Calculator Allowed: Yes



Transcription of this question: 3.Khumalo Pottery (KP)Lungile Khumalo owns a small company called Khumalo Pottery (KP) in Johannesburg,South Africa. KP manufactures plates and bowls that are sold to small shops. KP has a uniqueselling point (USP) based upon traditional African designs and patterns decorating the potteryKP does not pay its workers high wages and has never made anyone redundant, even during difficulteconomic times. Lungile always repeated to his workers that beauty was more important than quantity.Workers at KP could take time to produce beautiful pottery. They also developed great pride in thecompany and in their work.Across the Atlantic, in the United States (US), pottery with African designs was becomingincreasingly popular. As a result, several large American pottery manufacturers, operating on a verylarge scale, began to mass produce pottery with African-looking patterns. Thanks to their economiesOf scale, these American manufacturers sold their products at a very low price.In 2013, one large American company opened a highly automated factory in Johannesburg.The aim was to produce and sell African-looking pottery to large retailers across sub-Saharan Africa.If successful, the American company would employ up to 150 South Africans. These jobs wouldnot require much creativity: the pottery would not be hand-made, but the company would Offer goodwages with fringe payments (benefits).The American company used penetration pricing in South Africa, and large retailers eagerly stockedtheir shelves with the pottery KP’s sales started to decline almost immediately, as the small shopsselling KP’s pottery were losing customers to the large retailers with lower prices.(a)(b)(c)(d)(e)Identify one advantage and one disadvantage Of mass production for theAmerican company.Explain one difficulty that the American company may face when entering theSouth African market.Explain two possible purposes Of penetration pricing.Examine the roles Of intrinsic motivation and extrinsic motivation Of the workersat KP and at the factory opened by the American company.Evaluate the impact on South Africa Of the American company opening a factoryin J Ohannesburg.[2 marks][2 marks][4 marks][5 marks][7 marks]

Leave a Reply