FOR CANDIDATE FAILURE IN
COMMERCE ‘O’ LEVEL EXAMINATIONS
1. Poor choice of questions
2. Omission of questions or parts of questions
3. Answering all the questions on the paper (Paper 2)
instead of the four required
4. Poor language skills
5. Lack of knowledge of the subject
6. Insufficient detail in responses
7. Failure to follow the command words and respond to
the mark allocation for the questions
8. Inability to use commercial terminology
9. Writing out the question
10. Very, very poor presentational skills e.g. handwriting
 Part of every question was marked according to Levels
of Response.
 The part questions with the highest mark tariff were
usually marked in this way.
 Those candidates who wrote developed answers and
who responded to command words such as ‘discuss’ or
‘advise’ were able to gain level 3 marks.
 Candidates who contented themselves with giving
advantages and/or disadvantages of the topic set
usually gained level 2 marks. Some candidates who
presented lists remained in level 1.
 It should be remembered that it is not enough to
present a list of points, probably memorised from the
candidate’s lesson notes. It is important to develop
these points – to say why something is important, why
something is expensive, why something is difficult.
 If candidates offer some development of their answers,
they will then achieve a higher level and so more
marks.
How will you write answer of this question?

Q;Mr Patel has the following two options:

• set up as a sole trader;
• become a franchise.
Discuss both these options. Which would
you recommend? Give reasons for your
choice. [6]
 This question called for a full discussion of the
advantages and the disadvantages of both a sole trader
and a franchise and then a reasoned recommendation.
 Many candidates completed the discussion and gave a
recommendation but failed to substantiate the
recommendation adequately so remaining at Level 2
marks.
 It is important that candidates follow the rubric of the
question even if it means repeating themselves with
the reasons given for the recommendation.
 It is not sufficient to say ‘I recommend … for the reason
given above’.
 Level 3 (5–6 marks)
Has discussed both options and has made a recommendation substantiated by
convincing
reasoning
If Mr Patel sets up a sole trader he will be his own boss, can make his own
decisions and can operate the business as he wishes. He will have unlimited
liability and will be responsible for his losses with the risk of losing his personal
assets. He will, however, enjoy any profits he makes. On the other hand setting
up a franchise will be less risky. He will have the backing of a tried and tested
business, a well known name and product or service and the back-up of a large
business which can help him sort out any problems he may have. Franchises are
more likely to succeed than sole trading business. If Mr Patel feels that he lacks
the skills necessary to be a successful entrepreneur he should make a franchise
agreement. If he has the resources to set up as a sole trader he should consider
this as he will not have to make annual payment, a percentage of his turnover
and he will have greater freedom of action. I would recommend that Mr Patel
considers a franchise initially until he feels that he could be more successful on
his own. Tyres and batteries required a large capital investment and the
franchise company will provide this rather than Mr Patel borrowing very large
sums from his bank.
 Level 2 (3–4 marks)
Has commented on both options and has made a
reasoned recommendation OR has discussed both
options without a recommendation OR has made a
reasoned recommendation based on the discussion of
one of the options Mr Patel would be the sole owner
and keep all the profits if he set up as a sole trader. He
would have the backing of a large, well-established
company if he became a franchise. I would
recommend that he became a franchise because it will
be less risky, he will have support from the large
company and he is less likely to fail.
 Level 1 (1–2 marks)
 Has made some superficial comments
on one or both of the options with or
without a recommendation. As a sole
trader. Mr Patel has his own business.
He does not have to answer to anyone
so I recommend that he sets up his
business as a sole trader.
 if a question says ‘should they …., candidates
are usually required to give an opinion with
reasoning to support this opinion.
 It would be helpful if candidates spread out
their work better – leaving a line between
each question chosen and leaving a line
between each part of each question.
recommendation or opinion was omitted
 Candidates should look at the words which begin
questions in relation to the mark allocations for those
questions.
 If a question says “State” or “Identify”, it means that a
short answer is required and the answer is usually
worth one mark.
 If a question requires a candidate “To explain” , there
needs to be a more developed answer and there will be
a greater mark allocation.
 There is no doubt that a clearly written script
(preferably using black ink or ballpoint pen) helps the
Examiner.
 It is important, however, when using answer
booklets that candidates do not write in the
margins reserved for Examiners and do not
change their handwriting so that it is so
small that it is very difficult to read. There
were two empty pages at the end of the
answer booklet and these, with reference
made on the question, could have been used
to complete answers.
 Personal service, informal credit,
location of small shops, longer opening
times and providing speciality services
as reasons for the survival of many
small shops.
 newspapers were the cheapest means and
that they were purchased by many people.
Very few wrote about newspapers providing
detailed information or being kept for
reference. As regards television advertising,
many candidates mentioned this is a mass
medium and that it could provide sound
and visual impact.
 It should be remembered that for any
perishable cargo to be taken by sea, it will
need refrigeration and containerization
 The main documents used in international trade such
as;
 The bill of lading
 the air waybill
Are the most popular choices
 but documents such as the indent, the invoice, the
certificate of origin, the delivery note/consignment
note, the dock warrant, the shipping note and the bill
of exchange were also allowed.
 The main documents of home trade such as enquiry,
quotation, order, invoice, delivery note, the credit note
and the statement of account.
 Candidates should remember that limited liability
relates to the shareholders rather than the company.
 Many confused seasonal production i.e. production at
certain times of the year with seasonal demand.
Instead of writing about the storage of products such
as food to provide a constant supply, many candidates
wrote about products produced all the year round but
required only at certain times of the year e.g.
umbrellas, blankets
 containers can act as small warehouses, reducing
theft/damage, needing less handling and can also
speed up the delivery of goods.
 the changes in wholesale trade were expected with
comment on cash and carry warehouses and voluntary
chains.
 many different uses for the insurance premiums ; to
make profit, investment and paying expenses
 some confusion between limited and unlimited
liability.

 In selecting a suitable media of advertsing, concentrate

on cost, target market, area to be covered, the product
and details required.
 Have a good understanding of direct debit and the fact
that the creditor requests payment when using direct
debit.
Why countries import goods and
services?
 political reasons, satisfying consumers, providing what
the country lacks and helping to develop its economy.
 how exports might be increased; reduction in export
duty
 When selecting method of finance think of what these
kinds of finance might be used for - long term for
expansion or the purchase of fixed assets, short term
for trading activities and to overcome cash flow
problems.
 long term finance such as preference shares or a
mortgage.
 The differences between loans and overdrafts
Is it correct?
 Some candidates thought that Hire Purchase was
suitable for buying a new factory or for repairing the
office building and that debentures should be used for
paying for computer software.
 Loans, debentures and ordinary shares were accepted
for the factory.
 Trade credit and overdraft were accepted for the
software.
 Bank loan and overdraft were accepted for the repair to
the office building.
 the larger carrying capacity of aircraft, the increase in
the number of goods of low bulk and high value now
being exported and the increased number of airports,
air routes and cargo planes available
 the term direct services - those services performed
directly to the people who receive them –examples;
such as nursing, teaching, hairdressing
What factors have led to the
growth of the self-service system
of retailing?
 the growth of large scale retailing, the desire to cut
labour costs, the increase in the branding and
packaging of goods and the demands of consumers
wishing to save time and examine goods have all led to
the development of self-service retailing.
 Other candidates gave descriptive answers talking
about trolleys, more space and the display of goods.
A Retailer is thinking of installing
vending machines to sell drinks
outside his shops. Discuss
the arguments for and against
installing vending machines.
 commenting on 24-hour service, additional income,
 convenience to buyers, theft, vandalism and
maintenance costs.
Explain why Mr Ahmed may have
to pay a larger insurance premium
for fire insurance than
Mrs Singh.
 relating to nature of the goods in the shop,
 the value of these goods, previous claims made, fire
precautions installed and different demands of
different insurance companies.
Explain two business risks, apart
from fire, against which both Mr
Ahmed and Mrs Singh
should insure.
 Most candidates were able to name two business risks
but they often had difficulty commenting on such risks
as theft and flood to gain the additional marks for
explanation.
 Those candidates who listed public liability,
consequential loss, fidelity bond or employer’s liability
usually gained full marks.
How to reduce imports?
 subsidising home products, encouraging local
manufacturers, increasing import duties, introducing
quotas and embargoes and using devaluation and
exchange control regulations.
A manufacturer of clothing has
decided to use an export merchant
to sell her goods abroad.

 What are the advantages of using an export merchant

rather than exporting the goods
herself?
 Candidates were able to score marks even if they
confused an export merchant with an export agent. An
export merchant is a person who buys goods from the
manufacturer on his/her own account and looks for
buyers in order to make a profit. An export merchant
does not sell on commission as does an agent.
 Many of the advantages are, however, the same such as
saving the manufacturer looking for buyers, saving
time and costs and overcoming difficulties such as
language and distance.
Explain why retailers will
usually accept each of the
following in payment of debts:
(i) cash [3]
(ii) cheques [4]
(iii) credit cards
 that many candidates had no understanding of cheque
cards and debit cards and wrote about cheques and
credit cards instead.
 A cheque card guarantees a cheque up to certain
amount, the cheque cannot be stopped and it is
protection against the cheque being refused by the
bank because of insufficient funds.
 A debit card enables payments to be made without
writing cheques, the amount is automatically
deducted from the person’s bank account and
immediate transfer of funds takes place.
Methods of payment used by
importers
 Most candidates failed to appreciate that the payment
was for imported goods so an international method of
payment was needed rather than one of the methods
of payment listed in the question.
 Most candidates wrote about cheques and so gained
no marks.
 Answers should have commented on
electronic/cable/telegraphic transfer of funds,
documentary credits, bank drafts or bills of exchange.
Credit card was not a viable answer as the payment was
such a large amount.
 Some candidates had no knowledge of
teleconferencing and others confused with
videoconferencing.
 Teleconferencing; using the telephone to hold a
meeting of people located in several places.
How might Blazer Cargo
Services make the
advertisement shown in figure
more persuasive?
should have mentioned such
points as changing fonts,
emboldening parts of the
advertisement, including
discount, introducing special
offers and providing more
information.
 Some candidates thought that collective advertising
encompassed advertisements of types or brands of
milk instead of milk as a product.
Describe three general functions
of any kind of warehouse.
 such as storage, protection, preparing for sale,
stabilising prices or breaking bulk
Explain why they cannot insure
their shops against the risk of bad
management.
 Due to lack of statistics, no past records and inability
to assess the risk.
 showing little knowledge of bank drafts, forwarding
agents and export agents.
 confused a bank draft – a cheque drawn by a bank on
itself or another bank – with an overdraft.
 forwarding agents – responsible for arranging the
transport, insurance, storage,
 documentation of exported goods and export agents –
responsible for finding buyers, having specialist
knowledge of a country and earning commission.
 Point-of-sale is advertising where the customer will see
it when purchasing goods e.g. at the till.
 A regional distribution centre is a warehouse
positioned to supply several branches of the
supermarket with a given area so that the
supermarkets maintain their supplies.
Explain the trends that have
contributed to the decline of the
wholesaler.
 The growth of large-scale retailing, manufacturers
opening their own retail outlets, the growth of mail
order and improvements in transport and
communication.
In what circumstances is a
wholesaler still likely to be used by
retailers?
 voluntary chains, cash and carry, foreign traders and
the needs of the small-scale retailer.
 the port authority was often confused with a customs
authority

 There was some confusion about public limited

companies – ownership by the government was a
common error.
 some candidates confused a night safe with an ATM.
In what circumstances would a
building company make use of a
bank loan rather than a bank
overdraft?
 bank loan ;the need for a large amount, for a specific
purpose e.g. a new machine, expansion and for a long
period
 why the building company might use them to finance
a project e.g. to save paying interest, no repayment, no
liability and to finance the project more quickly.
 Many failed to focus on difficulties of trading in world
markets such as distance, currency, payments,
transport or customs
 packaging ;the need for protection, aiding storage,
enabling branding and information to be put on the
packaging and helping to attract customers.
 Direct debit is used to make variable or fixed payments
to a regular supplier. It saves on clerical work and time
and the payee often demands that debts are paid in
this way as the transaction can be computerised and
the amount paid can vary.
Describe the advantages and
disadvantages of using ro-ro ferries
for the transport of freight
between neighbouring countries.
 that vehicles are driven on board without unloading
them which speeds up the handling of cargo, increases
the use of containers, reduces transport costs across
short sea channels and expands international trade.
 The disadvantages of using ro-ro ferries are; possible
unemployment among dock workers, the increased
risk of terrorism; illegal immigrants using the ferries,
import of illegal goods via the ferries and risks
associated with the weather.
 Many candidates are still not clear about the
distinction between government owned organisations
and those privately owned. A public limited company
is in the private sector and so is privately owned.
Explain the purposes of a
wholesale warehouse in the chain
of distribution.
 should have mentioned storage, protection, display,
cash and carry, keeping retailers supplied, bulk
breaking and preventing shortages and price
fluctuations.
Which medium would be the
most cost-effective for
advertising a local restaurant?
A magazines B posters
C radio D television
 The correct answer was option B the cheapest method
and therefore the most suitable for a local business
which has to control its costs
 crossed cheques being safer because they could not be
cashed but had to be paid into a bank account were
usually made, that they could be specially crossed.
Explain how the accountant might
make use of Internet banking.
 setting up accounts for the company, making
payments, transferring funds between accounts,
calling up statements on bank accounts and obtaining
information about bank services.
 why Bing Ltd offered credit – higher turnover, loyal
retailers,
 building up goodwill between Bing Ltd and its
customers.
 consequential loss was not known –
 to cover loss of profits and costs as the result of
business closure because of a calamity such as a fire.
Giving reasons for your choices,
recommend a source of finance
given in Fig. 3 that the
multinational company might use
to:
(i) update its computer system [3]
(ii) build a new factory in another
country [3]
(iii) improve its cash flow.
 Retained profit or a bank loan were
the most appropriate sources of
finance for
 the computer system. The overdraft
and trade credit were not suitable as
the computer system was for the
 whole company and so a very large
sum of money was involved.
 Long-term finance such as ordinary
shares, a bank loan, retained profits or
debentures were required for part (c)(ii)
where again a large sum of money was
required. In part (c)(iii) trade credit or an
overdraft were the correct answers.
Candidates often
 gave long-term finance such as shares as
answers for this part question.
Suggest ways in which she could
make a profit.
 controlling costs, offering a quality service and
building
 up gradually as ways of making profits and showed
that they understood the context of the question.
 Public corporations were confused with public limited companies.
 the role of a consumer council; to report on unfair business practices
 How might consumers protect themselves against unfair trading
practices by retailers?
 By being more watchful and aware of what they are buying
 By watching consumer programmes
 By reading consumer magazines e.g. to find the best value for money
 By reporting unfair trading practices
 By being aware of government legislation designed to protect them +
example of
 legislation
 By looking for labels on products e.g. BSI kite mark
 By using reputable retailers e.g. ABTA travel agents
 By buying branded goods
 By telling other people
 By suing/taking to court
Name important factors to
consider when deciding on the
location of a small retail business..
 Nearness to customers – customers often buy
locally
 Availability of labour – may need shop assistants
 Availability of transport – customers to come to
the shop, labour
 Kind of site – close to other shops – on main
roads
 Ease of obtaining supplies – near main
roads, delivery area
 Close to/away from competition
especially large-scale retailers – may
have to rely
 on nearby customers
 Cost of location
 Planning rules
Mrs Chang owns a general
wholesale business. The business is
facing competition from
manufacturers selling directly to
retailers.
Explain why many manufacturers
now sell directly to retailers.
 They wish to sell in large quantities
 They are able to trade at favourable prices (large trade
discount)
 They wish to save the costs of a middleman
 They are trading in perishables/technical/large products
 Many retailers are large-scale and wish to trade in large
quantities and have the storage for them
 Many manufacturers deal in branded goods which are
standardised as regards size and quality
 Many manufacturers advertise nationwide and so create
the market for their products
 Improvements in transport and communications have
made it easier and faster for manufacturers to deliver goods
 Selling low priced goods/selling goods which cannot go
through chain of production
State and explain two actions Mrs
Chang might take to survive this
competition.
 Develop into a specialist wholesaler concentrating on one
particular commodity
 Try to reduce costs e.g. labour
 Form a voluntary chain with small-scale retailers
 Open the warehouse to card carrying customers from the general
public
 Encourage small-scale retailers as customers - discounts, special
offers,
 frequent delivery services, more credit (2 max)
 Concentrate on seasonal products/perishables e.g. fruit, fish
 Advertising campaign
 Change business e.g. mail order, sell on-line
 Improve quality of goods
 point-of-sale advertising, advertising at the till
 why traders may sell at a loss e.g. loss leaders, to
dispose of old stock, to maintain market share
 was not always accurate with many candidates
 saying road/sea/ship rather than identifying the actual
means of transport i.e. truck/lorry and container ship.
 Most candidates recognised that an overdraft was not a
suitable way to increase working capital but very few
identified it as an added liability so that it would add
to the total of current liabilities.
Explain the advantages of Internet
banking to:
(i) the customer [4]
(ii) the bank.
 some candidates confused Internet banking with
shopping on line or wrote about ATMs in this section.
Some candidates also thought that customers could
physically withdraw or deposit money using the
Internet.
 confusing an ATM with a night safe. Few mentioned
that ATMs are often found away from bank premises,
at garages or in shops.
 Most mentioned the advantages of 24-hour banking.
 How computerisation benefits Paradise Supermarket,s
customers?
 saving time, less errors and less waiting at the till
 confusion about the Balance of Trade and the Balance
of Payments
 confused visibles
 (goods) and invisibles (services)
 the public limited company (in the private sector) with
public corporations which are funded and
 controlled by government.
 weaker candidates confused investment with
borrowing but many appreciated that a loan has to be
repaid and that interest is charged on it. Trade credit is
not generally understood so many candidates chose
the overdraft. It might be suitable as it provides money
immediately so bills can be paid and discounts
obtained. Trade credit, on the other hand, would
enable Jabatan Ltd to pay monthly, use the materials
before paying for them and so earn money with which
to pay the bills. Trade credit would also help cash flow
and enable Jabatan Ltd to build up a good relationship
with its supplier.
 Which product would be stored long-term in a
warehouse?
A iron ore
B soap
C timber
D tomatoes
 Option B was the correct answer, but many chose
Option A. Although
 iron-ore is likely to be stored long-term, it is unlikely
to be stored inside in a warehouse.
the function of a customs
authority.
 collection duties, enforcing quotas, stopping
smuggling, supervising bonded warehouses,
checking goods and documents and collecting
statistics. keeping statistical records of imports
and exports – to help the government calculate
its balance of trade and balance of payments and
assess its trade policies and calculate its tax
 revenue from import duties
 collecting revenue from import duties –
may be ad valorem or specific controlling
bonded
 warehouses – to enforce the payment of
duties. Bonded warehouses provide storage
for
 dutiable goods on which duty is unpaid
 supervising the movement of goods across
the country’s borders – preventing
smuggling,
 inspecting cargoes, inspecting documents,
enforcing embargoes
 enforcing quotas - physical limits on amount of
goods allowed to be imported to prevent
 dumping
 may cover immigration – control of people
entering the country
 may cover quarantine regulations – for animals
 enforcing public health regulations – preventing
certain goods being imported e.g. food
port
authority
 Marks were awarded for such points as providing
warehousing, providing office space, providing
security, providing unloading facilities particularly for
containers and maintaining waterways and harbours.
the work of an airport authority
 Provides warehousing including bonded warehouses
 Provides facilities for customs authorities
 Provides space for air freight companies to run their businesses
 Provides runways and taxiing areas
 Provides fire fighting facilities
 Provides loading and unloading equipment
 Provides facilities for the repair of aircraft
 Provides refuelling facilities
 Provides navigational aids e.g. control tower
 Provides facilities for handling containers
 Provides facilities for transport out of the airport e.g. roads, rail link
 Provides security
 Provides car parking
insurance documents
 Explain why customers prefer to pay by credit card rather
than by other means of payment.
 Answers such as it is safer to carry cash and it is easier
gained no marks. Answers that gained marks Included
 can obtain goods immediately but postpone payment
 do not have to send cash/cheques through the post
 credit card company offers some protection against faulty
goods
 may be easier to obtain refunds if they return goods
 can give credit card details at the time of ordering
 credit card company provides insurance
hour banking. Is she able to do
this? Give reasons for your
answer.
 Some
 candidates thought that Fatima was a member of the bank staff
and that she might be expected to work for
 24 hours a day. Some answers were sketchy revealing that the
concept of 24-hour banking using electronic
 technology as opposed to manual labour using bank premises is
still not fully understood by all candidates.
 The word ‘undertake’ in the question may have confused some
candidates. Many candidates wrote about
 night safe and this was given no credit. The better candidates
wrote in some detail about ATMs and their
 functions, Internet banking and sometimes telebanking. Other
candidates mentioned the use of credit and
 debit cards
 State two disadvantages to Frank and Polly of
accepting payment by credit card.
 have to pay commission to the credit card company
 delays in receiving payment for goods
 bad debts because of credit card fraud
 extra clerical work
 have to have bank account
 candidates choosing the risks of fire or theft probably
found it more difficult to describe the risk than those
 choosing employer’s liability, consequential loss or
public liability.
 concepts of forwarding agents and freeports were not
always understood
 trading blocs, in Part (b), as groups of countries
who have made trade agreements with
 common tariff barriers. They gave worthwhile
examples and also showed the advantages to a country
of
 belonging to a trading bloc such as more opportunities
for trade, easier movement of goods across borders
 and better relations with member countries.
 middlemen in wholesale trade was not Understood
 the lowest mark-up on goods is likely to be on the
cheapest product
 the purpose of bank giro was not understood. It is used
for payments to many people such as staff using one
cheque. It is not used for monthly bills which are more
likely to be paid by direct debit nor for withdrawing
money from a bank.
 Containers cannot be used for all types of goods. They
are not suitable for animals, for ca
 The purpose of the consignment note was not known
in Question 26. A consignment note is used when
goods are carried usually by road in hired
transport. A consignment note is not used when
transporting goods by ship. A bill of lading would be
used.rs and for goods in bulk such as oil.
 The main feature of comprehensive motor vehicle
insurance was not understood in Question 29. It
covers
 both the owner and the owner’s property as well as
third parties1
 advantages of selling directly to large-scale retailers –
cutting costs, reducing damage, charging
 higher prices or giving greater trade discou
 confused the multiple shop with a shopping centre
 the advantages to
 customers of using credit cards. Answers that gained
credit were increased turnover, keeping up
 with competition, less cash on the premises and also
the arguments for not offering credit cards
 such as payment of commission, delay in payment,
danger of credit card fraud and increased
 paperwork.
 the importance of containerisation
 how containers protect goods, how quicker
turnaround times are achieved,
 how goods can be trans-shipped and how goods are
packed at factories and not unpacked until
 they reach their destination
 means of payment used on home trade. There
 was plenty of choice but candidates often failed to gain
full marks. Such means of payment as
 cheques, credit transfer, standing orders, direct debits,
bank drafts, credit cards and debit cards
 were accepted. The service was mentioned but there
was often little description. Some
 candidates also
 means of payment provided by commercial banks to
help trade in other countries.
 bills of exchange, letters of credit, bank drafts and
electronic transfer (cable) transfer of funds and credit
card
the developments in banking
 use of credit cards – postponed payment, payment settled monthly, can be paid using the
 Internet or by telephone
 use of standing orders and more particularly direct debit – (count as two services)
 preferred by creditors as they request payment and can avoid bad
 debts, enables them to computerise their billing and collect money
 electronically
 use of debit cards – immediate payment at point of sale, trader assured of payment, no
 cash or cheques involved
 Internet banking – can transfer funds between accounts, pay bills without using cash,
 available 24 hours a day
 telephone banking – can transfer funds between accounts, pay bills without using cash,
pay
 credit card bills
 use of bank giro – to pay wages, safer than paying by cheque or with cash
 use of ATM – for other services besides cash
 A charter flight is a specially hired
flight to carry
freight or passengers at a particular
time or for a particular journey.
An air waybill is a document used to
accompany goods sent by air. It gives
all the information about the
consignment, acts as an advice note
and as evidence of a contract of
carriage.
 The work of the agent was known by some candidates
but many wrote that the agent bought products and
then sold them for profit rather than acting as a
middleman bringing buyers and sellers together.
 Many candidates did not understand the concept
of the regional distribution Centre. Multiples,
 supermarkets, hypermarkets and chains of department
stores have regional distribution Centres.
 They need them to enable goods to be bought in bulk,
then stored and distributed to their branches
 when needed, often at short notice. They perform the
services of a wholesaler and so save the
 retailer’s costs.
 when wholesalers were not required – when large-
scale retailers buy in bulk direct from
 manufacturers, when goods are fragile, technical, very
expensive or perishable and when
 producers set up their own retail outlets
 three ways in which a sole trader is different from any
other form of business organisation.
 one owner
 quick decision making
 flexibility
 profits to the one owner
 no legal formalities when setting up
 losses borne by the one owner
 provided by owner
 answers concentrated on imports but did not always
explain why some countries need to export to other
countries.
 Free trade – trade without restrictions
 examples of collateral such as deeds of property
 Some candidates confused seasonal demand i.e.
demand at certain times of the year for seasonal
 supply. Some general points were credited. To gain full
marks examples needed to be given such
 as Christmas cards, summer clothing, winter blankets
and foods for festivals. Candidates often
 revealed their error by mentioned cold storage of fruits
and vegetables to meet customer demand.
 that posters and leaflets were more suitable for a small
shop with limited resources and a smal
 fire and theft but often did not
 mention reasons for insurance such as protection
against financial risks and compensationl number of
customers.
 wholesalers were not required – when large-scale
retailers buy in bulk direct from
 manufacturers, when goods are fragile, technical, very
expensive or perishable and when
 producers set up their own retail outlets.
 Methods of payment provided by bank to traders of
international trade
 electronic transfer of funds, documentary credits and
bank drafts.. Bills of exchange
 General points common to many types of retailers
such as self service,branded goods and acceptance of
credit cards were not given marks.
 a shopping centre; many shops under
one roof and each shop is owned by
different individuals.
 Central Business District (CBD); town
centres
 Some candidates seemed to think that
insurance would protect someone
from having an accident. It offers
financial protection not actual
protection.
Explain why Miss Solomon should
obtain quotations from several
insurance companies.
 So that she can see what cover each insurance company
offers, what conditions are
 imposed and what premiums are charged.
 So that she can compare what is offered and make a more
informed choice/find the best
 cover.
 As different insurance companies offer different cover for
the same risk and often the cost of
 cover varies.
 Different insurance companies may apply different
conditions e.g. no claims bonus.
Miss Solomon will complete a
proposal form provided by the
insurance company she decides
to use. Why is this necessary?
 Because it is the application for insurance cover
 She needs to give details of what she wishes to insure, act in
utmost good faith, tell the truth
 And any other relevant facts which may affect the
insurance premium
 The insurance company needs the proposal to assess the
risk
 To decide whether or not to accept the risk
 And to fix the premium to be charged
 Candidates should have mentioned that
 the proposal form is the application for insurance.
Details of what is to be insured are given and,
 on the basis of that, the risk is assessed and the
premium fixed. Comment on utmost good faith was
also given credit. Many candidates mistook the
proposal form for either the insurance policy
 or a claim form for compensation.
Explain two reasons why an
insurance company may refuse to
provide Miss Solomon with a
motor insurance policy.
 She has been refused by another company.
 She has not declared some relevant fact e.g. that
she has recently been involved in an accident
(utmost good faith).
 She has had convictions for dangerous
driving/drink driving and is considered a bad risk.
 She is outside the age ranges of the insurance
policies offered by the company e.g. too young,
too old.
 She may have a poor credit record and so may be
unable to pay the premium.
 Contribution – already insured with another
company
 No insurable interest – not her car
 Health reasons
 Not able to drive
 May be very high risk e.g. racing driver, so cover
not offered by general insurance companies –
need for specialist insurance.
Miss Solomon could use an insurance broker or
she could contact several insurance
companies to arrange motor insurance. Discuss
both options. Give reasons for your
answer.
 Some good discussions of both the insurance broker and insurance companies were seen
but
 many candidates concentrated their answer on one aspect of the question, usually the
insurance
 broker. Some candidates thought mistakenly that it was a good idea to insure with several
 companies so that you could make a profit from claiming from all of them. This is not
allowed
 under the principle of contribution. Although it is usual for insurance brokers to be paid
commission
 by the insurance companies, comment on payment of commission by Miss Solomon was
allowed
 as it has been found that this may happen.
companies are becoming
increasingly important in the global
economy.
 Many candidates answered this question in relation to
a developing country instead of the global economy.
As many of the expected answers could relate to either,
such as employment, improved standard of living,
improved infrastructure, increased economic growth
and payment of taxes, credit was given for this.
 The emphasis in this question was on suitable
products for sending by air transport, not the
advantages of sending goods by air. Candidates should
have concentrated on reasoning associated with
perishable goods, fragile goods, emergency aid,
lightweight goods and valuable goods and why these
are sent by air.
 improvements made to air
 transport such as larger aircraft, more routes, more
airports, the development of cargo planes and
 air freight companies, better facilities at airports for
handling freight and the growth of the container
 trade in air transport.
How would a cold storage
warehouse assist international
trade?
 Explanation of cold storage warehouses (1 mark)
 Storage, protection, display, breaking bulk, constant supply
(2 max)
 Enables goods to be preserved for a long time awaiting
demand or awaiting transport
 Enables markets to be extended for perishable goods such
as flowers, fruit and vegetables
 So that the export of these commodities has become a very
important part of the trade of
 some countries e.g. New Zealand lamb, South American
roses, Maldivian fish
 Instalments are not paid when leasing. Charges are
made by the leasing company.
 Good answers mentioned computer systems being
likely to become dated and needing
 replacement, the leasing agreement including
servicing and repairs and the company not having to
make a large initial cash outlay.
 the term re-export trade may have
 deterred some candidates. Answers to explain its
importance included providing employment,
 earning foreign currency, preparing goods for sale and
overcoming difficulties of trade with trading
 blocs.
 Some candidates could identify the functions of
forwarding agents as specialists in arranging
 transport for goods. Others thought, wrongly, that
they brought buyers and sellers together
 for trading purposes.
 identify and explain two difficulties that exporters may
have when sending
 goods to another country. Language, currencies and
distances were often considered.
Why do many port authorities
provide container terminals?
 This question proved to be quite difficult. Many candidates wrote about the advantages
of using
 containers rather than container terminals. Container terminals are provided because
much of
 global trade is shipped in containers, shipping companies want quick turnaround of
ships, the cost
 of dock labour is saved and they provide a secure environment for stacking containers
awaiting
 transport.
 Definition of container terminal = 1 mark
 Because much of the world’s traded goods is shipped in containers.
 Which require specialised handling at docks.
 Because the port wishes to attract container ships to use its docks.
 Because shipping companies want a quick turnaround time for their ships.
 Because facilities need to be available for containers to be stacked in secure conditions
 ready for loading on to ships.
 Saves costs of dock labour.
 Provides security.
 confused ports with airports. Most candidates had no
difficulty presenting a
 list of services provided by ports such as deep water
access, warehousing, office buildings, repair
 facilities, refuelling, provisioning, wharves and jetties,
pilots, lighthouses and tugs as well as
 security.
When differences are required, it is
important
that clear differences are shown. It
is not enough to say, for example,
that currencies are the same
for home trade and then to say
that currencies are different for
foreign trade. It is important to say
how they are different.
 confusion with Balance of Trade. Visible trade is trade
in goods. Examples were
 awarded marks.
how the country might increase its
export trade,
 encourage firms to be as efficient as possible so that they
can compete on price
 • government offers awards and incentives to exporters e.g.
subsidies
 • government makes trade agreements with other countries
 • government joins a trading bloc for the benefits of free
trade e.g. EU
 • reduce export duties
 • encourage more entrepot trade
 • encourage manufacturing for export.
 offering credit increased sales, many assumed that
 retailers earn interest on offering credit. This is not so.
Any interest paid by a customer would go
 to the organisation offering the credit facilities e.g. a
finance house or a bank. Good candidates
 were able to appreciate that the retailer would have
faster turnover of stock and competitive
 advantage.
 hypermarkets are located in outside city centres.
Work of forwarding agents
 arrange the form of transport
 • arrange the documentation
 • arrange storage if necessary
 • organise the container
 • organise customs clearance
 • organise insurance
 • deliver goods to destination
 • load/unload consignment
 • prepare consignment.
You wish to use an ATM at the bank
where you have an account. What
will you
need?
 Pin number, plastic card/cash card/credit card/debit
card.
 Candidates who stated a bank card, plastic card or
ATM card gained no marks. Pin number was correct,
password was not.
 Candidates often failed to make a clear distinction
between a bank statement issued by a bank and
 a statement of account issued by a trader to a buyer
purchasing on credit.
services provided by Internet or
telephone
banking. Many candidates wrote
about shopping online and others
failed to describe the service
listed.
 Commercial banks offer a range of automated services. Many
people use the Internet to
 conduct their bank business. Some people use telephone
banking. Most people use bank
 machines for a variety of purposes but mainly to obtain cash. It is
likely that some bank
 branches will close in some towns or city centres; especially
where there is duplication.
 Kiosks of banking machines such as ATMs may be more
available in more locations in city
 centres but many people will still need to visit their banks. They
may not go so frequently but
 they may need to talk to someone about a loan, need to deposit
money in a night safe, want
 to obtain information or just to pay in or obtain cash. It is,
therefore, unlikely that there will be
 total closure of bank branches.