Oct/Nov 2015

TWH manufactures a variety of toys through batch production. Dylan, the Managing Director at TWH, intends to put money into new technology to bring down average costs. ‘It’s the only way to increase efficiency as I do not know how we can improve employees’ motivation’ he said. Dylan is unsure whether retained profits or a long term loan would be the better source of finance.

Costs, scale of production and break-even analysis

Ramford is a private limited company. The business runs four factories that produce a broad mix of food items, including breakfast cereal and ice cream. Its Finance Director is concerned about the company’s financial performance. She has read that many businesses failed during the last year. ‘I think we are suffering from diseconomies of scale’ she said. Ramford’s directors have decided to reduce the number of different products it makes from 80 to 10.

Enterprise, business growth and size

Grimshaw makes mobile (cell) phones for the mass market. In the previous year, its market share rose by 3%. The Managing Director is considering opening a fresh factory in country T so that it can supply the mobile phone market there for the first time. Grimshaw intends to launch a new model of mobile phone. The Managing Director has requested market research. He stated: ‘Because we are a multinational, we could establish a new factory in any location; I want to find out whether the Government of country T would give us any assistance to construct our factory there.’

Market research

Tebo has only recently lost his job as a car mechanic. He is thinking about starting up his own business. Although he has no management experience, he knows that cash flow management will be essential to the business’s success. Tebo is also considering whether to apply for a FIXIT franchise. This franchise would cost $15 000, which would use up all of his savings. FIXIT is a car repair franchise, and it has 36 franchisees.

Types of business organisation

Walt is the owner of a business that has created a new computer game for adults. A focus group report indicates that customers like it. Walt has been thinking about the marketing mix, including the packaging of this product, which is expected to be sold in many countries. ‘I do not want to use a wholesaler because it would reduce my profit margin’ he said.

Marketing mix

CLW produces wood furniture, such as chairs and tables. Demand has grown rapidly during the last 3 years, so the business must expand production capacity at its factory. The factory is situated close to the city centre in a district with low unemployment. The Finance Director has prepared a business plan, which includes a balance sheet. The Finance Director is satisfied with CLW’s liquidity.

Statement of financial position

NCE uses flow production in 4 factories to make cars. The Human Resources Director at NCE believes that strong induction training supports high productivity. Factory X is the most efficient of the factories. In the previous year, the new car market shrank by 20%. NCE must now make 400 workers redundant at another of its factories. “I am glad NCE is a large business,” said the HR Director. “I think a small business would not be able to survive in this competitive market.”

Production of goods and services

Nellis is a public limited company. It focuses on constructing large luxury houses. During the last 3 years, its profits have risen because the country is enjoying an economic boom. ‘It’s not all good news - the Government has announced plans to increase interest rates and introduce new legal controls to protect the environment’ said the Managing Director. He thinks these new legal controls to protect the environment will simply leave businesses such as Nellis less profitable.

Economic issues

PYG is a private limited company located in country A. PYG manufactures metal cans for food products by using flow production. The Operations Director has been reviewing the operations data in Table 1. In the previous year, PYG had difficulty replacing the 15 production workers who left the company. Most of PYG’s output is exported. The Operations Director believes that relocating production to another country could create more advantages than disadvantages.

Production of goods and services

Toddles is a children’s nursery. It operates in the tertiary sector and offers childcare for children aged 2-5 years. It is a sole trader business. The business employs 4 full-time workers, all of whom are fully trained and highly motivated. Each employee cares for 3 children. Last year, Toddles made a loss. ‘I don’t understand it, we have fantastic employees and a good location’ said the owner. ‘I need to find ways to make the business profitable.’

Motivating employees

QF Group produces a variety of electrical goods, including computers and televisions. Since every QF manager has a broad span of control, delegation is important. QF Group’s main aim is growth. The Finance Director has been studying the accounting figures in Table 2. She is satisfied with the business’s performance.

Organisation and management

Xiolom is a mining company in the private sector. It is a very large firm employing over 100 000 workers. It operates in 10 countries. The Operations Director has announced plans to open a new mine in country G. He is furious. ‘First there are new legal controls over employment and now I must also handle pressure groups. The mine will generate 8000 jobs. Xiolom creates external benefits so it ought to be permitted to expand!’

Enterprise, business growth and size

Identify and explain one benefit and one drawback for CC of operating as a public limited company.

Types of business organisation

CC’s Marketing manager wants to carry out market research. Identify and explain two factors that could affect how accurate the market research data is.

Marketing mix

Identify and explain two advantages that CC workers would gain by joining a trade union.

Costs, scale of production and break-even analysis

Identify and explain one benefit and one drawback to CC of employing skilled workers in its factories.

Enterprise, business growth and size

RRM is a small business, and Rafael believes that market segmentation could help him raise sales.

Marketing strategy

Rafael’s son wants to learn more about motivating employees. Rafael is planning to hire a new worker to assist with repairing motorbikes.

Motivating employees

Population and financial information is given in Appendix 1 and Appendix 2.

Analysis of accounts

Rafael’s business works within an international setting and is looking at expansion.

Business and the international economy

Identify and explain two objectives that Joey and Jennifer could set for the business.

Business finance

Identify and explain four suitable ways Joey could contact his employees if he wants them to work extra hours so an urgent order can be completed.

Marketing mix

Identify and explain two leadership styles that would be suitable for Joey to apply with the production workers.

Cash-flow forecasting and working capital

Identify and explain two possible reasons why TP might fail.

Marketing strategy