Oct/Nov 2016

C&C enjoys a strong reputation for producing high-quality, hand-made shoes. It employs 120 skilled full-time staff. C&C must recruit 20 more production workers to satisfy rising demand. The Managing Director commented: ‘I don’t know why people worry about globalisation. Two years ago we did not export, now exports make up 10% of our output and are still rising.’ C&C has orders for 100 000 pairs of shoes in 2017. The Managing Director is uncertain whether new technology should be added to the production process.

Recruitment, selection and training of employees

Dowson is a large business that owns several shops. It offers a range of electrical goods, including computers and televisions. The Finance Director has been reviewing some recent financial information, as shown in Table 1. He is satisfied with Dowson’s liquidity, but he also knows that the business needs to cut its high debt burden, which includes a $6m overdraft. He remarked: ‘The economy is in recession. Many small retailers have failed. Size is an advantage!’

Analysis of accounts

YOGO is a newly established business that Amelia has just created with Government support. YOGO produces a variety of sweets (candy) aimed at adults, so it operates in a niche market. Amelia has been examining the marketing section of her business plan, and she must choose the pricing method to use. She is also spending a large amount of money on packaging. She carried out no primary market research because she thinks secondary data will be enough for decision-making. She assumes that every adult likes sweets.

Marketing mix

DCP produces a variety of high-quality industrial paints. It sells directly to 6 major business customers who are based in different countries. DCP sets a price of $0.35 per litre. It competes in a highly competitive market. The Operations manager has been examining DCP's costs, as shown in Table 2. He wants to raise profit, but he does not wish to purchase cheaper materials.

Costs, scale of production and break-even analysis

APQ is a multinational company. It produces chemicals sold to farmers, helping them raise food output. It intends to build a factory in country X, a developing country with low interest rates. The Finance Director stated: ‘This factory will generate a number of external benefits. APQ is a public limited company that aims to behave ethically towards all of its stakeholders.’ The new factory will cost $100m and APQ will face an opportunity cost. The Finance Director is unsure which source of finance should be chosen for the new factory.

Business finance: needs and sources

$LAND offers a broad assortment of products, ranging from food to toys. It operates 400 shops in country B. $LAND’s marketing strategy relies on penetration pricing. $LAND carries out no advertising and purchases all its products straight from manufacturers. Even though the country is in recession, revenue and profit have risen. The Marketing Director plans to grow the business by opening shops in other countries. He thinks $LAND will do well in other countries.

Marketing strategy

TKF manufactures furniture such as beds and tables through job production. TKF employs 3 part-time office staff, 8 production workers and 1 manager, who is supposed to conduct quality control. Because the factory is busy, most communication takes place by email. After several customer complaints, the manager believes TKF has some communication barriers. He thinks effective internal communication could make TKF more efficient. The manager is also concerned about TKF's cash flow position. Figures in brackets are negative.

Internal and external communication

Moeen and Ali are intending to open a small luxury hotel in the centre of a city in country R. They have a budget of $30000 to cover all costs. After investigating different forms of business organisation, as shown in Table 2, Moeen believes the hotel ought to be a private limited company. If the business is going to succeed, Ali understands that choosing the correct location will be important. He cannot decide whether to recruit full-time workers or part-time workers.

Types of business organisation

P & P is a business that makes paint.

Motivating employees

P & P is reacting to a pressure group’s influence.

Environmental and ethical issues

P & P has chosen batch production for the new paint. Identify and explain two factors that may have influenced this decision.

Costs, scale of production and break-even analysis

Identify and explain two reasons why added value matters to P & P.

Enterprise, business growth and size

Identify and explain one advantage and one disadvantage to Ghaziz and Jasmin of operating as a business partnership.

Types of business organisation

Calculate the break-even output level for the house cleaning service from the information in Appendix 1.

Costs, scale of production and break-even analysis

As Ghaziz and Jasmin intend to grow their business, identify and explain one economy of scale and one diseconomy of scale that could arise as the business expands.

Enterprise, business growth and size

Identify and explain two reasons why market research matters to GJ before she starts the new service.

Market research