ࡱ> xzwg XbjbjVV *r<r<PllAteee@@@@@@@$BEE@ee@@www@w@wwf><pV@Ёjq>D@@0A>d!Fj!FV@!FV@4e!wleee@@aeeeA!Feeeeeeeeel : Solutions to Applied Business Questions Leaving Certificate Business 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. 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 + 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 intrapreneurship 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 can 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 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, for other relevant answers, 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 which 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 which can specifically deal with changes that 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 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 or 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, I.D.A.. 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 together People learn co-operation and 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, 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 Requiring the use of assets by leasing them sometimes 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/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. Select managers/supervisors with necessary skills and share activities. Irish Colourcraft Ltd (a) Describe the strategies that can make Irish Colourcraft Ltd. more ethical and socially responsible in the way it operates. Refer to the text above in your answer. Answer Five points from the list below with reference to the text in each case. Marks 5 x (3 + 2), 3 marks for each point and 2 for referring to the test. Management should take leadership role in being ethical and socially responsible Management should set objectives and plan for the firm to be ethical and socially responsible. Introduce a code of ethical behaviour for the firm Set high quality standards for product and service, introduce TQM Set minimum standards in relation to product safety Reviews of treatment of workers regularly to ensure fair and respectful treatment Ensure all laws and regulations are fully known and complied with Take a proactive role in relation to environmental protection Be open and transparent about the activities of the firm Engage in dialogue with stakeholders in the firm Conduct social audits of the firms activities to identify issues which require action (b) Evaluate the benefits that empowerment and TQM can bring to the operation of the business. Answer Six points from those below or other relevant points Marks 6 x (3 + 3), 3 marks for each point and 3 marks for development Empowerment Can unlock the talents of each employer and benefit from the full potential of each employee Develops intrapreneurship Increase employee ability to respond to change Employee get increased job satisfaction Increased motivation to complete tasks Increased loyalty to the firm Employees may develop so much that they can take on a promotion. TQM Improved product quality and customer satisfaction Increased customer loyalty and repeat orders Reductions in costs and wastage of materials Firm can charge higher prices in line with product quality Good company reputation can lead to new customer and new markets TQM makes everyone in firm focused on common objectives. Velvet Confectionery Ltd (a) Identify the important elements of the marketing mix for the product they are selling. Answer Any three important elements required for each part of the marketing mix. Refer to the product in question. Marks 8 + 8 + 7 + 7 Product The product concept how it meets consumers needs Features of the product and unique selling points (USP) Product design, appearance, appeal Products identify name, logo, brand, trademark Packaging for protection, information, appeal Price Price as part of product image, high price equals high quality Profitability price must more than cover all costs of the firm Pricing strategies competitive, profit maximising (??), costs, plus profit, market share Promotion Advertising Sales promotions Public relations Sponsorships Direct marketing Sales team Internet marketing Place Channels of distribution, mix of different channels Outlets convenient to the consumer Transport methods that deliver on time and in good condition In-store positioning Point of Sale influence, display and advertising. (b) Analyse the benefits that an effective stock control system can bring to a business like Velvet Confectionery Ltd. Answer Any five points from those below identifying the benefit in each case Marks 5 x (3 + 2), 3 marks for point and 2 for the benefit to the firm. Ensures stocks are big enough to meet customer demand and avoid loss of sales Ensures adequate stocks of raw materials so production can continue Ensures stocks are not bigger than necessary so that storage costs are minimised, e.g. insurance, light, heat, power, security, etc. Maintain stocks at optimum level to maximise productions and sales and at the same time minimise costs Reduces stock losses due to goods going out of date, becoming obsolete or being stolen Allows us to know when to order new stocks and how much to order Allows us to monitor and control t he movements of stocks in and out of the business. (c) Describe how favourable economic factors would help the start up of the new business. Any five of the following points stating why they would be favourable Marks 5 x (3 + 2), 3 marks for each point and 2 for development. High levels of employment result in high spending and demand for products Low interest rates result in low costs for borrowing for the business in a start-up situation Stable exchange rates with currencies of export markets reduce dangers of exchange losses Low inflation rates result in costs remaining low and lack of pressure from staff for pay rises Lower inflation rates in Ireland compared to other countries will give a competitive advantage to the firm relative to foreign competitors Low tax rates allow the firm to keep most of their profits for reinvesting in the growth of the firm. Low tax rates on employees will reduce pressure for wage increases and keep costs down Grants help finance the business for premises, feasibility studies, staff training Economic growth will result in increases in demand, particularly for a luxury good. Excel Print plc (a) Better credit control will reduce non payment by debtors and increase the amount of cash held Ensuring that the credit days allowed to debtors are less than the credit days received from creditors will improve our liquidity position Effective stock control procedures will greatly reduce stock losses with a resulting increase in our cash position and liquidity Good stock control will also allow the firm to reduce the amount of stock that must be held. This will increase the cash holdings and reduce the value of stock held and as a result will improve out acid ratio Improved cash budgeting by spreading large one off payments over the twelve months of the year will eliminate liquidity problems at the time of an annual payment (b) The firm could make a sale and leaseback arrangement on their new premises allowing them to continue to use the premises long-term but also allowing them to use the cash from the sale to reduce their debts (gearing). This would mean that they have less control over their premises than if they owned them. The firm could issue additional ordinary or preference shares to raise cash which could be used to pay back their loans and improve the gearing of the firm. The issue of ordinary shares to new shareholders would dilute the ownership control of the existing shareholders (c) Use standard report format ( 1) Qualities of good financial information Relevant Understandable Reliable Complete Objective Timely Comparable (2) Benefits of improved financial information systems Business decisions will improve with better financial information Managers will have more regular financial information to measure performance Information is available to all the stakeholders in a form that is understandable to them Comparisons can be made with previous time periods to see trends in performance Una Hilliard The solution you supplied should be changed as follows: The text in answer (a) is to be replaced The text in answer (b) is to go in as answer (a) The text in answer (c) is to go in as answer (b) The new text for answer (c) is set out below Benefits Sole Trader A suitable ownership structure for a small business Are easy to set up at very low cost Are subject to very few regulations compared to other forms of ownership As owner she can make all decisions She will get all the profits of the business after tax is paid Very little information about the business must be disclosed in a sole trader Benefits of a Limited Company The business is a separate legal entity More capital can be raised through the issue of shares There can be up to fifty shareholders in the firm The shareholders have limited liability for the debts of the business It is easier to expand the business Continuity of the business is assured as shares can be inherited when a shareholder dies Sac Designs Limited The solution you supplied should be changed as follows: The text in answer (a) is to be replaced The text in answer (b) is to go in as answer (a) The text in answer (c) is to go in as answer (b) The new text for answer (c) is set out below Prepare a job specification and a person specification to ensure the correct type of candidates apply Search for candidates using advertising suited to the type of candidate. This will ensure that a good number of suitable candidates will apply Screen the applications and select a shortlist of candidates who best meet the criteria for the job. Ensures that only the most suitable candidates are interviewed Select the most suitable candidates based on interview or other methods. Ensures that the position is offered to the best candidate for the job Check references to ensure that they are bona fide. This makes sure that a dishonest candidate is not appointed Issue employment contract when offer of job is accepted. Legally confirms the employment agreement between the firm and the employee Celtic Aromatics Limited The solution you supplied should be changed as follows: The text in answer (a) is to be replaced The text in answer (b) is to go in as answer (a) The text in answer (c) is to go in as answer (b) The new text for answer (c) is set out below Better treatment of customers leads to loyalty and repeat business Fair treatment of employees will result in better motivated employees and higher levels of productivity Being transparent about how the business is run builds trust in the other stakeholders who will work for the benefit of the firm Fair treatment of suppliers will ensure continuity of supply and make suppliers more responsive to the needs of the firm Cooperation with the local community will ensure the support of the community for the work of the firm Conforming to all relevant laws will ensure that the firm is not prosecuted resulting in fines or court orders restricting its operations Many consumers want to do business with firms that are ethical and socially responsible F  ! 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