Exam Question p. 5

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Q1: "Prawn Free sells salmon fishcakes. Analyse how a drop in salmon supplies might affect their supply chain" (10 marks)

In the supply chain, all businesses are dependent on the suppliers. Therefore, a drop in salmon supplies would cause an inconvenience for Prawn Free who are in the tertiary sector, because the suppliers of salmon are in the primary sector and the tertiary sector companies provide services to individuals and businesses in the primary and secondary sectors. In addition, the businesses in the secondary sector would also have less profit to benefit from because there would be less work for them to do as their work mostly consists of processing the raw materials coming from the businesses in the primary sector.

In other words the manufacturers, the distributors and the retailers (Prawn Free) are the stages of the supply chain that would suffer from a drop in salmon supplies. Also, a drop in salmon supplies might cause the businesses in the different stages to increase the added value so that they will still be able to get profit from their sales or at least reach break even - because as we all know, less sales can lead to less revenue if the value stays the same.