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Ikea and Its Mode of Entry

In: Business and Management

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Assessment Support Pack
SCQF level 8
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International Purchasing and Supply — H2X3 35
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www.sqa.org.uk © Scottish Qualifications Authority 2013

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Published by the Scottish Qualifications Authority The Optima Building, 58 Robertson Street, Glasgow, G2 8DQ Lowden, 24 Wester Shawfair, Dalkeith, Midlothian, EH22 1FD

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The information in this publication may be reproduced to support SQA qualifications. This publication must not be reproduced for commercial or trade purposes. This material is for use by teaching staff only.

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Publication date: April 2013 Publication code: H2X3 35/ASP001

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Introduction
This Assessment Support Pack incorporates assessment templates for both Higher National and National Qualifications (other than CfE) and can be used in a variety of ways including, for example:  to generate evidence which demonstrates that learners have achieved all Outcomes and Knowledge and/or Skills for the Unit  as exemplification of the standard of performance expected of learners achieving the Unit, ie as a benchmark  to help centres develop an appropriate assessment for the Unit  to give teachers/lecturers/assessors new ideas  as a staff development tool

Security and confidentiality

The information in this publication may be reproduced in support of SQA qualifications. Where the publication includes materials from sources other than SQA (secondary copyright), this material should only be reproduced for the purposes of examination or assessment. If it needs to be reproduced for any other purpose it is the centre’s responsibility to obtain the necessary copyright clearance. SQA’s Support Materials team may be able to direct you to the secondary sources. Every effort has been made to contact copyright holders and SQA apologises if any have been overlooked.

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In addition to a centre’s own security procedures, any suspected breach of the above must be reported immediately to SQA’s Quality Assurance department within SQA Operations marked ‘Security breach — Support Materials’.

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The assessment and marking information in this publication can be used or adapted by staff in approved SQA centres subject to the guidelines above. Adapted materials must be verified prior to use and stored securely within the presenting centre.

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Support Materials are distributed only to SQA approved centres and may be downloaded from SQA’s secure website by authorised personnel. For added security, SQA discourages the downloading of this material for; the maintenance of paper-based libraries, stockpiling ahead of assessment events and saving to portable storage devices and laptop computers.

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This material is intended solely for the purpose of assessment of learners against Higher National and National Unit standards in SQA approved centres and must not be released prior to examination/practical test or distributed more widely for any other purpose.

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Scottish Qualifications Authority Assessment Support Pack/H2X3 35/ASP001 V1 SCQF level 8 International Purchasing and Supply

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General information
Before using this Assessment Support Pack centres should read the relevant Unit specification which details the standard of performance expected of learners. It is important to ensure that this Assessment Support Pack is used in a context appropriate to the Unit and, if applicable, the associated Group Award. A copy of the Unit specification can be found on SQA’s website www.sqa.org.uk. This Assessment Support Pack supplements the section Guidance on Approaches to Assessment for this Unit found in the Support Notes. It provides an example of assessment that is valid, reliable and practicable. The assessment tasks correspond to the guidance contained in the Unit specification. Centres must ensure the integrity and confidentiality of the Instrument of assessment. Although the content of this Assessment Support Pack has been verified as a suitable assessment, centres should note that using it does not automatically guarantee successful external verification. It is the centre’s responsibility to make sure that all the appropriate internal quality assurance procedures are satisfactorily followed. A valid and effective internal verification system should be in place.

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It is expected that learners will carry out research into an organisation engaged in international purchasing.

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It is recommended that this Unit is delivered middle to late in the award when candidates will have knowledge and understanding of the major business functions such as finance, inventory management, distribution and logistics.

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This Assessment Support Pack supports the assessment of the Unit International Purchasing and Supply H2X3 35 as taught within the HND Global Trade and Business at SCQF level 8. Centres are required to develop the assessment in accordance with the validated Unit specification.

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Guidance on content and context for this qualification

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Scottish Qualifications Authority Assessment Support Pack/H2X3 35/ASP001 V1 SCQF level 8 International Purchasing and Supply

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Opportunities for developing Core and other essential skills
There are no Core Skills embedded in this Unit. However, the following table gives some examples of the opportunities for developing Core Skills within this Unit. Core Skill Communication SCQF level Level 6 Opportunities for development All three Outcomes can contribute to the reading and writing aspects of this Core Skill.

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Problem Solving

Level 6

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Written Communication (Writing)

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Level 6

There are opportunities to develop written communication where candidates produce written responses as these have to be well-structured and clear, addressing the Evidence Requirements. Evidence is required in the form of the production of a structured report. In researching an organisation involved in overseas sourcing and the analysis and evaluation of its activities, there are opportunities to develop the Core Skill of the components Problem Solving (Critical Thinking), Problem Solving (Planning and Organising) and Problem Solving (Reviewing and Evaluating) at SCQF level 6.

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Written Communication (Reading)

Level 6

Candidates are expected to read and understand complex written information.

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Core Skill Information Technology

SCQF level Level 5

Details of these and other SQA publications are available on our website. Most publications can be downloaded free of charge from our website at www.sqa.org.uk on the ‘Publications, Sales and Downloads’ section. If you require a publication to be sent to you, please telephone our Business Development and Customer Support team on 0303 333 0330 quoting the product code and, where a charge is applicable, have a purchase order number or credit card details available.

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 Guide to Assessment  Introduction to Assessment Arrangements  SQA’s Quality Framework: a guide for centres

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Before using this Assessment Support Pack centres might find it useful to look at some of our other publications, in particular:

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Related publications

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Working with others

Level 4

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Throughout the Unit the candidate may have the opportunity to take part in group discussion and group work.

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Numeracy

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Candidates may also be able to gain Numeracy skills throughout the Unit but particularly in their examination and evaluation of transport and freight costs.

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Opportunities for development Candidates are likely to use Information Technology when undertaking research into their chosen organisations. Finished reports may include graphics, tables or spreadsheets to illustrate points.

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Section 1 — How to generate assessment evidence
The following information indicates the evidence which should be retained for external verification. The Scottish Qualification Authority’s system of assessment measures the evidence of a learner’s attainment of knowledge, understanding and skills against a defined criteria. Assessment must demonstrate competence at the level of the qualification and allow evidence of each learner’s performance to be generated and collected. This evidence must then be judged against the standards set out in the Unit specification. To achieve a Unit, learners must generate the evidence required in relation to all Outcomes and Knowledge and/or Skills. This information is found in the Statement of Standards in the relevant Unit specification. This Assessment Support Pack is consistent with the Statement of Standards for the International Purchasing and Supply Unit at SCQF level 8 and the following information applies when using it to generate evidence of learner achievement.

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Conditions of Assessment
To achieve this Unit, learners must produce satisfactory assessment evidence that shows they have achieved all of the Unit Outcomes. This will be done by producing a four part report corresponding to the four Unit Outcomes. Each part should be approximately 750 words in length and where appropriate diagrams should be included. 5
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Explain the operation of an International Purchasing Department (IPD). Evaluate the reasons for using distribution channel intermediaries.

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Evaluate the key challenges involved in overseas sourcing.

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Four part report

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Evaluate the reasons why a business would consider sourcing overseas.

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Assessment

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Examples of suggested evidence to be retained will always include the assessment, marking information and learner assessment records.

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Assessment

Evidence to be retained The learner’s assessed report together with assessor comments and feedback and the internal verification report with feedback.

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It is recommended that the report be submitted in parts, ie after each Outcome, so that the individual learner’s progress can be monitored and, where necessary, remediation can take place before progressing to the next part. The report will be completed under open-book conditions, in the learner’s own time, with each part being submitted on a date agreed with the course tutor.

Quality assurance

The Unit specification has been designed to ensure that there are no unnecessary barriers to learning or assessment. The individual needs of learners should be taken into account when planning learning experiences, selecting assessment methods or considering alternative evidence. Further advice can be found on our website http://www.sqa.org.uk/assessmentarrangements.

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E-assessment may be appropriate for some assessments in this Unit. By e-assessment we mean assessment which is supported by Information and Communication Technology (ICT), such as e-testing or the use of e-portfolios or social software. Centres which wish to use e-assessment must ensure that the national standard is applied to all learner evidence and that conditions of assessment as specified in the Evidence Requirements are met, regardless of the mode of gathering evidence. The most up-to-date guidance on the use of e-assessment to support SQA’s qualifications is available at www.sqa.org.uk/e-assessment.

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For all modes of delivery, assessment conditions and quality assurance arrangements must ensure that the same standard is applied for all learners.

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Opportunities for e-assessment

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Time is allowed within Units for assessment and re-assessment of Outcomes. Where learners have not attained the standard necessary to achieve a particular Outcome or Outcomes, they should have the opportunity to be re-assessed. SQA’s advice is that there should normally be one Unit re-assessment opportunity, or in exceptional circumstances two. In some cases learners may be required to resubmit original work which has been revised to take account of earlier weaknesses. In other cases, learners may be required to undertake a new assessment designed to assess the particular Outcome(s) in which they were unsuccessful. In all cases, evidence from the original assessment should be used for formative purposes prior to re-assessment.

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Re-assessment

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Centres should retain assessment evidence and internal verification records. Units are subject to external verification by SQA.

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Section 2 — Assessment
The assessment example(s) below can be used by centres, or alternatively centres can develop their own assessment.

Assessment 1
Outcomes covered 1, 2, 3, and 4

You should acknowledge any references to the company being researched. As per the brief from the MD, you have agreed that the report will consist of four parts and will cover the following:

 evaluate the effect of the international business environment on the IPD  explain how the IPD can increase business competitiveness  evaluate the contribution of national and international quality standards to successful overseas sourcing  evaluate how technology affects the company’s decision to source overseas  evaluate the strategic nature of a decision to purchase overseas

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You are required to evaluate the reasons why a business would consider sourcing overseas. For the company you have chosen to investigate you will need to:

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Part 1

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A new Managing Director (MD) has been appointed to your company and following meetings with the Board of Directors a new Purchasing Strategy has been agreed which includes the formation of a new International Purchasing Department (IPD) to source components and materials from overseas. The timescale for establishing this new department is one year, and you as the Purchasing Director, have been tasked with writing a report on how to progress this. The MD met with you personally to provide a brief as to what the report should contain and has suggested that you research a company which is already experienced in purchasing overseas.

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Scenario

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Learners must produce a report of approximately 3,000 words under open-book conditions. This will include appropriate diagrams. The report will comprise of four parts reflecting each Outcome and will be completed in your own time and should be informative.

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Assessment instructions

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Part 2 You are required to evaluate the key challenges in overseas sourcing. For the company you have chosen to investigate you will need to:       explain how culture, language and communication affect overseas purchasing evaluate the factors affecting foreign exchange rates evaluate how currency exchange results in financial risk evaluate the effect of counter-trade on overseas sourcing explain the benefits of forward buying to the company evaluate the need for the IPD to achieve continuity and security of supply requirements.

Part 3

You are required to explain the operation of an Internal Purchasing Department (IPD). For the company you have chosen to investigate you will need to:     explain the strategic role of the IPD in reducing costs analyse the objectives of the IPD in making a decision to source overseas analyse the components of the comapany’s international purchasing cycle explain the relationships between Purchasing and the departments of Design, Research and Development (R&D), and Finance  explain the contribution of the IPD to the appraisal of overseas suppliers  evaluate the need for payment documentation when importing goods  evaluate the impact of Incoterms when assessing the price of imported goods

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 describe the intermediaries involved in international distribution channels  evaluate the role of freight forwarders in distribution channels  evaluate the contribution of Information and Communication Technology (ITC) to integrating channels of distribution  evaluate the contribution of transport modes to minimise freight costs

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You are required to evaluate the reasons for using distribution channel intermediaries. For the company you have chosen to investigate you will need to:

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Part 4

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Scottish Qualifications Authority Assessment Support Pack/H2X3 35/ASP001 V1 SCQF level 8 International Purchasing and Supply

Guidance for making an assessment decision
Assessment 1
The assessor should expect to evidence the following information, or similar, in the answers to the task. The report should address each issue as detailed in the task and learners should focus on these issues. The report should contain any diagrammatical illustrations and recommendations.

Part1

 Evaluate the effect of the international business environment on an IPD. The learner’s response is likely to include, for example, changes in the business environment which may increase the need to source globally and therefore a greater load on the work of the IPD.  Explain how an IPD can increase business competitiveness. The learner’s response is likely to include, for example, by finding suitable suppliers that will allow the company to increase competitiveness through lower prices, improved deliveries and better quality.  Evaluate the contribution of national and international quality standards to successful overseas sourcing. Responses may include, for example, the use of ISO (International Organisation for Standards) standard to ensure the quality and reliability of goods. These standards may also help companies to access new suppliers to improve the competitiveness of the company even further.  Evaluate how technology affects the decision to source overseas. Responses may include, for example, the internet which is an inexpensive method for companies to find out about potential suppliers and their products, information is much easier to transfer vie EDI (Electronic Data Interchange) and it is also possible to talk direct to suppliers through video conferencing, Skype, etc.  Evaluate the strategic nature of a decision to purchase overseas. Responses may include, for example, that a strategic decision to purchase overseas will be part of the company’s purchasing strategy and is likely to involve other strategic decisions in how the company will approach this major step. It may be that domestic buyers within the company will receive training, or if the company has subsidiaries in other countries personnel from there may be used, because of the language advantage to seek suppliers, etc. Part 2  Explain how culture, language and communication affect overseas purchasing. Responses may include, for example, the complexity of culture, the problems with languages that may be open to misinterpretation. Language is a major element in communication and could make it very difficult in terms of negotiating contracts, etc. 9
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Scottish Qualifications Authority Assessment Support Pack/H2X3 35/ASP001 V1 SCQF level 8 International Purchasing and Supply

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Learners will need to provide evidence to demonstrate their Knowledge and/or Skills across all Outcomes by showing that they can:

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 Explain the strategic role of an IPD in reducing costs. Responses may include, for example, that the role of IPD in reducing costs is similar to domestic procurement and that it is not necessarily the cheapest items that should be purchased but items where the price reflects the quality and on time deliveries which in turn will save overall costs.  Analyse the objectives of an IPD in making a decision to source overseas. This should follow on from the previous task in that the difference in an IPD is they must ensure that they will achieve the objectives from an overseas supplier more effectively than from a domestic supplier  Analyse the components of the international purchasing cycle. The responses may include, for example, that the cycle itself is no different from the basic procurement cycle but the difference will include such things as the currency of the transaction, payment method, insurances, transport, customs, etc.

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Part 3

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 Evaluate the factors affecting foreign exchange rates. Learners may choose to evaluate from a number of factors including interest rates, employment outlook, economic growth expectations, etc.  Evaluate how currency exchange rates result in financial risk. Responses may include, for example, that when purchasing overseas there is always a risk that currencies will fluctuate and the buyer may pay more than expected. This can be a complex issue but the risk can be limited by setting limits, agreed in advance, on how much variation will be accepted.  Evaluate the effect of counter-trade on overseas trading. This is a very specialised, though not uncommon, practice. The learner may define countertrade as an international reciprocal trade, which basically means that when an order is placed by a purchaser in another country there is a condition that goods to a specific value, usually the same, are sold in the opposite direction. This is used particularly where countries have currencies that are not convertible. There are a number of advantages and disadvantages of countertrade which the learner should mention.  Explain the benefits of forward buying to an importer. Responses should explain the benefits in that where the company felt that an exchange rate would worsen say in six months time, when the company had an actual requirement for the goods in question, for example, they could make a forward purchase that would be at the current exchange rate but the goods would be delivered in six months time. If this was a fairly large order the saving on a forward purchase could be substantial.  Evaluate the need for an IPD to achieve continuity and security of supply requirements. Continuity and security of supply requirements is not peculiar to IPD it is also a requirement of domestic purchasing but where learners may make a distinction, for example, in purchasing overseas is where the commodities are not readily available in the home market or there is insufficient capacity in the home market, etc.

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Scottish Qualifications Authority Assessment Support Pack/H2X3 35/ASP001 V1 SCQF level 8 International Purchasing and Supply

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 Describe the intermediaries involved in international distribution channels. Responses may include the use of different types of intermediary such as freight forwarders, import agent, import dealers, etc.  Evaluate the role of freight forwarders in distribution channels. Responses may be similar to — a company would prefer to concentrate on their core business and leave the import of supplies to the expertise of a freight forwarder. The expertise will include being able to combine smaller shipments with other shipments thus saving money and perhaps time. The freight forwarded will have detailed knowledge of the regulations that need to be met, etc.  Evaluate the contribution of Information and Communication Technology (ICT) to integrating channels of distribution. Responses may include the following or similar. With the increase in global trading the use of ICT is increasingly important to provide better information in terms of supply chains. The types of ICT would be the use of RFID, for example to quickly identify goods and their destination. Another example may be the use of satellite navigation systems to rack goods in transport.

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Part 4

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 Explain the relationships between Purchasing and the Departments of Design, Research and Development (R&D) and Finance. Learner should respond similar to — It is important that all departments work together but for those stated design should work closely with R&D to ensure what is being proposed is feasible and with finance to ensure that costs are within budgets and Purchasing must also be aware of what is happening in order to make an initial survey of suppliers that would be required to meet the need of the organisation.  Explain the contribution of an IPD to the appraisal of overseas suppliers. Learners may respond with the following or similar. Appraisal of potential suppliers is an expensive exercise but for overseas suppliers it can be very important, especially where the potential supplier does not have ISO 9001. Either through contacts in the suppliers country or by a direct visit members of the IPD need to check out the following — finance, production facilities, performance, quality, etc of a potential supplier. There should be some initial survey carried out on potential suppliers so that only the most likely are appraised.  Evaluate the need for payment documentation when importing goods. Responses may be along the lines of — getting the correct documentation in place is important to avoid delays. In terms of payments documentation there should be a contract between the buyer and the seller and this should state the currency in which the payment will be made. Payment documentation for imported goods is also important so that the correct import duty and taxes paid, such as VAT is accurate.  Evaluate the impact of Incoterms when assessing the price of imported goods. Incoterms are predefined terms used for international commercial transactions. In terms of the price of imported goods, Incoterms should be used to determine exactly what is being agreed. For example who is responsible for insuring the goods and who pays the insurance and who handles customs procedures and who is responsible for handling the payment of duty and taxes.

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wEvaluate the contribution of transport modes to minimising freight costs. Responses may include the following, for example, the type of transport used to import components and materials will depend on a number of factors such as the originating country, a company’s business requirements, types of goods, costs, etc, when minimising freight costs.

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History of changes to Unit
Version Description of change Date

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SQA acknowledges the valuable contribution that Scotland’s educational institutes have made to the development of HN qualifications.

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Acknowledgements

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Class Tutor

(SCQF 8) H2X3 35 — International Purchasing and Supply Outcome 1 Outcome 2 Outcome 3 Outcome 4

*Achieved/not achieved — (Enter A or NA in the box to indicate whether the learner has achieved or not achieved each Outcome. The comments column can be used to highlight any re-assessment that may be needed.)
Scottish Qualifications Authority Assessment Support Pack/H2X3 35/ASP001 V1 SCQF level 8 International Purchasing and Supply

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Outcome 1 — Evaluate the reasons why a business would consider sourcing overseas. Outcome 2 — Evaluate the key challenges involved in overseas sourcing. Outcome 3 — Explain the operation of an International Purchasing Department (IPD). Outcome 4 — Evaluate the reasons for using distribution channel intermediaries.

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Overall comments

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