With reference to Utopia, describe two suitable sources of finance for the 3D printers (line 60).

Explain the role of ethics in John’s businesses.

Relative to the size of Utopia, the cost of the printers is not large.

Sources could include:
• retained profits – but are these sufficient after the problems of 2016?
• sale of assets – but are there any? The villas are only just being rebuilt and the café is growing
• reductions in working capital – impossible to say but it does seem an efficient organization
• loans – although John does not want external influences, he is thinking that he will have to look outside. Loans would dilute his control the least. Debentures are unrealistic. Debt factoring
• joint ventures, strategic alliances, franchising would seem rather unsuitable for the 3D printing as it is a small project. Would anyone be interested?
• Shares: Unlikely to be suitable as John owns 100% of shares and does not want external influences
• Hire purchase/leasing – would this be available from 3D printer manufacturers?
• Can also consider grants

Shares not acceptable as John owns 100% of shares. Remember, Utopia is a private limited company

Accept any other relevant point.

Mark as 2+2.

Award [1] for each source identified, and [1] for the development of each of these sources in the context of the project, up to a maximum of [2].

Ethical objectives are difficult to define and vary from culture to culture; however, the following might be regarded as ethical/socially responsible:
• using local craftsmen
• focussing on local culture
• using local ingredients
• using ethically produced fair trade coffee and paying above market prices.

Importance relates to:
• maintaining the goodwill of the community
• maintaining the goodwill of suppliers, employees
• maintaining the brand image (perhaps the most important).
• Aiming to improve long term success and profitability of the business

Accept any other relevant analysis.

Marks should be allocated according to the Paper 1 markbands for May 2016 forward, section A.

Award a maximum of [3] for a theoretical answer.

Award a maximum of [5] if the analysis is mainly descriptive but in context.

For full marks the explanation needs to be developed and in context.

Candidates general knew two sources of finance but many had difficulty contextualising their answers.

The subject of ethics is generally well understood and most candidates were able to extract examples of ethical behaviour from the case material. However, many candidates saw this as an opportunity to analyse/evaluate the ethical behaviour of John’s businesses rather than answer the question which was about the role of ethics in the business. The best answers related ethics to the ideas of creating and maintaining brand image, customer loyalty, the goodwill of the community and good relationships with employees.