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    University of Cambridge International Examinations General Certificate of Education Ordinary Level

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    mstudy123456
    'Fair trade' products are paid a higher price than they would get selling at the normal international price. Local people say that the increasing number of farms selling their fruit and vegetables to foreign companies is causing food prices to rise in local markets. The Government has told the farmers that the exchange rate may increase in the future.

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    University of Cambridge International Examinations General Certificate of Education Ordinary Level

    Uploaded by

    mstudy123456
    22 views4 pages
    'Fair trade' products are paid a higher price than they would get selling at the normal international price. Local people say that the increasing number of farms selling their fruit and vegetables to foreign companies is causing food prices to rise in local markets. The Government has told the farmers that the exchange rate may increase in the future.

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    7115_w09_in_2

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    'Fair trade' products are paid a higher price than they would get selling at the normal international price. Local people say that the increasing number of farms selling their fruit and vegetables to foreign companies is causing food prices to rise in local markets. The Government has told the farmers that the exchange rate may increase in the future.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    22 views4 pages

    University of Cambridge International Examinations General Certificate of Education Ordinary Level

    Uploaded by

    mstudy123456
    'Fair trade' products are paid a higher price than they would get selling at the normal international price. Local people say that the increasing number of farms selling their fruit and vegetables to foreign companies is causing food prices to rise in local markets. The Government has told the farmers that the exchange rate may increase in the future.

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    UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS General Certificate of Education Ordinary Level

    BUSINESS STUDIES Paper 2 INSERT

    7115/02 October/November 2009 1 hour 45 minutes

    READ THESE INSTRUCTIONS FIRST This insert contains the case study material.

    This document consists of 4 printed pages.


    IB09 11_7115_02_INS/FP UCLES 2009

    [Turn over

    2 Dilips Vegetable Farm Dilip owns a large farm that he inherited from his father in Country A. He is a sole trader. Dilip grows vegetables and these are all sold at weekly markets at nearby towns. Dilip doesnt have any farm machinery. He employs 5 farm workers all year round to help grow the vegetables. Dilip employs an additional 20 workers to help pick the crops by hand each year. Dilips leadership or management style is autocratic, the same as his father. Wages are low as there is a lot of unemployment in the local area and many farmers pay below the legal minimum wage. Many other farmers in country A have signed contracts to supply vegetables to a large supermarket chain located in Europe. The buyer from this supermarket wants different types of vegetables to those currently being grown by Dilip. The quality of the vegetables has to be high or the buyer from the supermarket wont buy the vegetables. Dilip is also considering changing to selling to the European supermarket chain. He will need to grow different vegetables. He will also need to buy machinery costing $10 000 to package the vegetables to be sent to the port for shipment to the European market. Appendix 1 Daily News October 2009

    Local people say that the increasing number of farms selling their fruit and vegetables to foreign companies is causing food prices to rise in local markets. Consumer pressure groups say it is due to reduced local supplies. Government officials argue that the low exchange rate is the reason why so many farmers are selling their fruit and vegetables abroad. The officials have told the farmers that the exchange rate may increase (an appreciation) in the future. There is an increased demand for fair trade products throughout the world. The farmers who grow these crops are paid a higher price than they would get selling at the normal international price. These fair trade prices are about 10% more than the usual selling price. In return, the farmer must ensure that no children are working on the farms and that the legal minimum wage is paid to employees. The farms need to be inspected regularly to be allowed to say they are selling fair trade products.

    UCLES 2009

    7115/02/O/N/09

    Appendix 2 Figure 1: Break even chart for Dilips Vegetable Farm each year - vegetables sold at local markets

    $ 5000

    4000 Total Revenue 3000 2250 2000 Fixed Cost Total Cost

    1000

    0 4000 Variable cost = $0.125 / kg 8000 9000 kg of vegetables

    Figure 2: Forecast break even chart for Dilips Vegetable Farm each year - vegetables sold to the European supermarket $ 6750 Total Revenue

    Total Cost

    3000 2000

    Fixed Cost

    0 4000 Variable cost = $0.25 / kg Note: 9000 kg of vegetables are produced every year.
    UCLES 2009 7115/02/O/N/09

    9000

    kg of vegetables

    [Turn over

    4 Appendix 3 MEMORANDUM To: From: Date: Re: Dilip Sam (Farm Manager) 2 October 2009 Houses for rent

    We have discussed several different ways to increase the farms profit. It has been agreed to convert some of the old farm buildings to houses for tourists to rent. There are areas of natural beauty near to the farm where people can walk and watch wild animals. I have carried out some primary research into the demand for holiday houses using interviews with potential customers. This has shown that many people from the capital city would like to come to the countryside for 34 day holiday breaks. The market segment we should aim at is high income groups who want luxury holiday houses. We will need to employ well trained workers who can provide a quality service for the guests staying at the houses. I think this will be an excellent way of increasing the farms profitability. We need a large investment of $50 000 to convert the old farm buildings to 5 houses. We also need to employ 10 more workers who are trained to cook and serve the guests staying at the houses.

    Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.

    UCLES 2009

    7115/02/O/N/09

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