Business Studies A Level example answers Edexcel

‭ dexcel‬‭2021‬‭Business‬‭Paper‬‭1‬
E
‭Question‬‭2c)‬‭Section‬‭2‬
‭10‬‭Marker‬

(‭ c)‬‭Using‬‭the‬‭data‬‭from‬‭Extract‬‭F,‬‭assess‬‭the‬‭impact‬‭of‬‭the‬‭exchange‬‭rate‬
‭movements‬‭between‬‭January‬‭2019‬‭and‬‭April‬‭2019‬‭on‬‭the‬‭total‬‭costs‬‭of‬‭a‬
‭business,‬‭such‬‭as‬‭Tropicana,‬‭which‬‭imports‬‭to‬‭the‬‭USA‬‭from‬‭Brazil.‬‭(10)‬

‭ n‬‭exchange‬‭rate‬‭is‬‭the‬‭value‬‭of‬‭one‬‭currency‬‭in‬‭terms‬‭of‬‭another,‬‭this‬‭is‬
A
‭constantly‬‭subject‬‭to‬‭change‬‭due‬‭to‬‭a‬‭country’s‬‭internal‬‭factors,‬‭external‬
‭factors‬‭and‬‭bilateral‬‭relations‬‭with‬‭other‬‭countries.‬

‭ etween‬‭Jan‬‭2019‬‭and‬‭April‬‭2019,‬‭the‬‭Brazilian‬‭Real‬‭has‬‭appreciated‬‭against‬
B
‭the‬‭United‬‭States‬‭Dollar‬‭(USD).‬‭This‬‭will‬‭mean‬‭that‬‭all‬‭United‬‭States‬‭based‬
‭MNCs‬‭importing‬‭goods‬‭from‬‭Brazil‬‭will‬‭be‬‭met‬‭with‬‭higher‬‭import‬‭costs.‬
‭The‬‭predominant‬‭financial‬‭impacts‬‭that‬‭a‬‭MNC‬‭like‬‭Tropicana‬‭will‬‭face‬‭from‬
‭exchange‬‭rate‬‭fluctuations‬‭is‬‭transport,‬‭manufacturing‬‭and‬‭sourcing‬‭costs.‬

‭ owever,‬‭as‬‭Tropicana‬‭is‬‭a‬‭successful‬‭highly‬‭profitable‬‭business‬‭operating‬
H
‭globally,‬‭this‬‭small‬‭fluctuation‬‭(from‬‭3.8R‬‭to‬‭4R)‬‭will‬‭have‬‭little‬‭to‬‭no‬‭impact‬‭on‬
‭the‬‭long‬‭term‬‭functionality‬‭or‬‭longevity‬‭of‬‭the‬‭business.‬‭Also,‬‭extract‬‭F‬‭only‬
‭allows‬‭us‬‭to‬‭make‬‭conclusions‬‭on‬‭impact‬‭on‬‭import‬‭and‬‭export‬‭costs,‬‭but‬‭there‬
‭are‬‭still‬‭other‬‭factors‬‭that‬‭can‬‭increase‬‭costs‬‭such‬‭as‬‭staff‬‭and‬‭goods‬‭sourcing.‬
‭Moreover,‬‭Tropicana‬‭is‬‭likely‬‭to‬‭source‬‭its‬‭oranges‬‭from‬‭an‬‭array‬‭of‬‭nations‬
‭rather‬‭than‬‭just‬‭relying‬‭on‬‭Brazil.‬‭So,‬‭even‬‭if‬‭there‬‭are‬‭significant‬‭impacts‬‭from‬
‭exchange‬‭rate‬‭fluctuations,‬‭they‬‭can‬‭marginally‬‭increase‬‭their‬‭exports‬‭from‬
‭another‬‭country,‬‭to‬‭reduce‬‭economic‬‭stress‬‭on‬‭Brazil.‬
‭Still,‬‭it‬‭can‬‭be‬‭argued‬‭that‬‭this‬‭change‬‭between‬‭USB‬‭and‬‭BR‬‭is‬‭too‬‭little‬‭to‬
‭have‬‭large‬‭impacts‬‭on‬‭Tropicana.‬

I‭n‬‭conclusion,‬‭I‬‭believe‬‭that‬‭in‬‭the‬‭future,‬‭the‬‭United‬‭States‬‭and‬‭Brazilian‬
‭government‬‭can‬‭engage‬‭in‬‭bilateral‬‭talks‬‭to‬‭carve‬‭an‬‭import‬‭corridor‬‭for‬
‭oranges,‬‭given‬‭that‬‭50%‬‭of‬‭the‬‭US’s‬‭oranges‬‭originate‬‭from‬‭Brazil.‬

‭MARKED‬‭9/10‬