May/June 2022

Pamela runs a thriving business. She owns a gift shop that sells celebration cards, toys and candy (sweets). When Pamela launched the business 30 years ago, she had no help with running the shop. Today, she employs 5 workers. Pamela understands that keeping customers loyal matters. She uses competitive pricing. She spends most of her marketing budget on sales promotion. Pamela does not use e-commerce.

Marketing, competition and the customer

CTF is a public limited company. It manufactures beds through 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 appears in Table 2.1. The Operations Director wants to find out how a rise in inflation could influence CTF. She is aware that a manufacturing business can react to many environmental pressures.

Costs, scale of production and break-even analysis

VCG makes high-quality briefcases and travel bags. VCG employs 50 skilled production workers at its factory. VCG is intending to grow by constructing a second factory. Several possible locations are under consideration. The Managing Director is examining VCG’s financial statements. An extract is shown in Table 3.1. Both internal and external stakeholder groups of VCG are keen to see this information.

Statement of financial position

MBH is a public-sector business organisation. It operates 5 hospitals and employs 5600 staff, including 440 doctors. When hiring skilled employees, it relies on external recruitment. The Human Resources Director uses 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 internal communication at MBH takes place by email and phone calls.

Motivating employees

AHG is a long-established business because it has been trading for many years. It offers garden products, such as plants and flowers. AHG follows competitive pricing. The business employs 4 managers and 30 other staff. Every one of AHG’s managers makes use of delegation. The Finance Manager is examining AHG’s statement of financial position since she wants to assess its liquidity. Table 1.1 provides an extract.

Statement of financial position

RWB makes buses. 1200 workers are employed in its factory. Every employee gets off-the-job training. RWB motivates its staff using financial rewards. In the previous year, RWB recorded a $1.7$ million loss. The Managing Director stated: ‘A number of external influences are affecting our business, including shifts in unemployment levels and fresh legal restrictions on business activities that affect the environment.’

Motivating employees

CHW makes electrical products, including cameras. The business is creating new products. The Managing Director understands that the stage of the product life cycle can shape CHW’s decisions about promotion. He is examining data for one of its products. An extract is shown in Table 3.1. The business also wants to bring flow production into the factory.

Costs, scale of production and break-even analysis

Tom plans to resign from his job and become an entrepreneur. He and his sister intend to set up a window cleaning business. Tom has been warned that new businesses face a higher chance of failure than well-established businesses. He must decide whether a partnership would be a suitable form of business organisation for the new venture. He has worked out that the business will need $700 as start-up capital. Tom understands that every choice he makes involves an opportunity cost.

Types of business organisation

Explain four reasons why governments may support business start-ups.

Enterprise, business growth and size

Explain one advantage and one drawback to Yasin of using a break-even chart.

Costs, scale of production and break-even analysis

Explain four methods Yasin might use to advertise MB’s products.

Marketing mix

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

Motivating employees

Explain two distinct ways in which TT could expand.

Costs, scale of production and break-even analysis

Explain two advantages to TT of using lean production methods.

Analysis of accounts

Explain one way in which the information in each chart in Appendix 1 may help TT.

Recruitment, selection and training of employees

Explain four ways in which training can affect a business.

Recruitment, selection and training of employees