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GCE JUN 2006 : (A2 12) The Global Market

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ADVANCED General Certificate of Education 2006 GCE Applied Business assessing The Global Market A6B61 Assessment Unit A2 12 [A6B61] TUESDAY 20 JUNE, AFTERNOON TIME 1 hour 30 minutes. INSTRUCTIONS TO CANDIDATES Write your Centre Number and Candidate Number on the Answer Booklet provided. Answer all seven questions. INFORMATION FOR CANDIDATES The total mark for this paper is 80. Quality of written communication will be assessed in all questions. Figures in brackets printed down the right-hand side of pages indicate the marks awarded to each question or part question. ADVICE TO CANDIDATES You are advised to take account of the marks for each part question in allocating the available examination time. A6B61S6 2364 Case Study (Unseen) Study the information below and answer ALL the questions that follow. Ryanair orders 140 more Boeing 737-800s. Order valued at over $4 billion 2500 new jobs to be created in Ryanair (Press release dated 24 February 2005). Ryanair, Europe s lowest cost airline this morning placed an order for a further 140 Boeing 737-800 series aircraft, direct from the aircraft manufacturer in the United States of America (USA). This agreement brings the total number of aircraft ordered to 225, with the option to buy a further 193 aircraft. The total value of the aircraft ordered is over $4 billion (which translates to approximately 3.3bn). By the end of 2005, Ryanair will have taken delivery of about 100 new Boeing 737-800s. This new order is for aircraft that are due for delivery primarily between 2008 and 2012. This will allow Ryanair to maintain its planned business growth during the latter years of this decade. When all these aircraft have been delivered, Ryanair (which in the financial year to March 2006 expected to carry 34m passengers), anticipates that it will carry in excess of 70m passengers per annum, making it Europe s largest airline. The new aircraft will result in the creation of more than 2500 new highly paid jobs in Ryanair principally for pilots, cabin crew and engineering staff. Ryanair abides by the Health and Safety at Work Act 1974, for all employees. Half of these jobs will be generated at the airline s existing 12 European bases (airports), some of which are remote from populated centres, with the remainder at 10 or more new airports, which will be developed by Ryanair over the next seven years. The City of Derry airport is the only airport in Northern Ireland which is used by Ryanair, flying passengers to new destinations such as East Midlands, Liverpool and London Stansted. Indeed, the Ryanair website indicates that in some cases, the tax on airfares is greater than the airfare itself, such is the success of the business internationally. The agreement with Boeing enables the airline to achieve a 2% reduction in fuel consumption in the immediate future, thus making the aircraft more economical to run. This means that Ryanair will now enjoy the lowest per seat operating cost in Europe. This will allow Ryanair to widen its lowest cost/lowest fare leadership position compared to rival European airlines, such as Easyjet and other national carriers. This development will enable Ryanair to offer even lower fares and underpin the growth strategy in terms of passenger numbers 34m in 2005/06 to over 70m passengers in 2011/12. Since its introduction into the Ryanair fleet in March 1999, this type of aircraft has transformed reliability, making Ryanair the No. 1 on time major airline in Europe. It is a well known fact in the airline industry that aircraft can be used to earn more profits when flying in the sky, than sitting on the tarmac in a local airport. A6B61S6 2364 2 [Turn over Ryanair is presently Europe s largest low fares airline and thanks to a successful partnership with Boeing, intends to become Europe s largest airline (measured in passenger numbers). The airline will continue to operate from new low cost airports throughout Europe, thus saving money on operating and other costs at airports. In addition, the airline is a ticketless airline, meaning that reservations are done using e-commerce facilities (through their website, reservations can be made for hotel rooms, car hire and holidays). However, some countries could impose obstacles which impede the business operations of airlines such as Ryanair, for example, restrictions on size of aircraft, landing and take-off times and noise pollution. Source: adapted from www.ryanair.com 1 Explain what is meant by the term Globalisation and use an example from the case study. [4] 2 Explain two examples of regulations that will potentially impact on the airline when trading globally. [6] 3 Prepare a SWOT analysis for Ryanair in the context of global competition. 4 Evaluate the suitability of e-commerce activities for a business such as Ryanair. 5 Discuss the impact of Ryanair trading globally on the following: [8] [12] (a) Consumers (b) Northern Ireland economy [12] 6 Discuss six reasons why Ryanair would conduct business on a global scale. [18] 7 Evaluate five factors that Ryanair would need to consider when trading globally. [20] A6B61S6 2364 3 [Turn over Permission to reproduce all copyright material has been applied for. In some cases, efforts to contact copyright holders may have been unsuccessful and CCEA will be happy to rectify any omissions of acknowledgement in future if notified. S 6B61S6 302507(142) A 7/05 5002364 4 [Turn over

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Additional Info : Gce Applied Business June 2006 Assessment Unit A2 12 - The Global Market
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