May/June 2022

Pamela runs a thriving enterprise. She owns a gift shop that sells celebration cards, toys and candy (sweets). When she launched the business 30 years ago, she had no one to help her run the shop. She now employs 5 staff. Pamela understands that retaining customer loyalty is important. She uses competitive pricing. Most of her marketing budget is spent on sales promotion. Pamela does not use e-commerce.

Marketing, competition and the customer

CTF is a public limited company. It makes beds by means of batch production. The Operations Director is using break-even analysis to work out the margin of safety for children’s beds. An extract from CTF’s output data is shown in Table 2.1. The Operations Director wants to find out how a rise in inflation could affect CTF. She is aware that there are many environmental pressures to which a manufacturing business could react.

Costs, scale of production and break-even analysis

VCG produces premium briefcases and travel bags. There are 50 skilled production workers in VCG’s factory. VCG plans to grow by constructing a second factory, and several sites are under consideration. The Managing Director is examining VCG’s financial statements. An extract appears in Table 3.1. Both VCG’s internal and external stakeholder groups are interested in this information.

Analysis of accounts

MBH is a public-sector business organisation. It runs 5 hospitals and employs 5600 workers, of whom 440 are doctors. When it recruits skilled employees, it relies on external recruitment. The Human Resources Director applies ideas from Herzberg’s theory to raise employee motivation. He is concerned about communication barriers inside MBH. The business has a tall organisational structure and a long chain of command. Most communication within MBH happens through email and phone calls.

Motivating employees

AHG is an established business because it has been trading for a long period. It offers garden goods, such as plants and flowers. AHG sets competitive pricing. The business employs 4 managers and 30 additional workers. Every one of AHG’s managers delegates. The Finance Manager is examining AHG’s statement of financial position because she wants to assess its liquidity. An extract appears in Table 1.1.

Cash-flow forecasting and working capital

RWB produces buses. Its factory employs 1200 people. Every employee is given off-the-job training. To motivate staff, RWB relies on financial rewards. In the last year, RWB recorded a $1.7 million loss. The Managing Director commented: ‘Our business is influenced by many external factors, including shifts in unemployment levels and new legal controls on business activities that affect the environment.’

Recruitment, selection and training of employees

CHW manufactures electrical goods, including cameras. The business is creating new products. The Managing Director understands that the product life-cycle stage can shape CHW’s promotion decisions. He is studying data for one of its products; an extract is shown in Table 3.1. The business also wants to add flow production to the factory.

Costs, scale of production and break-even analysis

Tom is considering resigning from his job so that he can become an entrepreneur. He and his sister intend to set up a window cleaning business. Tom has been advised that new businesses face a higher chance of failure than established ones. He must choose whether a partnership would be a suitable type of business organisation for the new venture. He has worked out that the business will require $700 as start-up capital. Tom also understands that every choice he makes carries an opportunity cost.

Types of business organisation

MTD produces specialist cleaning products, including soap. It uses batch production. The business operates just-in-time inventory control. MTD spent 18 months developing its latest environmentally friendly cleaning product. The Marketing Manager must choose the packaging and the promotion method for this new product. She stated: ‘All our stakeholders, including pressure groups, matter. MTD aims to help sustainable development.’

Marketing mix

TJM is a private limited company. It operates as a food retailer and owns 450 shops. During 2021, TJM’s revenue rose by $500 million. The Finance Director is examining TJM’s financial statements. An extract appears in Table 2.1. The directors intend to expand TJM by launching 20 new shops. TJM will need to complete a recruitment and selection process for 400 new employees.

Cash-flow forecasting and working capital

Gareth is preparing to launch a car washing business with government support. He is studying market research data to guide the key choices he has to make about the business. Extracts from this data are shown in Figure 3.1 and Figure 3.2. Gareth said: ‘I will need to set business objectives.’ He intends to keep the business small. Gareth is concerned about the possible impact of higher taxes. Figure 3.1 shows a pie chart titled ‘Do you have a car?’ with 77% labelled ‘Yes’ and 23% labelled ‘No’. Figure 3.2 shows a car illustration with the text ‘Average price paid for a car wash’ and the price ‘$6.34’ written inside the car.

Business objectives and stakeholder objectives

BCZ is a multinational business operating in 12 countries. It produces cement, a building material that construction firms use, so maintaining quality is vital. Cement production generates external costs. One of BCZ’s factories is in country X. The government of country X intends to introduce new legal controls that would cut the maximum working week from 45 to 35 hours.

Achieving quality production

Explain four reasons why governments might back business start-ups.

Enterprise, business growth and size

Explain one benefit and one limitation to Yasin of using a break-even chart.

Costs, scale of production and break-even analysis

Explain four different ways Yasin could promote MB’s products.

Marketing mix

Explain one advantage and one disadvantage of Yasin adopting a democratic leadership style.

Organisation and management

Explain two methods by which TT could expand.

Enterprise, business growth and size

Explain two benefits to TT of applying lean production methods.

Analysis of accounts

Explain one way the information shown in each chart in Appendix 1 could be of use to TT.

Recruitment, selection and training of employees

Explain four ways training can influence a business.

Recruitment, selection and training of employees

Explain two leadership styles that the Managing Director of BB may adopt.

Motivating employees

Explain four business objectives that BB could have.

Location decisions

Explain four methods used to measure the size of a business.

Enterprise, business growth and size

Explain two reasons why BB could experience cash-flow problems.

Cash-flow forecasting and working capital