Case Study : Border Tweed to Border Tead

Read the case study below and answer the questions that follow.

Background

Sandy and Gillian have been happily married for just over seven years. They met eight years ago at a textile factory in Hawick, where they both started work after leaving school. The textile factory was the biggest employer in the area.

During these years they saved hard and finally bought their dream house a four-bedroom detached traditional bungalow. The house needed upgrading, so the couple managed to get it at a bargain price. They put down a good deposit and took a mortgage for 60,000. They were looking forward to renovating the house over time.

The present situation

The textile trade was the main industry in the Scottish Borders. In the past few years, however, factors such as high prices for cashmere wool and declining orders from Japan and America have led to short-time working and some redundancies within the industry.

Last year Sandy and Gillian were both made redundant at the same time. Faced with the prospect of moving away to find work or being unemployed, they decided they would start up their own business. They would run a Bed and Breakfast guesthouse. The Scottish Borders is a popular tourist area and the couple lived in a very beautiful spot. It was also on the main route for travellers to both sides of the border. They decided to use their redundancy money to upgrade the accommodation immediately to the required standard.

Sandy and Gillian know nothing about running a business. They are hoping to find some useful information on running a Bed and Breakfast business and whether there are any government grants available to help them get started. Sandy arranged a meeting with the bank manager to have a talk about their new business. They would need a new business account and help in preparing a business plan.

The couple are aware of the importance of information technology to help them run their business. They have set aside 2,000 for a new computer, any software they might need and a good quality printer. They have decided what tasks each of them will be responsible for. Sandy will look after the accounts and negotiate any grants that may be available for the business. Gillian has agreed to look after bookings, customer correspondence and promotional material, including design of leaflets and business cards for the business. They have read a lot about advertising businesses on the internet and think this would offer a lot of opportunity for their Bed and Breakfast business.

Border Tweed to Border Tead: questions

1. (a) Suggest the most suitable type of business organisation for

Sandy and Gillian to set up. Give reasons for your answer. (4)

(b) Identify a possible external stakeholder in their business.

State what interest that stakeholder would have. (2)

2. Describe two useful sources of information that would help Sandy

and Gillian find out if their venture would be successful. (4)

3. (a) Give two reasons why an IT training course would benefit

Sandy and Gillian. (2)

(b) Describe two ways they could use the internet to support their business. (2)

4. Sandy has agreed to be responsible for the business accounts. Explain why financial planning and maintaining financial records are essential for business survival. (5)

5. Gillian has agreed to look after the marketing aspect of the business. Explain the importance of the marketing mix to a business such as Sandy and Gillians. (6)

(25)