Currently, PF sells 200 chairs per month. Each chair sells at an average price of 100....

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Currently, PF sells 200 chairs per month. Each chair sells at an average price of 100. Below are the forecasted foxed and variable costs for 2019. Table 1: Fixed costs Rent 24000 Insurance 6000 Salaries 11000 Lease on equipment 40000 Cleaning service 18000 Table 2: Variable costs per chair Material 50 Delivery 5 (a) Define the term batch production (b) (i) Calculate the break-even level of output for PF for 2019 (show all your working). EE [2] [2] (ii) Construct a fully labelled break-even chart, to scale, for PF for 2019 [4] (iii) Calculate the forecasted profit if PF sels 2400 chairs in 2019 (show all your working). 121 Answer one question from this section. 3. Jacob Strutz (JS) -5- N18/3/BUSMT/SP2/ENG/TZ0/XX Section B Jacob Strutz (JS) is an American multinational company that produces jeans. Founded in 1860, for 100 years JS enjoyed steady growth in sales, mostly in the United States and then in Canada and Mexico. In the 1960s and 1970s, when teenagers worldwide began wearing jeans, JS's sales increased significantly. JS's premier product is Strutz's No.5 jeans, one of the best-known brands in the world. In the late 1970s, JS operated 71 factories in the United States. In 1994, its sales peaked at $7.6 billion worldwide, but then began to decline. In 2002, JS made the decision to close its last remaining factories and outsource manufacturing to foreign manufacturers, whose quality was more difficult to control. By 2017, annual sales were only $4.5 billion. Even sales of Strutz's No.5 jeans declined, and JS faced intense competition, including foreign competition. JS briefly experimented with fast fashion, an industry practice developed in the United States in response to cheap, foreign imports. In fast fashion, new design concepts are quickly manufactured once they have been tested at fashion shows. Unfortunately, fast fashion worked against JS's brand identity. Surveys indicated that JS's brand has value and inspires loyalty, though focus groups of young consumers did not perceive JS as cool. JS has been a leader in corporate social responsibility (CSR). Since the 1890s, it has pursued profits through values. More recently, JS introduced Strutz's chemical-free jeans. Because many of JS's suppliers operate in areas with few pollution regulations, to remain consistent with its image of CSR, JS is insisting that suppliers follow innovative but expensive chemical-free processes. Define the term multinational company (MNC). (b) Explain the importance to JS of: brand value; brand loyalty. (ii) (c) (i) Draw and label a product life cycle for Strutz's No.5 jeans. (ii) Explain the position of Strutz's No.5 jeans on the product life cycle. (d) Discuss the role and impact of globalization on the growth and evolution of JS [2] [2] [2] [2] [2] [10] Turn over 4. Dana's Handbags (DH) -6- N18/3/BUSMT/SP2/ENG/TZ0/XX Dana's Handbags (DH) is a small manufacturer of women's handbags. DH sells directly to large retail chains in Europe. The company is privately owned and has fifteen shareholders. Table 1: Selected financial data for DH for 2016 and 2017 (figures in $000s) 2016 2017 Sales revenue 28000 29000 Cost of goods sold 14000 15000 Gross profit 14000 14000 Net profit after interest and tax 1370 1300 Total current assets (at year end) 5000 5200 Total current liabilities (at year end) 3000 3500 Stock (inventory) 3000 3200 1000 900 Cash Beginning in 2017, DH adopted a programme of corporate social responsibility (CSR) by: donating money to charities encouraging employees to do three paid hours per week of community service during work hours using only biodegradable materials in its handbags. This programme was expensive. DH's management thought that a programme of corporate social responsibility (CSR) would strengthen DH's brand. During the first year of the corporate social responsibility (CSR) programme, employee morale improved and DH received favourable media attention. However, at the annual general meeting in January 2018, financial results from 2017 revealed that sales growth had not improved. Several influential shareholders complained about the high cost of the corporate social responsibility (CSR) programme. Other shareholders suggested that DH should develop consumer awareness that it is a socially responsible company. (a) Identify two features of a private limited company. (b) Calculate: (1) the net profit margins for DH for 2016 and 2017; (ii) net current assets (working capital) for DH for 2016 and 2017. (c) Explain one method of above-the-line promotion and one method of below-the- line promotion that DH could use to raise consumer awareness that it is a socially responsible company. (d) Discuss DH's decision to develop a policy of corporate social responsibility (CSR). [2] [2] [2] [4] [10 5. Benno -7- Benno is a soft drinks manufacturer. Its mission statement is "to produce healthy drinks without damaging the environment. Competition in the healthy soft drinks market is fierce. Benno uses a competitive pricing strategy. However, sales of Benno's drinks have fallen significantly over the last five years, particularly in the 12-18 age group. The business has no accumulated retained profits. N18/3/BUSMT/SP2/ENG/TZ0/XX Benno is committed to innovation and corporate social responsibility (CSR). Its research and development division has recently invented a new biodegradable drink pack ring that starts to break down within two hours of contact with sea water. It dissolves fully in 48 hours. Currently, 98% of pack rings are made of plastic and when dumped in the sea are responsible for the death of many sea creatures. A focus group of loyal customers used regularly by Benno's marketing department is wholeheartedly in favour of the new drink rings. However, the marketing director has read recent studies that suggest: purchases of green products are not increasing, despite the positive attitude of many consumers towards sustainability and biodegradable products consumers continue to prioritize price when purchasing soft drinks. To manufacture the new drink rings, machinery costing $5 million would be needed. Drink ring production unit costs would rise from 10 cents to 15 cents and prices of a six-pack of Benno soft drinks would have to increase by 5%. Benno's net profit margin on a six-pack is 10%. Benno's director of corporate social responsibility favours the change to the new drink rings but is opposed by both the finance director and marketing directors. [Source: Image provided with permission from ESPR (a) Define the term innovation. [2] (b) Explain two roles of Benno's mission statement. [4] (c) Explain one advantage and one disadvantage for Benno of using a focus group of loyal customers. [4] (d) Recommend whether Benno should replace its plastic drink rings with the new biodegradable drink rings. [10] Turn over -8- Section C N18/3/BUSMT/SP2/ENG/TZ0/XX Answer one question from this section. The organizations featured in sections A and B and in the paper 1 case study may not be used as a basis to your answer. 6. With reference to an organization of your choice, examine the impact of innovation on promotional strategy. [20] 7. With reference to an organization of your choice, examine the impact of globalization on change in operations management. [20] 8. With reference to an organization of your choice, examine the impact of ethics and culture on human resource management. (201 Currently, PF sells 200 chairs per month. Each chair sells at an average price of 100. Below are the forecasted foxed and variable costs for 2019. Table 1: Fixed costs Rent 24000 Insurance 6000 Salaries 11000 Lease on equipment 40000 Cleaning service 18000 Table 2: Variable costs per chair Material 50 Delivery 5 (a) Define the term batch production (b) (i) Calculate the break-even level of output for PF for 2019 (show all your working). EE [2] [2] (ii) Construct a fully labelled break-even chart, to scale, for PF for 2019 [4] (iii) Calculate the forecasted profit if PF sels 2400 chairs in 2019 (show all your working). 121 Answer one question from this section. 3. Jacob Strutz (JS) -5- N18/3/BUSMT/SP2/ENG/TZ0/XX Section B Jacob Strutz (JS) is an American multinational company that produces jeans. Founded in 1860, for 100 years JS enjoyed steady growth in sales, mostly in the United States and then in Canada and Mexico. In the 1960s and 1970s, when teenagers worldwide began wearing jeans, JS's sales increased significantly. JS's premier product is Strutz's No.5 jeans, one of the best-known brands in the world. In the late 1970s, JS operated 71 factories in the United States. In 1994, its sales peaked at $7.6 billion worldwide, but then began to decline. In 2002, JS made the decision to close its last remaining factories and outsource manufacturing to foreign manufacturers, whose quality was more difficult to control. By 2017, annual sales were only $4.5 billion. Even sales of Strutz's No.5 jeans declined, and JS faced intense competition, including foreign competition. JS briefly experimented with fast fashion, an industry practice developed in the United States in response to cheap, foreign imports. In fast fashion, new design concepts are quickly manufactured once they have been tested at fashion shows. Unfortunately, fast fashion worked against JS's brand identity. Surveys indicated that JS's brand has value and inspires loyalty, though focus groups of young consumers did not perceive JS as cool. JS has been a leader in corporate social responsibility (CSR). Since the 1890s, it has pursued profits through values. More recently, JS introduced Strutz's chemical-free jeans. Because many of JS's suppliers operate in areas with few pollution regulations, to remain consistent with its image of CSR, JS is insisting that suppliers follow innovative but expensive chemical-free processes. Define the term multinational company (MNC). (b) Explain the importance to JS of: brand value; brand loyalty. (ii) (c) (i) Draw and label a product life cycle for Strutz's No.5 jeans. (ii) Explain the position of Strutz's No.5 jeans on the product life cycle. (d) Discuss the role and impact of globalization on the growth and evolution of JS [2] [2] [2] [2] [2] [10] Turn over 4. Dana's Handbags (DH) -6- N18/3/BUSMT/SP2/ENG/TZ0/XX Dana's Handbags (DH) is a small manufacturer of women's handbags. DH sells directly to large retail chains in Europe. The company is privately owned and has fifteen shareholders. Table 1: Selected financial data for DH for 2016 and 2017 (figures in $000s) 2016 2017 Sales revenue 28000 29000 Cost of goods sold 14000 15000 Gross profit 14000 14000 Net profit after interest and tax 1370 1300 Total current assets (at year end) 5000 5200 Total current liabilities (at year end) 3000 3500 Stock (inventory) 3000 3200 1000 900 Cash Beginning in 2017, DH adopted a programme of corporate social responsibility (CSR) by: donating money to charities encouraging employees to do three paid hours per week of community service during work hours using only biodegradable materials in its handbags. This programme was expensive. DH's management thought that a programme of corporate social responsibility (CSR) would strengthen DH's brand. During the first year of the corporate social responsibility (CSR) programme, employee morale improved and DH received favourable media attention. However, at the annual general meeting in January 2018, financial results from 2017 revealed that sales growth had not improved. Several influential shareholders complained about the high cost of the corporate social responsibility (CSR) programme. Other shareholders suggested that DH should develop consumer awareness that it is a socially responsible company. (a) Identify two features of a private limited company. (b) Calculate: (1) the net profit margins for DH for 2016 and 2017; (ii) net current assets (working capital) for DH for 2016 and 2017. (c) Explain one method of above-the-line promotion and one method of below-the- line promotion that DH could use to raise consumer awareness that it is a socially responsible company. (d) Discuss DH's decision to develop a policy of corporate social responsibility (CSR). [2] [2] [2] [4] [10 5. Benno -7- Benno is a soft drinks manufacturer. Its mission statement is "to produce healthy drinks without damaging the environment. Competition in the healthy soft drinks market is fierce. Benno uses a competitive pricing strategy. However, sales of Benno's drinks have fallen significantly over the last five years, particularly in the 12-18 age group. The business has no accumulated retained profits. N18/3/BUSMT/SP2/ENG/TZ0/XX Benno is committed to innovation and corporate social responsibility (CSR). Its research and development division has recently invented a new biodegradable drink pack ring that starts to break down within two hours of contact with sea water. It dissolves fully in 48 hours. Currently, 98% of pack rings are made of plastic and when dumped in the sea are responsible for the death of many sea creatures. A focus group of loyal customers used regularly by Benno's marketing department is wholeheartedly in favour of the new drink rings. However, the marketing director has read recent studies that suggest: purchases of green products are not increasing, despite the positive attitude of many consumers towards sustainability and biodegradable products consumers continue to prioritize price when purchasing soft drinks. To manufacture the new drink rings, machinery costing $5 million would be needed. Drink ring production unit costs would rise from 10 cents to 15 cents and prices of a six-pack of Benno soft drinks would have to increase by 5%. Benno's net profit margin on a six-pack is 10%. Benno's director of corporate social responsibility favours the change to the new drink rings but is opposed by both the finance director and marketing directors. [Source: Image provided with permission from ESPR (a) Define the term innovation. [2] (b) Explain two roles of Benno's mission statement. [4] (c) Explain one advantage and one disadvantage for Benno of using a focus group of loyal customers. [4] (d) Recommend whether Benno should replace its plastic drink rings with the new biodegradable drink rings. [10] Turn over -8- Section C N18/3/BUSMT/SP2/ENG/TZ0/XX Answer one question from this section. The organizations featured in sections A and B and in the paper 1 case study may not be used as a basis to your answer. 6. With reference to an organization of your choice, examine the impact of innovation on promotional strategy. [20] 7. With reference to an organization of your choice, examine the impact of globalization on change in operations management. [20] 8. With reference to an organization of your choice, examine the impact of ethics and culture on human resource management. (201