ࡱ> '` Ubjbj$$ 4FFMdddd$d/2ZeZeZeZeZe5f5f5f$ahɈԄi5f5fiiԄZeZellliZeZelillzZZeNe -CDdj^60/}k}lZ}Z85fflwglg5f5f5fԄԄ|l5f5f5f/iiii/4/4  Applied Business Questions for 2011 Only key points are provided, students should develop these points to fully answer the question asked. Answers given are not exhaustive, not all answers given would be required in examination. Celtic Aromatics Ltd. (a) Skills - communicating, delegating responsibility, directing staff, organising Activities - planning, keeping accounts, cash budgeting, quality control, customer care, controlling, stock, training. (b) Challenges - set up reward systems, solve existing industrial relations problems, make necessary redundancies, retraining of staff, possible loss of key personnel, to remove the suspicions of staff, building good relationship with trade unions, manpower planning for the future. (c) Licensing production of their products to firms in foreign markets Enter more foreign markets as they did in the French market Strategic alliances to attain strength in the Irish market or to enter new foreign markets Alan and Catriona McGuinness (a) Business Plan - outline of business idea, management team, production plans, marketing plans, financial plan, projected accounts, cash flow statement, breakeven analysis.. (b) Set objectives - know where you're going Select strategies - to achieve objectives Identify resources required - manpower, materials, finance, and production capacity Cash budgets, ensure good cash flow Anticipate problems - can take corrective action Control - review and adapt plans regularly Feasibility - can test that plan is realistic Short term finance for wages, materials, and services - Overdraft Trade credit Medium term finance for machinery and vehicles Leasing Hire purchase Term loan Long term finance for site, buildings and expansion Issue of shares Loans Duncloon Meats Ltd (a) Factors-communications methods - nature of message, whether internal or external, urgency, destination, cost, technology available, need for security, need for a record, whether formal or informal.. Management use of financial information (1) profit and loss account - assess past performance, identify areas of strong and weak performance, assess effectiveness of strategies employed balance sheet - assess working capital needs, assess ability to raise capital, . (2) profitability - action to reduce costs, increase revenues, close unprofitable operations, compare to other years/ companies. Liquidity - action to improve ability to pay short term debts as they fall due if needed. Gearing- can assess the debt position of the firm (3) cash flow forecasts - to ensure no cash shortages will arise in future, to identify future finance needs Product screening - to ensure the idea is worth developing further, reality testing Concept development - ensures a clear definition of the product, its features, its market, its unique selling points Feasibility study - prove on paper its possible from the point of view of production, marketing, finance, profitability, resources etc Prototype development - prove production possible, sample for product testing, market research, can cost accurately and price profitably Product testing - to ensure safety and reliability, set quality standards Marketing Approaches Limited Data controller requirements - all data collected fairly, data accurate and up to date, data used only for lawful purposes, data disclosed only with permission of person concerned, access allowed to files to persons who are subjects of files, protect files from unauthorised access HRM strategies - establish grievance procedures for unhappy staff, use employee appraisal system, rewards for staff, stock options?, improve communications with staff, regular feedback, create promotion opportunities, improve organisation structures - teamwork, empowerment, use staff needs to motivate them Marketing strategies - mail order sales, internet sales, direct marketing, use wholesalers and/or retailers for distribution, branding, introductory offers, merchandising, promotions, pricing, unique selling points. Sac Designs Limited Communications - set up reliable internal communications channels, consult with employees and get feedback on their concerns, regular meetings, build better relations with the unions, introduce teamwork systems, train staff in communications skills, listen and respond to customers complaints, select appropriate technologies for communications, monitor effectiveness of communication. Market research - will allow them to identify the target market, differentiate several target markets, identify product features customers want, find out price range for product, to find out the size of the market, find out about competitive products. Quality management- introduce quality control procedures, develop a total quality management approach, promote a quality culture in the business, conduct regular quality audits, work towards a quality mark such as ISO9000 or the Q mark, provide training to all staff on quality control, set up quality circles, empower staff in relation to improving quality, provide incentives to staff related to quality achievement. Teamwork- introduce team structures into the organisation, apply good team selection procedures, provide training for staff on teamwork skills, nurture a teamwork ethos in the firm, use team participation to motivate staff, empower staff in managing their work through teamwork, teamwork will lead to creativity and new ideas from staff. Una Hilliard Planning- setting objectives gives clear direction, identify resources needed, ensure adequate finance, select appropriate strategies, establish feasibility of project, identify problem areas to be dealt with, allows effective monitoring and control Organising - allows setting up suitable structures, allocation of responsibilities, ensure good staff relationships Controlling - measurement and assessment of performance, ensures standards are maintained, allows changes to be made when required, ensures good management of stock, cash, quality etc Tax - household - PAYE tax only, deducted at source V business-deduct and record PAYE and PRSI for staff, record and make returns for VAT if applicable, return her own income tax as self-employed person including preliminary tax Insurance household - insurance for building and contents only V business - insurance for car, house, premises and contents, public liability, employee liability, fidelity guarantee.. Marketing mix Product- mix of product/services on offer, target market, name/brand/identity, and packaging/presentation. Price- premium price, profitable, cover costs, price discrimination OAPs, group discounts, family tickets. Promotion - advertising leaflets, garden magazines, local radio, yellow pages, internet homepage, open-day, special offers. Place- local signposts, through travel agents, tourist information offices, local B&Bs, gardening clubs, schools Excel Print Plc (a) Analyse how better working capital management could improve the liquidity position of Excel Print plc. Answer Marks 5 x (3 + 3) 3 marks for how liquidity improved 1 Improve stock control reduce stock held and increase cash (improve acid ratio). 2 Improve credit control, paying creditors more slowly than debtors pay the firm (will improve cash and liquidity position). 3 Improve credit control on debtors to minimise bad debts (maintains value of debtors in accounts). 4 Use stock control to minimise stock losses due to deterioration or theft (maintains stock value). 5 Careful cash budgeting can ensure that cash outgoings will maths cash incoming and that the liquidity position will stay healthy. 6 Should check if available working capital is enough to support the levels of sales and production. Additional working capital may have to be provided through long term finance. (b) Identify two ways of improving the gearing position of Excel and explain the consequences of any actions taken. Answer Marks 2 x (6 + 4) 4 marks for explaining consequences 1 Sell additional shares and use money raised to pay off loans. Consequence control over the firm may be diluted. 2 Sale and lease back of the premises to eliminate loans. Consequence firm can use the asset but does not have ownership. 3 Apply to the government for grant aid towards the building of the premises use grant to reduce loans. Consequences government may set conditions for giving the grant, eg, providing more jobs. 4 Withhold dividend payments and use retained profits to reduce the level of loans. Consequence investors may be unhappy and sell shares. (c) Draft a report from Maria Tabor to the board of directors {1} Identifying the qualities of good financial information {2} Evaluating the benefits of improved financial information systems to the firm. Answer Marks report layout 6 marks; qualities 4 x 3 marks; benefits 4 x 3 marks Benefits of improved financial information systems: 1 Better decision making based on good information. 2 Information is continuously updated and recorded. 3 Planning for the future can be based on historical information which is reliable. 4 Past performance can be properly assessed. 5 Company accounts can be produced to a high standard. 6 Quality information allows problem areas to be identified and solutions to be worked on. Canvas and Sail Products (a) Describe how John can identify new business opportunities from inside and outside the business. Answer Opportunities from inside (any four and link answer to questions) Marks 7 x 3 + 1 x 4 Invest in Research and Development Encourage and seek staff suggestions (experienced and skilled workers) Introduce incentives scheme for innovation among staff (profit-sharing) Consult sales staff as they know the market Check and note consumer feedback may get ideas/suggestions Develop teamwork structures generally to increase innovation Develop team approach to coming up with new opportunities Develop employee empowerment, this leads to innovation and entrepreneurship Opportunities from outside (any four and link answer to questions) Market research Research and Development links with university joint projects Recruit new staff who are creative and can develop new product opportunities Monitor competitor products improve on their ideas Foreign markets can often indicate new product trends which we can follow Acquire new opportunities through any of the following: strategic alliances, buying patents, mergers, takeovers, franchises/licences 15 Import substitution identify imported products that he can make Analyse the benefits that the introduction of teamwork will bring to the business. Answer Any four points below Marks 4 x (3+2) which are 3 for the point and 2 for development. Variety of skills and approaches from different departments brought to the task Empowered teams have high motivation to complete tasks Interaction of different team members can spark ideas innovation Team members gain high level of job satisfaction through success of their team low staff turnover Less demands on management time as teams are self-managing High quality standards result. Team specially selected to take on specific tasks (c) Suggest a new ownership structure for the business. Contrast the possible benefits to the firm of this structure with the benefits of being a sole trader. Answer Any seven points from below, pointing out the contrasts. Marks 7 x (3 + 2), 3 for the point and 2 for making the contrast. Suggested new structure: Private Limited Company (a co-operative or a Public Limited Company would also be acceptable with answer adjusted) Benefits of Limited Company (contrast with sole trader) Owners have limited liability New shareholders bring additional finance. New shareholders bring additional expertise, influence, and skills Risks of business shared Easier to get loans from banks Continuity of the business if a shareholder dies Benefits of a sole trader (contrast with Limited Company) The owner gets all the profits The owner has full control Quick decisions can be made, no consultation required The business has privacy, does not have to disclose accounts Easy, quick and cheap to set up Service IT (a) Identify the market research methods employed successfully by Cora in the past, and those which could make her business successful in the future. Answer Any six points below, two past and two future Marks 5 x 4 + 1 x 5 In the past She used observation on a trip abroad to get her original idea Observation in her business to identify a market need Survey of home computer users Customers asked for feedback Reading business magazines In the future Desk research to identify towns big enough to support a franchise operation Observation by visiting towns to identify locations, and Surveys by questionnaire of consumers in target towns (b) Describe how Cora can manage the insurance risks she faces in order to keep her premiums as low as possible. Answer Any five of the following points Marks: 5 x (3 + 2), 3 for risk and 2 for how to manage. Risk Premises, fire etc. Contents, stock Cash being stolen Vehicles, accidents Public Liability Product Liability Goods in transit Management Fire alarm, smoke alarm, sprinkler system Alarm systems, secure doors and windows, minimise value of stocks held Safe, security systems including close circuit TV Maintain vehicles, qualified trained drivers Safety audits of premises, restrict public access Quality standards, product testing Minimise delivery times, minimise stock in vans, security procedures, alarms on vans Irish Farm Fertilizers Ltd a) Identify the strategies the management can use to deal with ongoing change in their business. Refer to the text above in your answer. Any four points below with reference to the text. Marks: 4 x (4 + 2), 4 marks for each point and 2 for reference (where possible, otherwise development of point). Managers move from controller to facilitator style, less resistance to change. Be proactive. Anticipate change and plan for it. Develop a business culture that is open to change. Provide training for management and staff in handling change. Management should inform and consult with other stakeholders about change that will impact on them. Introduce employee empowerment to improve employee response to change. Develop teamwork structures that can specifically deal with changes which need to be implemented. The Human Resource Manager can use Performance Appraisal with employees to regularly review the impact of change on their work. (b) Evaluate the possible impact of Government activities, decisions and policies on Irish Farm Fertilizers Ltd. Answer Any five points from those below or other relevant points. Marks: 5 x (3 + 3), 3 marks for point and 3 for explaining possible impact. Environmental standards; cost of meeting standards; inspections by Environmental Protection Agency. Health and Safety Standards; cost of meeting standards, particularly for a chemical industry. Location government may assist location by designating areas suited to chemical industry, e.g. Ringaskiddy. Grant aid for set-up of new plant, for feasibility studies or for training in new technologies. Low tax rates may attract companies like Growfast Ltd to take over and develop IFF Ltd. Industrial relations laws make it easier for employer and workers to resolve disputes. The development and maintenance of infrastructure (roads, ports, etc) is very important to firms like IFF Ltd. Government agencies who may provide assistance, e.g. Teagasc, Enterprise Ireland, IDA. Local Authority services - water, sewage, waste removal, etc. (c) Describe the benefits that training programmes and performance appraisal will bring to IFF Ltd. Answer Six points from the following, minimum of two from training and two from performance appraisal. Marks: 6 x (3 + 2), 3 for point and 2 for development Training Development of skills Increase productivity Employees become multi-skilled flexibility Enable introduction of new technology or processes Prepares staff to take on promotions Improve quality of finished product Performance Appraisal Firm gets useful feedback and information from employees Identify the training and development needs of workers Identify specific problems experienced by workers Identify achievements and suitable rewards for staff Identify employees for promotion Appraisal motivates staff and makes them more productive Glenfada Village (a) Outline how community development activities assist the growth of enterprise in a village like Glenfada. Refer to the text above in your answer. Answer Any 5 points from those below Marks 5 x (3 + 2), 3 marks for each point and 2 for application to text. Brings all individuals and organisations together to work as a team. People learn co-operation, management and other skills needed in enterprise. Community activities promote enterprise among the population. An audit of enterprise opportunities may be carried out. State agencies may be enlisted to assist and support enterprising activities, such as FS and Enterprise Ireland. An Enterprise Centre is often set up as a focal point to serve the needs of new entrepreneurs. Many people realise they have entrepreneurial skills through community development work. (b) Analyse the short, medium and long-term finance needs of the leisure activities centre and the sources of finance they should use. Answer Marks: 3 x (5 + 5), 5 marks to identify finance needs and 5 to identify sources. 1 Short-term finance Needs Finance to pay for wages, insurance, rates, materials, heat, light, power, i.e. day-to-day running expenses and materials. Sources Credit from service suppliers, e.g. ESB, phone company, credit from materials suppliers. Bank overdraft Unpaid tax amounts, e.g. PAYE, VAT, PRSI 2 Medium-term Finance Needs Purchase of equipment such as boats, sailboards, and other stocks of equipment. Purchase of vehicles, office furniture and office machinery. Any other needed Sources Term loans used to purchase equipment Purchase of assets under Hire Purchase arrangements The use of assets by sometimes leasing them with an option to purchase. 3 Long-term Finance Needs Large amounts of finance to fund the development of the land for leisure activities, for the building of the jetty, for building offices and other premises. Sources Their own capital which they can invest Sale of shares to investors by setting up a limited company Long-term bank loans, possibly using their land or other assets as security. Grants from some government agencies or perhaps the Leader Fund of the EU. (c) Illustrate by the use of examples how good selection of staff can ensure the success of the business. Answer Any five points from below and link each one to the success of the business. Marks 5 x (3 + 2), 3 marks for each point or example and 2 for link to success of the business. Match employees selected to a clear person specification for each job, e.g. trained lifesaver to supervise water pool. Ensure that selection processes, interview, etc allow the best candidate to be selected for each job. Ensure staff selected pass relevant experience, e.g. leading groups of climbers. Ensure staff have the necessary skills, e.g. fishing, sailing, etc. Ensure staff have adequate fitness levels and are suited to active outdoor work. Ensure staff can relate to people well, necessary in leisure industry. Ensure staff are interested and motivated by the work so that they will be good employees. Ensure staff are not overqualified as they may not stay. 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