Marked exam answers with assessor feedback

Question 5: The case study information states that GFATM is an international organisation which
supports local production in several countries.
Analyse FOUR legislative, regulatory or organisational requirements that GFATM will need to take into
account when sourcing from international suppliers (20 marks)
3 HMRC
Her Majesty’s Customs and Excise have duties to ensure
that goods entering or leaving the country have paid the
taxes and duties on them as appropriate. They are also
required to produce statistical data and seize any illegal or
banned products. Taxes are enforced in two ways; Ad
valorum- by value or; by quantity- weight or measurement
i.e. container.
4 Payment
Payment terms would be complicated for GFATM as there are
multiple currencies as they trade globally. They would want to
minimise the number of currencies that they trade in whilst
ensuring that they get the best value within the exchange
rate. Payment could be done in a number of ways:
Normal trading- pay for goods when they are received, this
would require trust and only undertaken with known
suppliers.
PIA- Payment in advance. Goods are paid for by the buyer in
advance usually for strategic relationships.
1/5 marks
This part of the answer does not address the
question very well. It is a UK centric and
parochial response as HMRC would not need to
be taken into account by GFATM. However 1
mark awarded for the mention of taxes and
duties which would be relevant but in a more
international context.
4/5 marks
A good answer demonstrating good knowledge
of payment mechanisms, but limited application
to the case study. The analysis of payment
methods could include the advantage and
disadvantages of each approach. Development
of this answer to include these would have
resulted in full marks being justified.
Total mark for Q5 = 14/20, a good credit pass
standard.
Letter of credit- Once the contract has been signed, the order
is placed. The buyer notifies its bank of the arrangement that
then they contact a bank in suppliers area. Once all
documents have been agreed and goods are received and
checked, payment is passed from the buyer’s bank to that of
the supplier.
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