Do you think that investing in new technology is the best way to improve profitability at PJK? Justify your answer
Knowledge [1] – award 1 mark for identification of relevant issue(s)
Positive or negative points allowed or alternative ways to improve profitability [max 1] Application [1] – award 1 mark if relevant reference made to this business
Analysis [2] – award up to 2 marks for relevant development of point(s)
Evaluation [2] – justified decision made as to whether new technology is the best way to improve profitability. Candidate’s final decision can be either for or against the statement Relevant points might include:
• Reduce labour costs [k] so lower costs [an]
• Less wastages or errors [k] so have to order less parts [app]
• Additional costs e.g. redundancy or training costs [k] initially reduce profitability [an]
• Impact on employee morale [k]
• Better quality / accuracy [k] for this luxury product [app] so customers might pay higher price [an] leading to bigger gap between costs and revenue [an]
• High initial costs of equipment [k]
• Speed up production [k] so leading to lower average costs [an]
• Might take away their USP [k] of being handmade [app] so reduce demand [an]
• Or Introduce more efficient working practices e.g. redesign factory layout [k]
• Or use cheaper materials [k] so lower variable costs [an] but could mean lower quality of watches [app]
• Or sell more through increased advertising [k] but could be expensive / may not work [an]
Application marks may be awarded for appropriate use of the following: luxury product / watches, skilled workers, quality assurance, handmade, production process, materials / parts