Paper 1 Case Flashcards
Types of internal and external economcis of scale (+Defintion)
Economies of scale are the cost advantages that a firm can achieve as it increases its level of production.
Purchasing: As a firm grows, it can negotiate better deals with suppliers due to its increased purchasing power. This can result in lower input costs and thus lower average costs of production.
Operational: A larger firm can spread its fixed costs (such as rent, utilities, and equipment) over a larger output, resulting in lower average costs per unit.
Marketing: A larger firm can spend more on advertising and promotion, which can result in a lower cost per customer acquisition.
Transportation: A larger firm can take advantage of economies of scale in transportation, such as bulk shipping rates, resulting in lower transportation costs per unit.
Managerial: A larger firm can hire more specialized managers, leading to improved efficiency and lower costs.
Finance: A larger firm can access capital more easily and at lower costs due to its larger size and creditworthiness.
Infrastructure: A firm can benefit from a well-developed infrastructure, such as good roads, ports, and communication systems, which can result in lower transportation costs and improved efficiency.
Growing market: A growing market can result in lower costs per unit as a firm can take advantage of economies of scale in production and distribution.
Technological advancements: A firm can benefit from technological advancements in its industry, which can result in improved efficiency and lower costs.
Technical economies of scale refer to the cost advantages that a firm can achieve as it increases its level of production through technological advancements. T
Types of internal and external economcis of scale (+Defintion)
Economies of scale are the cost advantages that a firm can achieve as it increases its level of production.
Purchasing: As a firm grows, it can negotiate better deals with suppliers due to its increased purchasing power. This can result in lower input costs and thus lower average costs of production.
Operational: A larger firm can spread its fixed costs (such as rent, utilities, and equipment) over a larger output, resulting in lower average costs per unit.
Marketing: A larger firm can spend more on advertising and promotion, which can result in a lower cost per customer acquisition.
Transportation: A larger firm can take advantage of economies of scale in transportation, such as bulk shipping rates, resulting in lower transportation costs per unit.
Managerial: A larger firm can hire more specialized managers, leading to improved efficiency and lower costs.
Finance: A larger firm can access capital more easily and at lower costs due to its larger size and creditworthiness.
Infrastructure: A firm can benefit from a well-developed infrastructure, such as good roads, ports, and communication systems, which can result in lower transportation costs and improved efficiency.
Growing market: A growing market can result in lower costs per unit as a firm can take advantage of economies of scale in production and distribution.
Technological advancements: A firm can benefit from technological advancements in its industry, which can result in improved efficiency and lower costs.
Technical economies of scale refer to the cost advantages that a firm can achieve as it increases its level of production through technological advancements. T
Pricing Strategy:
ricing Strategy: Pricing strategies are the methods and procedures companies employ to determine the rates they charge for their goods and services.
Distribution Channel:
Distribution Channel: The channel of distribution refers to the means used to get a product to the consumer.
A product portfolio
A product portfolio is the menu of goods or services that a firm produces and offers for sale.
Regional monopoly and monolpoly defintion
Regional Monopoly:Where a business controls 80% or more of market share and has barriers of entry (such as special licensing from the government , or a high startup cost).
Monopoly: A market structure characterised by a single seller of a product that faces no competition from other firms and it has substantial market power and is the price maker of the product in that region.
Internal skatehdolers (3 Main ones)
Internal Stakeholders
Yannick Pederson
Director of the FreshWater Division
Ariadne Johansen
Director of the Engineering Division
Jayne Dees
Director (line 106)
Proposed for SVT to develop low-cost water purifiers (line 112)
Yannick Pederson
Director of the FreshWater Division (line 17)
Situational leadership (line 19-20)
Fast thinker (in response to shortages of potable water due to climate change, he was able to find alternative sources of potable water (line 15-18)
Had clashes with Ariadne regarding the water treatment plant update delays (line 24-26)
Ariadne Johansen
Director of the Engineering Division (line 22)
Autocratic leadership, leading to delayed tasks involving the Fresh Water Division (water treatment plants update) due to having different priorities (line 23, 24-26)
Jayne Dees
Director (line 106)
Proposed for SVT to develop low-cost water purifiers (line 112)
Made her own research which is to operate water purifiers using solar power (line 113-115)
SVT Employees
Newly hired employees for Engineering Division
300 vacancies filled for highly skilled and specialised employees that can work well in team environment (line 65 -68)
Went through induction training including a visit to SVT’s factory in Norway (line 71)
Old employees
After 10 years of employment under SVT, employees are offered 3 months paid leave to join the Outreach Program in LEDCs (line 99)
Employees taught in schools, dug wells, repaired infrastructure and provided training to local people (line 101)
Travel expenses, accommodation cost and salaries covered by SVT (line 100)
6000 employees took part (line 103)
Employees that join SVT following acquisition of H4
Work three eight-hour shifts per day
Given one-time incentive for agreeing to the new flexible-working contract
SVT’s Marketing Department
Used secondary market research to investigate the spending patterns of low-income families in LEDCs and their access to media. (line 134-135)
SVT’s Human Resource Department
Met resistance following takeover of H4 since long-serving employees from H4 resist the changes made by SVT (line 59)
Since a quarter of H4 employees decided to resign, SVT’s HR organised recruitment to fill 300 vacancies (line 66)
Choose carefully where to advertise the vacancies and all vacancies were filled within 3 months (line 69-70)
Board Members
Impressed by Jayne’s idea regarding water purifiers needing to be operated by solar power, be simple to use, inexpensive and long-lasting (10 years) because it fitted well with SVT’s mission statement. (line 114-115)
Have not agreed on the pricing strategy of WF15 (line 127)
Directors
Several believed that WF15 should be a not-for-profit operation, a minority felt that SVT should go further and subsidise the product to make it affordable to as many people as possible. (line 127-129)
Two directors are against subsidising the WF15, believing that it will negatively impact SVT’s overall profitability. (line 129-130)
A secondary unresolved issue is how SVT would distribute the WF15. SVT has little experience of
distributing consumer products in LEDCs and no distribution channel in place for this new product.
Partner with local distributors: SVT could identify and partner with local distributors in LEDCs who have experience and established distribution networks in those regions. This could help SVT leverage the existing expertise and infrastructure of local distributors to efficiently distribute the WF15 to target markets.
Establish strategic alliances: SVT could establish strategic alliances or collaborations with local businesses or organizations in LEDCs that share similar values and objectives. This could help SVT tap into their local knowledge, networks, and resources to facilitate the distribution of the WF15.
Conduct market research: SVT could conduct thorough market research in LEDCs to understand the local consumer preferences, behaviors, and purchasing power. This could help SVT tailor their distribution strategy to meet the unique needs and demands of the target market and identify the most effective distribution channels.
Build distribution channels: SVT could build distribution channels from scratch in LEDCs by establishing partnerships with local wholesalers, retailers, or e-commerce platforms. This could involve setting up warehouses, logistics, and supply chain management systems to ensure smooth and efficient product distribution.
Provide training and support: SVT could offer training and support to local distributors, retailers, or other stakeholders involved in the distribution process. This could include product training, sales and marketing support, and after-sales services to build their capabilities and ensure successful product distribution.
