Oct/Nov 2019

BFF produces a variety of computer screens, which it sells to other manufacturers. The Managing Director has been reviewing BFF’s income statement and is concerned about what an increase in material costs will do. She commented: ‘Advances 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 ought to raise its prices.

Income statements

WKN sells household products, including plates and brushes. In the previous year, sales in WKN’s 200 shops went up, but profit dropped by 80% to $5m. WKN’s Human Resources Director said: ‘All retailers are finding this part of the business cycle difficult. WKN must reorganise the business. This will create redundancy for 1800 shop workers. WKN intends to create 100 new jobs in the marketing department at head office to help preserve customer loyalty. The company is cooperating with trade unions to make these changes happen.’ WKN must decide whether the candidates for the new jobs should be chosen from the workers who are being made redundant.

Economic issues

Keila runs a profitable small bakery. She wants to grow the business. One possibility is to open a café selling cakes and drinks in a well-known tourist area. Her main promotional plan is to hand out free samples. She has collected customer and cost data in Table 1. Some of the information was gathered through primary market research.

Costs, scale of production and break-even analysis

VXH makes a variety of fruit-based soft drinks using batch production. Specialisation is used in VXH’s factory. Over the last two years, the business has expanded rapidly. VXH has raised its production workforce from 40 to 80, which has increased the span of control for each manager. It has been hard for VXH to maintain worker motivation. The Human Resources Manager must choose whether job rotation or financial bonuses would be the better way to raise employee motivation.

Motivating employees

GOP is an oil producer located in country X. It is a public corporation. GOP intends to construct a 200 km pipeline across the country and will use retained profits to finance it. The pipeline will need planning permission from the Government. Environmental pressure groups are concerned. A spokesperson for GOP said: ‘GOP’s objectives differ from those of private sector businesses. This pipeline will generate 2000 skilled construction jobs and lessen the need for other businesses to import oil.’

Types of business organisation

Samira runs a thriving takeaway business selling fried food. She has 2 part-time workers. In the previous year, revenue dropped for the first time in 10 years. This happened because competition increased from a well-known franchise. To deal with this, Samira may reduce her prices, as Table 1 shows. Another possibility is to introduce a delivery service. Samira intends to carry out some market research. She must choose between using secondary research or setting up a focus group with some of her customers.

Market research

LBM operates as an online fashion clothing retailer. Its target market is 18-35 year olds. Revenue rose by 25% last year to $600m. The Marketing Director commented: ‘All businesses must meet customer needs. Customer service matters, so every employee is given induction training. LBM gives customers a broader product choice than its rivals. Promotion is carried out through social media networks. Is there any reason to open our own shops?’ LBM intends to introduce 3500 new styles each week and will need to organise finance for the extra inventory.

Recruitment, selection and training of employees

NBV is a multinational company that produces building products, including bricks. In the previous year, NBV’s financial accounts reported capital employed of $144 billion. NBV operates in 18 countries and has a total workforce of 400 000. NBV is affected by some diseconomies of scale. To avoid exchange rate problems, all raw materials are bought from the countries where it operates. NBV plans 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.

Analysis of accounts

Identify and explain one benefit and one cost MF could face from developing the new product.

Marketing mix

Identify and explain the effects on the following two stakeholder groups of MF arising from the production of this new product. Employees Customers

Business objectives and stakeholder objectives

Identify and explain how each of these four departments of MF is likely to be affected by the launch of its new product. Marketing. Human Resources (HR). Operations. Finance.

Organisation and management

Identify and explain two distinctions between MF and unincorporated businesses.

Economic issues

Identify and explain two methods QC could use to add value to its new service.

Market research

Neil and the part-time employees are both stakeholders in QC. Identify and explain: • one objective that will be identical for both of these stakeholders • one objective for Neil that will conflict with an objective of the part-time employees.

Motivating employees

Neil and Jin need to let employees know 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 ways Neil and Jin could raise QC’s cash flow.

Cash-flow forecasting and working capital