Oct/Nov 2019

BFF produces a selection of computer screens that it sells to other manufacturers. The Managing Director has been reviewing BFF’s income statement. She is concerned about the consequences of a rise in the cost of materials. She stated: ‘Improvements in technology have made our production methods better. BFF must stay competitive because imports of computer screens are rising.’ The Managing Director must decide whether BFF should raise its prices.

Income statements

WKN sells household items such as plates and brushes. In the previous year, sales across WKN’s 200 shops rose, yet profit dropped by 80% to $5m. The Human Resources Director at WKN commented: ‘All retailers are finding this point in the business cycle difficult.’ WKN must restructure the business. This will cause redundancy for 1800 shop workers. WKN intends to add 100 new jobs in the marketing department at head office to help keep customer loyalty high. The company is collaborating with trade unions to implement these changes. WKN must decide whether the candidates for the new jobs should be chosen from the workers who are being made redundant.

Recruitment, selection and training of employees

Keila runs a thriving small bakery shop. She wants to grow the business and could set up a café that sells cakes and drinks in a busy tourist area. Her main promotional plan is to hand out free samples. She has collected some customer and cost data, as shown in Table 1. Keila used primary market research to obtain some of this information.

Costs, scale of production and break-even analysis

VXH makes a variety of soft drinks from fruit by using batch production. Specialisation is used in its factory. Over the last two years, the business has expanded rapidly. VXH has raised the number of production workers from 40 to 80. This has made the span of control for each manager larger. It has been hard for VXH to keep workers motivated. The Human Resources Manager must decide whether job rotation or financial bonuses is the better way to improve employee motivation.

Organisation and management

GOP is an oil producer in country X. It is a public corporation. GOP intends to construct a 200km pipeline across the country, and it will use retained profits to finance the project. Government planning permission will be required for the pipeline. Environmental pressure groups are worried. A spokesperson for GOP stated: ‘GOP’s objectives are unlike those of businesses in the private sector. This pipeline will generate 2000 skilled construction jobs and cut the need for other businesses to import oil.’

Types of business organisation

Samira runs a profitable takeaway fried-food business. She employs 2 part-time workers. In the previous year, turnover dropped for the first time in 10 years. This happened because competition increased from a well-known franchise. To react, Samira might cut her prices, as the Table 1 data show. Alternatively, she could launch a delivery service. Samira intends to carry out market research. She must choose between secondary research and arranging a focus group with some of her customers.

Market research

LBM operates as an online retailer of fashion clothing. LBM’s target market consists of 18-35 year olds. In the previous year, revenue rose by 25% to $600m. The Marketing Director stated: ‘Every business must meet customer needs. Customer service matters, so all staff are given induction training. LBM provides customers with a broader product range than its competitors. Promotion takes place via social media networks. Is there any reason to open our own shops?’ LBM intends to introduce 3500 new styles every week and will have to secure finance for the extra inventory.

Business finance

NBV is an international company with operations in several countries. It produces building materials such as bricks. In the previous year, NBV’s financial accounts reported capital employed as $144 billion. NBV operates in 18 countries and has a total workforce of 400 000. NBV suffers from some diseconomies of scale. All raw materials are bought from the countries where it operates so that exchange rate problems are avoided. NBV intends to open a factory in Country B for the first time. Some people believe this choice will create only disadvantages for other businesses in country B.

Business and the international economy

S&V imports high quality spices and herbs, then sells them to local restaurants and shops. S&V wants to raise added value. As a business partnership, its owners do not have limited liability. One partner, Serena, is concerned that deliveries from some countries do not arrive on time, or that the wrong goods are sent. She said: ‘S&V cannot afford communication barriers with its many suppliers. Also, our customers want up-to-date information about spices and herbs that are in season.’ Serena must decide if e-mail is the best method for communicating with S&V’s customers.

Internal and external communication

HBN produces steel rods for the construction industry by using flow production. One method HBN relies on to motivate its 40 employees is job enrichment. Demand for steel rods has risen for HBN because of movements in the business cycle. Firms such as HBN are expected to have a policy on sustainable development. The Operations Director is looking at methods to raise steel rod output while still keeping quality high. The possible choices are shown in Table 1.

Production of goods and services

RGO is a large airline business. It offers flights to 120 countries using the newest aircraft. Most of RGO’s customers are holiday travellers. RGO sells 80% of its tickets through its website. It works in a competitive market, so keeping customer loyalty matters. One of RGO’s objectives is to raise market share from 8% to 10%. The Managing Director said: ‘One option is to lower ticket prices but to do this we will have to reduce costs.’

Marketing strategy

PBG manufactures cars in country A. The Managing Director has been reviewing PBG’s financial statements. He is concerned about PBG’s liquidity position. Table 2 shows an extract from the balance sheet. The Managing Director stated: ‘New legal controls mean that all cars sold in country A will have to be electric by 2025. PBG must look for new markets for its existing cars while we develop new models.’ One possible move for PBG is to set up a joint venture with a car manufacturer in another country.

Cash-flow forecasting and working capital

Identify and explain one benefit and one cost to MF of developing the new product.

Marketing mix

Identify and explain the effect of the new product on these two MF stakeholder groups. Employees affected: Customers affected:

Business objectives and stakeholder objectives

Identify and explain how MF’s four departments below are likely to be influenced by the launch of its new product. Marketing: Human Resources (HR): Operations: Finance:

Organisation and management

Identify and explain two differences between: (i) MF and unincorporated businesses: (ii) MF and public sector organisations:

Types of business organisation

Identify and explain two ways QC can create added value for its new service.

Market research

Neil and the part-time employees are both QC stakeholders.

Business objectives and stakeholder objectives

Neil and Jin need to inform employees about the new service. Identify and explain one advantage and one disadvantage of using email for this communication.

Internal and external communication

Identify and explain two actions Neil and Jin could take to improve QC’s cash flow.

Cash-flow forecasting and working capital

Identify and explain two possible reasons behind Richard’s wish to expand RR.

Types of business organisation

Identify and explain two possible reasons why Richard requires a well-motivated workforce.

Recruitment, selection and training of employees

Identify and explain two methods Richard could use to promote the new restaurant.

Location decisions

Identify and explain one opportunity and one threat facing RR if a multinational company opens a restaurant close by.

Cash-flow forecasting and working capital