May/June 2024

FBM is a boat building business. It employs 100 skilled workers. The Operations Director is worried that FBM is holding too much inventory. She is also worried that the business is beginning to suffer diseconomies of scale. The Finance Director has been asked to examine FBM’s cost and output data. An extract is shown in Table 1.1.

Costs, scale of production and break-even analysis

ADN operates as a food retailer. It owns 5 shops and employs 300 full-time workers. Every one of ADN’s employees is given off-the-job training. ADN uses a tall hierarchical structure. Its managers have a narrow span of control and all apply an autocratic leadership style. ADN’s directors are intending to grow the business and are unsure whether internal growth or external growth is the more suitable option for a business.

Organisation and management

IDT is a multinational business that makes clothes for the mass market, and it has factories in 4 countries. Its finance needs are both short-term and long-term. The Finance Director is examining IDT’s statement of financial position, with an extract shown in Table 3.1. He has been asked to work out working capital and to describe how a rise in non-current liabilities could influence IDT.

Cash-flow forecasting and working capital

CFG is a social enterprise. It sources cocoa beans from local farmers and then turns the beans into chocolate. Ethical behaviour matters to the business. CFG has created a new chocolate bar. The Marketing Manager intends to use skimming as the pricing method and retailers as the distribution channel for the new product. He recognises that a business may be affected by many legal controls over marketing.

Marketing mix

Nicky aims to become a successful entrepreneur. She intends to launch a travel business that specialises in walking holidays. Nicky will operate in a niche market. To support her decision-making, she is drawing up a business plan. She has been informed that government support is available for business start-ups. She also understands that developing customer relationships will be important.

Enterprise, business growth and size

GTB is a business that operates in the tertiary sector. It owns 5 cafés where it sells food and drinks. The business promotes itself through social media. The Finance Manager, Moeen, is examining GTB’s financial statements. An extract appears in Table 2.1. He is thinking about methods to increase GTB’s profit margin. Moeen is aware that there are other users interested in a business’s accounts.

Analysis of accounts

RBG is an oil company with operations in 6 countries. It employs 2000 workers, including 60 managers. A number of its managers adopt a laissez-faire leadership style. All internal communication at RBG is carried out using information technology (IT) based methods. The Managing Director understands that RBG’s business activities can produce external costs and external benefits. She states: ‘Pressure groups often try to influence business decisions.’

Organisation and management

DLT makes cups and plates in country X. Its factory operates with flow production and employs 75 workers. The Human Resources Director is aware that employment is controlled by many legal rules. DLT sells 30% of its output to country Y, where it enjoys lower taxation rates and no import quotas. The Managing Director is thinking about moving the factory to another area of country X in order to satisfy the higher demand for exports.

Location decisions

WFT is a primary sector business that harvests timber from trees. The Operations Manager is aware that there are many legal controls on business activity that have environmental effects. WFT employs 30 people and relies heavily on technology to process the timber. The business is constantly looking for ways to raise added value. WFT frequently requires finance. An extract from WFT’s statement of financial position appears in Table 1.1.

Statement of financial position

Five years ago, Alana set up a restaurant in the city centre. It serves plant-based meals made from a selection of vegetables. Alana carries out primary market research to help her spot changes in consumer spending patterns. Market research can also be used to divide a market into segments. The restaurant employs 16 workers. Each worker receives the legal minimum wage. In 2023, the business earned a profit of $80 000. Alana wants to find out how a rise in interest rates could affect her business.

Market research

CQT is a public limited company. It makes paint by using flow production. This production method lets CQT enjoy economies of scale. CQT has 50 workers. At present, all of CQT’s raw materials are purchased from local suppliers. However, the Operations Director is aware that globalisation has many causes. He has been asked to explain the factors a business should weigh up when deciding whether to move its factory to another country.

Location decisions

MTO is a bank that offers loans and other financial services to 1 million customers. It operates 70 branches and employs 2800 people. Many members of staff work part-time. The business has a tall organisational structure and its managers have a narrow span of control. Effective internal communication matters. One of MTO’s objectives is growth, and the Human Resource Director has been told to recruit a new manager. Details about applicant A are given in Table 4.1.

Organisation and management

Explain two disadvantages to EP of operating a tall organisational structure.

Organisation and management

Explain two advantages and two disadvantages of using external recruitment to appoint EP’s new manager.

Recruitment, selection and training of employees

Explain four causes of changes in consumer spending patterns for a product.

Production of goods and services

Explain two factors EP ought to consider when selecting a source of finance.

Business finance

Explain two reasons why it is important for JJ to set business objectives.

Costs, scale of production and break-even analysis

Explain two benefits and two limitations for JJ of using part-time workers in its factory.

Marketing mix

Explain four reasons why profit matters to a business.

Business objectives and stakeholder objectives

Using Appendix 2 and other information, explain two ways JJ may be affected by the forecast increase in unemployment in country X.

Environmental and ethical issues

Explain four characteristics that a successful entrepreneur may display.

Marketing mix

Explain two business objectives Santhosh may have for RF.

Business finance

With Appendix 2 and other information, explain two benefits and two limitations for Santhosh from break-even analysis.

Costs, scale of production and break-even analysis

Explain two benefits that a well-motivated workforce can bring to RF.

Motivating employees