Oct/Nov 2024

RSL makes paint by means of flow production. In the previous year, it produced 10 million litres of paint. RSL employs 6 managers and 80 workers in its factory. The managers adopt different leadership styles. For internal communication, RSL uses email and telephone calls. The Operations Manager wants to find out why some manufacturing firms are moving their operations to other countries.

Organisation and management

Mitchell is an entrepreneur who plans to launch a business selling books. As part of his business plan, Mitchell has completed some market research. An extract is shown in Fig. 2.1. Mitchell will use microfinance as a source of finance. He wants to find out whether the opportunities from using ecommerce for a new business are greater than the threats. Fig. 2.1 Extract from Mitchell’s market research data for 2023. Chart 1: Kinds of people who read books. The figures are: Children 35%, Older people 27%, Adults 20%, Students 18%. Chart 2: Book sales by type (million). Approximate sales are: Electronic books 20 million, Audio books 10 million, Paperbacks 50 million, Hardbacks 15 million.

Market research

JTA is a public limited company. It offers holidays to a mass market. The business has 44 shops and employs 200 people. The Finance Director is considering ways in which a business can increase profit. She has been asked to analyse JTA’s financial performance by using ratio analysis. An extract from JTA’s financial statements is shown in Table 3.1. Table 3.1 Extract from JTA’s financial statements for 2023 ($ million): Revenue 900, Profit 100, Capital employed 800.

Analysis of accounts

FSW is a multinational company that operates in 6 countries. It produces steel used by the construction industry. Quality assurance is employed to make sure production is of a high standard. FSW has numerous stakeholder groups that take an interest in its activities. The Managing Director recognises that FSW’s business generates external costs. She also knows that pressure groups attempt to affect business decisions.

Environmental and ethical issues

Avtar runs a private-sector car repair business. It is a small firm with 2 full-time employees. He wants to discover the most effective way for a business to raise added value. Avtar’s business needs finance for many different reasons. He also wants to find out how an economic recession could affect his business.

Enterprise, business growth and size

SNT is an ethical business. It makes a range of soft drinks through batch production. In 2023, SNT produced 300 000 bottles of soft drinks each week. Many factors influence the amount of inventory the business ought to keep. The directors of SNT plan to grow the business into new overseas markets by setting up a joint venture. They are also thinking about licensing as another method to help deal with the possible difficulties of entering these new markets.

Production of goods and services

HRO makes children’s toys and operates as a private limited company. Its shareholders mainly aim to raise profit. That may clash with the aims of other stakeholder groups, such as its 30 suppliers. HRO’s Managing Director understands that market research can support marketing decisions. The Finance Director is drawing up HRO’s statement of financial position. Table 3.1 gives an extract.

Statement of financial position

TLA is a large hotel with 200 rooms and 3000 employees. A high proportion of these workers belong to a trade union. The Managing Director is intending to grow the business, but is concerned that diseconomies of scale may appear as TLA gets bigger. The Human Resources Director has been told to hire 2 new managers. She understands that it is vital for all managers to adopt the most suitable leadership style. Every new employee at TLA is given induction training.

Recruitment, selection and training of employees

BPT makes bicycles in country A using batch production. The Operations Director is drawing up a break-even chart for one of BPT’s bicycles, as shown in Fig. 1.1. The directors are considering ways to reduce BPT’s break-even level of output. BPT brings in 60% of its raw materials and sells its bicycles to 8 countries overseas. The Managing Director wants to find out how a depreciation in country A’s exchange rate and the introduction of import tariffs could affect BPT. Fig. 1.1 is headed: "Partly completed break-even chart for one of BPT’s bicycles". The vertical axis is labelled "costs and revenue $" and runs from 0 to 300 000. The horizontal axis is labelled "output in units" and runs from 0 to 300. There are two straight lines on the chart labelled X and Y. Line X begins at about $50\,000$ when output is 0 and rises steadily. Line Y starts at $0$ at output 0 and rises more steeply than line X.

Costs, scale of production and break-even analysis

Ramon is an entrepreneur. He intends to launch a home tutoring service that would give students extra support in maths. He is thinking about buying a franchise. Although he has drawn up a business plan, he is worried that a rise in the inflation rate may affect his business. Ramon also wants to know whether crowdfunding is the most suitable source of finance for a start-up business to use.

Enterprise, business growth and size

LRL produces skincare products, including face cream. It is a private sector business in country X. One of LRL’s aims is to support sustainable development. Keeping customer loyalty high is important, and the Marketing Director understands that a business needs an appropriate marketing mix. He is examining data to work out the value of LRL’s market share. An extract is shown in Fig. 3.1. The total value of sales of skincare products in country X during 2023 was $120$ million. Fig. 3.1 has the title: "Market share data for skincare products in country X in 2023 (%)". The pie chart shows: LRL: 30% Competitor A: 20% Competitor B: 15% Others: 35%.

Marketing mix

RHN operates as a clothing retailer. It runs 50 shops and employs 290 people. Every RHN employee receives training. One form of financial reward is commission. When a vacancy arises, the business frequently recruits from within. In the previous year RHN recorded a profit of $1.5$ million. The Managing Director, acting as an internal user of accounts, has been examining RHN’s statement of financial position.

Recruitment, selection and training of employees

Explain four reasons that might cause a business to remain small.

Enterprise, business growth and size

Explain two management functions for CC’s new manager.

Organisation and management

Explain two advantages and two disadvantages of CC when using batch production.

Production of goods and services

Explain two reasons CC may require finance.

Marketing mix

Explain two advantages and two disadvantages of BB being a public limited company.

Motivating employees

Explain two effects of BB having a short chain of command.

Marketing strategy

Explain one way each of the following stakeholder groups could be affected if a business becomes a multinational company. • Shareholders • Employees • Suppliers • Government

Location decisions

Explain two reasons BB may choose to market its products in overseas markets.

Business and the international economy

Explain two ways in which the slump in country P’s economy could be affecting SA.

Business objectives and stakeholder objectives

Explain two reasons that lead SA to want labour turnover to remain low.

Recruitment, selection and training of employees

Explain four functions of packaging for a business.

Achieving quality production

Explain two advantages and two disadvantages of SA when it uses just-in-time (JIT) inventory control.

Production of goods and services