Oct/Nov 2018

SOLS manufactures 5 styles of luxury men’s shoes using job production. SOLS operates in a niche market. Quality assurance matters. All inputs, including leather, are imported. SOLS uses cost plus pricing. The shoes are sold directly to customers through its website. The Managing Director said: ‘We can sell our shoes for $100 less a pair than our competitors because we have no shops.’ Demand is rising and the Managing Director must decide whether to switch to batch production.’

Production of goods and services

AllPlay is a toy shop founded by Vince in 2012. Every year, Vince has achieved his business objectives, including making a profit in 2017. AllPlay brings in all of its products from overseas. Vince plans to grow the business by opening a second shop so that he can offer a broader selection of products. Buying the shop will cost $20 000. A bank loan is one possible source of finance. Vince’s bank manager will want to examine AllPlay’s income statement, together with other financial documents.

Business finance

Filltum is the brand name of a chain of vegetarian restaurants. It runs 28 restaurants, and 16 of these are run by franchisees. The Managing Director is happy with how quickly it is growing, especially at a time when many businesses are failing. She stated that having a well-motivated workforce matters to their success. Every new employee is provided with on-the-job training. Filltum intends to open 10 more restaurants in the next year. The Managing Director now must choose whether to sell more franchises or open its own restaurants.

Enterprise, business growth and size

AHP is a multinational company that manufactures mobile (cell) phones in Europe, in country X. 80% of its sales come from Europe. Some people are worried about AHP’s effect on the environment. The Operations Director stated that AHP always aims to comply with all legal controls and that globalisation has brought many opportunities for AHP and its stakeholders. The Operations Director is intending to move its factories to a low-cost country in Asia. Raw materials would have to be transported an extra 4000 kms. Interest rates are expected to rise across Europe.

Business and the international economy

M&R Motors operates 2 car showrooms. It purchases used cars and repairs them before offering them to customers. M&R is constantly seeking to raise added value. M&R intends to open an additional showroom. The owner stated: ‘Choosing the correct location matters. The new showroom will need a manager and I have to find a person with the right qualities.’ The vacancy will be placed in the local newspaper, as shown in Figure 1. The advertisement will cost $5 for one week. Figure 1: Job advertisement M&R plans to use for the new manager. CAR SHOWROOM MANAGER REQUIRED • This successful business is expanding. • The job involves running the office and selling cars. • You will be responsible for three workers who will repair the cars. • Do you have the qualities we are looking for? • We offer good pay and working conditions. For more information apply to M&R Motors

Recruitment, selection and training of employees

FTT operates as a social enterprise. It sells its high quality fair-trade coffee beans to retailers in country P. Ethical behaviour matters to FTT. It gives local people information about micro-finance and training so that they can begin growing beans for FTT to market on their behalf. FTT wants to begin exporting coffee beans because its market research indicates rising demand for coffee in other countries. FTT’s managers must choose an appropriate pricing method for selling the coffee beans in those countries.

Market research

TRB is a small firm in the secondary sector. TRB puts together computers. With the exception of the battery and the glass used for the screen, every component is brought in from overseas. 40% of its products are sold abroad. Many rival firms are moving to low-cost countries. TRB’s Operations Director believes the advantages of globalisation may outweigh the disadvantages for TRB. She is considering ways to raise factory efficiency. One possibility is to adopt lean production methods.

Production of goods and services

Bakin Group (BG) is a limited company. It runs 3 holiday parks that provide families with holiday accommodation and activities. BG wants to meet customers’ needs 24 hours a day. Customers pay for their holidays when they arrive at the park. Each park employs 3 managers and 40 part-time employees. BG advertises through a broad mix of social media networks. The Finance Director is worried about BG’s cash flow position. He is unsure whether an overdraft is the best way for BG to deal with its cash flow problem.

Cash-flow forecasting and working capital

KXD is a public limited company with 60 shops selling fashion clothing to 18-25 year olds. 60% of its inventory is imported. It has not made a profit for three years. The Managing Director stated: ‘Net cash flow is still positive, but KXD has been unable to match the rise in demand. We have also had difficulty because suppliers have not delivered the inventory we need on time.’ KXD intends to appoint the vacant Operations Director post immediately by using internal recruitment or external recruitment.

Cash-flow forecasting and working capital

GGB produces a variety of bakery items, such as pies, cakes and bread. These goods are sold only through its 400 shops, 60 of which are franchises. Primary market research indicates that customers’ spending habits are shifting. GGB has spent 6 months creating new products, including a selection of healthy foods such as pasta and sushi. High quality will be vital. The Marketing Director must choose whether Buy One Get One Free is the most suitable sales promotion method for the new products.

Marketing mix

Duckett produces cleaning products, including washing powder, by using a variety of chemicals. The Operations Director intends to move production to either country X or country Y. He explained: ‘Environmental pressures and tighter legal controls on marketing are the main reasons for relocating. Our output is at break-even and we cannot afford to pay our 450 workers the higher minimum wage of $8 per hour. A wide range of stakeholders will be affected.’

Costs, scale of production and break-even analysis

Bill has spent 30 years working for a large IT company. He enjoys using computers, but he is struggling to stay motivated. Bill is considering setting up his own business to repair computers in customers’ homes. He believes there is demand for this service, although he recognises that starting a business involves risk. His secondary market research indicates that existing computer repair businesses charge high prices and do not provide home repairs. If Bill launches the business, he will need a vehicle. It would cost $6000, which Bill intends to pay for from his own savings. Bill would trade as a sole trader.

Enterprise, business growth and size

Identify and explain two advantages and two disadvantages of GT operating as a public limited company.

Types of business organisation

Identify and explain two roles performed by the Operations manager at GT.

Costs, scale of production and break-even analysis

Identify and explain two factors GT needs to take into account when developing products for markets in different countries.

Internal and external communication

Identify and explain one effect on GT and one effect on GT’s employees when workers belong to a trade union.

Analysis of accounts

Identify and explain two methods that PP could use to raise the quality of its products.

Achieving quality production

Identify and explain two primary research methods PP could use to investigate the market in country Z.

Market research

Identify and explain one benefit and one drawback of Peter assigning tasks to the new Operations manager.

Organisation and management

Identify and explain two sources of finance PP could choose for its expansion.

Business and the international economy

Identify and explain two methods HH could use to build a brand image.

Marketing strategy

Identify and explain two reasons showing why working capital matters to HH.

Cash-flow forecasting and working capital

Identify and explain two ways Harry and Fred might use the Internet to support management of HH.

Recruitment, selection and training of employees

Harry and Fred have prepared a business plan for the expansion of HH. Identify and explain two contents of a business plan that Harry and Fred could find useful as HH expands.

Enterprise, business growth and size