Oct/Nov 2016

C&C enjoys a strong reputation for producing high-quality, hand-made shoes. It employs 120 full-time skilled workers. C&C now has to hire another 20 production employees to satisfy rising demand. The Managing Director said: ‘I don’t know why people worry about globalisation. Two years ago we exported nothing, but now exports make up 10% of our output and this is still rising.’ C&C has orders for 100 000 pairs of shoes in 2017. The Managing Director cannot decide whether to bring new technology into the production process.’

Recruitment, selection and training of employees

Dowson is a sizeable business that owns several shops. It sells a variety of electrical goods, including computers and televisions. The Finance Director has been reviewing some recent financial information, which is shown in Table 1. He is pleased with Dowson's liquidity, but he knows that its large debt burden must be reduced, including an overdraft of $6m. He remarked: ‘The economy is in recession. Many small retailers have failed. Size is an advantage!’

Analysis of accounts

With Government support, Amelia has recently launched YOGO as a new business. YOGO produces a selection of sweets (candy) aimed at adults, so it operates in a niche market. Amelia has been reviewing the marketing section of her business plan and must choose a pricing method. She is spending a great deal on packaging. She did not carry out any primary market research because she believes secondary data will be enough for her decisions. She thinks every adult enjoys sweets.

Marketing mix

DCP manufactures a range of high-quality industrial paints. It sells directly to 6 large business customers, each based in a different country. DCP charges $0.35 per litre. It competes in a competitive market. The Operations manager has been reviewing DCP's costs in Table 2. He wants to raise profit but does not want to buy cheaper materials.

Costs, scale of production and break-even analysis

APQ is a multinational company. It produces chemicals that are sold to farmers, helping them to increase food output. It intends to set up a factory in country X, a developing country with low interest rates. The Finance Director said: ‘This factory will generate many external benefits. APQ is a public limited company that aims to behave ethically towards all of its stakeholders.’ The new factory will cost $100m and APQ will face an opportunity cost. The Finance Director cannot decide which source of finance should be chosen for the new factory.

Business finance

SLAND offers a very broad assortment of goods, ranging from food to toys. It operates 400 stores in country B. SLAND bases its marketing strategy on penetration pricing. It carries out no advertising and obtains every product straight from manufacturers. Even though the country is in recession, revenue and profit have risen. The Marketing Director plans to grow the business by opening stores in other countries. He is convinced that SLAND will do well in other countries.

Marketing strategy

TKF manufactures furniture such as beds and tables by using job production. TKF has 3 part-time office employees, 8 production workers and 1 manager, who is meant to carry out quality control. Because the factory is busy, most communication happens by email. After several customer complaints, the manager thinks TKF has some communication barriers. He believes that effective internal communication can help TKF become more efficient. The manager is also concerned about TKF’s cash flow position.

Internal and external communication

Moeen and Ali are planning to set up a small luxury hotel in the centre of a city in country R. They have a budget of $30 000 to cover every cost. After investigating different forms of business organisation, as shown in Table 2, Moeen believes the hotel ought to be a private limited company. If the business is to succeed, Ali knows that selecting the right location will matter. He cannot decide whether to employ full-time staff or part-time staff.

Types of business organisation

UDig is a major mining business in the private sector. It provides firms in country B with 30% of the coal they require. UDig currently operates eight mines, but it intends to shut two of them, and this would put 1800 employees at risk of redundancy. The Managing Director stated: ‘I blame the rise in value of country B’s exchange rate and the new legal restrictions, including those intended to protect the environment. The Government should assist UDig so that these mines stay open.’

Business and the international economy

GBU is a public limited company. It produces an assortment of beauty products, including shampoo and soaps, for the mass market. In the previous year, GBU’s revenue fell. The Marketing Director has been studying the findings from its primary market research, which was based on a sample of 2000 consumers. An extract is shown in Fig. 1. She thinks keeping customer loyalty matters more than winning new customers. Fig. 1: Extract from GBU’s market research. The first pie chart asks: ‘Where do you buy your beauty products?’ The segments are labelled: mail order 200, shop 1100, online 700. The second pie chart asks: ‘Would you buy our beauty products?’ The segments are labelled: yes 1700, no 300.

Market research

Izaak runs a small fish restaurant. He employs two chefs (cooks) and three workers who serve in the restaurant. He has been trying to raise added value to improve profits. Izaak has been studying the business accounts shown in Table 1. He believes fixed costs are too high. Izaak has received several complaints about food and service. He feels that quality needs to improve, but he cannot choose the best method.

Analysis of accounts

ReBag operates as a social enterprise. Asha launched the business three years ago with micro-finance. ReBag employs 30 women across four small towns in different parts of the country. They work from home and produce a range of bags from pieces of old fabric (cloth). In the previous year, ReBag’s revenue was $700. Asha said: ‘Our external stakeholders want ReBag to employ women in five more towns. Securing a bank loan to expand the business is going to be a problem. What will I do about management? How will I communicate? I cannot keep visiting everyone.’

Business objectives and stakeholder objectives

P & P needs to operate efficiently. Identify and explain four methods P & P could use to motivate production workers.

Motivating employees

Identify and explain two reasons why P & P may react to the pressure group and alter what the company is doing.

Environmental and ethical issues

P & P has opted for batch production for the new paint. Identify and explain two factors that may have led to this choice.

Costs, scale of production and break-even analysis

Identify and explain two reasons that show why added value is important to P & P.

Enterprise, business growth and size

Identify and explain 1 benefit and 1 drawback for Ghaziz and Jasmin of operating as a business partnership.

Types of business organisation

Calculate the break-even level of output for the house cleaning service from the information in Appendix 1.

Costs, scale of production and break-even analysis

As Ghaziz and Jasmin expand their business, Identify and explain one economy of scale and one diseconomy of scale that could arise.

Recruitment, selection and training of employees

Identify and explain two reasons why market research matters to GJ before the new service begins.

Marketing mix

Identify and explain two likely reasons why Bethany wants the business to stay small.

Types of business organisation

Identify and explain two reasons why it is important for Bethany to notice changes in customer preferences.

Achieving quality production

Identify two fixed costs and two variable costs of BB, then explain why each cost is fixed or variable.

Costs, scale of production and break-even analysis

Identify and explain two reasons why communication between Bethany and her employees needs to be effective.

Internal and external communication