Paper 1 Sample Questions Flashcards
State 2 internal and 2 external stakeholders of SVT [4]
The right answer (because the command term is state):
Internal: Yannick Pedersen and Ariadne Johansen
External: customers, James Azuki
Describe the difference between acquisition and merger [4]
Acquisition is when a business takes control over another business. It is a form of external growth. In this case, the Fresh Water Division took control of a company called Geng PLC. A merger on the other side is when two or more different businesses become one entity.
Examine the impact of the external environment on the functioning of SVT [10]
The external environment has a significant impact on the functioning of SVT. The company’s operations, revenue, and profits are influenced by a range of external factors, including political, economic, social, technological, legal, and environmental factors.
One of the main external factors that affect SVT is climate change. The shortage of potable water in some countries, caused by climate change, has resulted in increased demand for water treatment plants and desalination plants. To respond to this demand, SVT has had to find alternative sources of potable water and invest in desalination plants. SVT’s Fresh Water Division, which supplies potable water, has had to expand in size to meet the growing demand for clean water in various countries around the world.
Another external factor that has impacted SVT is market competition. With the increasing demand for water treatment and desalination plants, the competition in the market has also increased. SVT has responded to this challenge by acquiring other companies, such as Geng PLC in the United Kingdom, and by expanding its product range to include household water treatment products.
Moreover, technological advancements have impacted SVT’s operations, particularly in the Engineering Division. The acquisition of H4 PLC and its modernization program has enabled SVT to expand its product range and achieve . The division manufactures equipment and machinery for SVT’s water treatment plants, and the modernization program has allowed it to operate 24/7 and increase productivity.
In conclusion, the external environment has a significant impact on the functioning of SVT, and the company has responded by adapting its strategies to meet the challenges and opportunities presented by external factors. From climate change to market competition and technological advancements, SVT has had to innovate and expand to continue to achieve its vision of “making the world a safer place.”
Prepare strengths for swot
Strengths:
Long-standing reputation as a reliable and trustworthy supplier of potable water.
Strong market position with regional monopolies in each country where it operates.
Diversified product portfolio across four divisions, with a focus on water treatment and related equipment.
Strong leadership and decision-making capabilities within each division, enabling quick responses to changes in the external environment.
Prepare weaknesses for swot
Weaknesses:
Dependence on regional monopolies for revenue and market share.
Limited geographical , with a majority of revenue coming from Norway and a few other countries.
Potential for conflict between different divisions and directors with different leadership styles.
Limited innovation and investment in emerging technologies compared to some competitors.
Prepare opportunities for swot
Opportunities:
Growing global demand for potable water and water treatment solutions.
Increasing market for desalination, with potential to expand into new markets and increase revenue.
Growing demand for household water treatment products, with potential for expansion into new markets.
Opportunity to invest in emerging technologies to enhance efficiency and productivity (like the modernization program).
Prepare threats for swot
Threats:
Increased competition in the water treatment and desalination industries, with the entry of new players and potential pricing pressure.
Regulatory risks and political instability in some of the countries where SVT operates.
Dependence on natural resources and vulnerability to climate change and environmental risks.
Potential for supply chain disruptions and volatility in raw material prices.
Discuss the difference in the manner in which a non-profit organisation functions as compared to a profitable one.[6]
Goals: Non-profit organisations have a mission to benefit the public or a particular cause, while for-profit organisations focus on generating profits for shareholders or owners. NPOs’ objectives can include social or environmental causes, education, healthcare, or other charitable purposes, and their activities are geared towards achieving these goals.
Revenue: NPOs rely on donations, grants, and fundraising to support their activities and programs, while for-profit organisations generate revenue from the sale of goods or services they offer. This difference in the revenue stream means that non-profit organisations are more accountable to their donors and funding agencies, as opposed to for-profit entities, which are accountable to their shareholders or owners.
Organisational Structure: NPOs have a different organisational structure from for-profit organisations. NPOs typically have a board of directors or trustees, who are responsible for making decisions that align with the organisation’s mission and goals. Additionally, NPOs often rely on volunteers to carry out their programs and activities, whereas for-profit organisations usually have paid staff members who are responsible for carrying out the operations.
In the context of SVT, outline the meaning of growth [2]
Growth is the expansion of SVT as an organisation due to an increase in the size of its operations such as the recent acquisition of Geng PLC and the expansion into new markets by launching new products such as low-cost, easily transportable water purifiers. Growth can be measured in numerous ways, such as an increase in SVT profits, market share or the number of employees.
Describe any 2 stakeholder conflicts being experienced by SVT. [4]
One stakeholder conflict experienced by SVT could be with local governments or communities in countries where they operate, who may feel that SVT’s regional monopoly limits their choices and bargaining power. This could lead to tension and conflict, particularly if SVT raises prices or fails to meet local expectations regarding water quality or service provision.
Another stakeholder conflict could be within the Engineering Division of SVT, where there may be disagreements between employees and management regarding changes to working patterns or conditions, such as the shift to a 24-hour, three-shift system. This conflict could result in low morale, high turnover rates, and even industrial action, which could negatively impact the division’s productivity and profitability
Examine the usefulness of a vision statement to SVT [6]
A vision statement is an important tool for an organisation to communicate its long-term aspirations and goals to its stakeholders. For SVT, its vision statement “Making the world a safer place” has been in place since its founding and serves as a guiding principle for the company’s operations.
The vision statement is useful to SVT in several ways. First, it provides a sense of purpose and direction for the company, which can help to align the efforts of its employees towards achieving its goals. This is particularly important for a company like SVT, which operates in a critical industry where the provision of safe and clean water is essential to public health and safety.
Second, the vision statement can serve as a source of inspiration and motivation for employees. It can help to create a shared sense of purpose and identity among employees, which can lead to higher levels of engagement, productivity, and job satisfaction.
Third, the vision statement can be used to communicate SVT’s values and priorities to its stakeholders. This can help to build trust and credibility with customers, investors, and other stakeholders who share the company’s commitment to making the world a safer place.
Distinguish between a vision and a mission statement. [4]
A vision statement outlines the aspirations and goals of an organisation, describing what it wants to achieve in the future. It provides a clear and compelling image of the future state that the organisation aims to create.
On the other hand, a mission statement outlines the purpose and core values of an organisation, describing what it does and why it exists. It defines the company’s primary objectives and guides decision-making by providing a framework for strategic planning and resource allocation.
With reference to SVT, distinguish between external and internal growth [4]
External growth refers to the expansion of a company’s business activities through mergers, acquisitions, or strategic partnerships with other companies. SVT has expanded externally by acquiring other companies in the water treatment and desalination industries, such as Geng PLC and H4 PLC.
Internal growth, on the other hand, refers to the expansion of a company’s business activities through the development and expansion of its existing operations. SVT has achieved internal growth by increasing the size and capacity of its Fresh Water and Desalination Divisions, as well as by expanding the product range of its Engineering and Consumer Products Divisions through research and development.
Explain one method of internal and one method of external growth that SVT used [6]
One method of internal growth that SVT used was expanding its product range through the creation of new divisions. SVT initially specialised in producing and delivering potable water in Norway, but in the 1980s, it expanded into other business sectors, including desalination and household water treatment products, by acquiring other companies. SVT also created four new divisions based on product: The Fresh Water Division, The Desalination Division, The Engineering Division, and The Consumer Products Division. This allowed SVT to diversify its product offerings and increase its revenue streams without relying on external acquisitions.
One method of external growth that SVT used was through acquiring other companies. SVT has grown through both internal and external growth strategies. Its most recent acquisition was Geng PLC, a major water supplier in the United Kingdom (UK). Acquisitions allow SVT to rapidly expand its business and customer base, as well as to acquire expertise and resources that may not be available in-house. This strategy has helped SVT to expand its operations globally, supplying potable water to millions of households in over 20 countries, and becoming one of the industry leaders in productivity per employee
Using the Ansoff matrix examine the growth strategies being considered by SVT. [8]
Market Penetration - This strategy involves increasing market share in existing markets with existing products. SVT has already achieved a regional monopoly in each country it operates, and the Fresh Water Division supplies potable water to nearly 200 million people around the world. To increase market penetration, SVT can focus on expanding its operations in the existing countries and targeting new areas within those countries to increase the number of people it serves. SVT has also acquired Geng PLC, a major water supplier in the United Kingdom, to expand its operations.
Market Development - This strategy involves introducing existing products to new markets. SVT already supplies water treatment plants to over 20 countries. To expand further, SVT can identify new countries with high demand for water treatment plants and enter those markets. Additionally, SVT can focus on building more desalination plants in countries with limited freshwater resources.
Product Development - This strategy involves introducing new products to existing markets. SVT’s Engineering Division manufactures water treatment equipment and power turbines. To pursue this strategy, SVT can invest in developing new and innovative water treatment equipment and machinery that can improve the efficiency of its operations. Additionally, the Consumer Products Division can focus on developing new household water filters with improved technology.
- This strategy involves introducing new products to new markets. SVT has already diversified into the desalination and household water treatment product sectors. To further diversify, SVT can consider expanding into related industries such as renewable energy, wastewater treatment, or infrastructure development.
Examine the implications of acquiring a UK-based company Geng PLC a water supply company.[6]
The acquisition of Geng PLC, a major water supplier in the United Kingdom, by Skandvig Terra PLC (SVT) has several implications. First, it increases SVT’s market share in the UK’s water supply industry, which can lead to increased revenue and profitability. Second, SVT can leverage Geng PLC’s existing infrastructure, knowledge, and expertise to expand its operations in the UK and improve its service offerings. Third, the acquisition may lead to job losses in Geng PLC or changes in employment contracts, which can have implications for employee morale and public relations. Fourth, the acquisition may attract regulatory scrutiny, particularly in terms of potential monopoly and antitrust issues, which may require divestitures or other measures to ensure fair competition. Finally, the acquisition may require significant investment in integrating Geng PLC’s operations into SVT’s existing infrastructure and management, which can be costly and time-consuming.
Examine the implications of taking over H4 PLC, a rival engineering company. [6]
The takeover of H4 PLC by Skandvig Terra PLC (SVT) has several implications. First, SVT has expanded its product range to include steam and gas turbines, which are used to produce electricity. This acquisition provides SVT with a new income stream, as well as the ability to manufacture and supply its own turbines for use in its water treatment plants.
Second, the takeover enabled SVT to achieve by modernising H4’s operations and integrating them into SVT’s existing operations. This allowed SVT to improve efficiency, reduce costs, and increase productivity, which could ultimately result in higher profits.
Third, the modernization program required a change in the shift patterns of H4’s employees, which was met with resistance from some long-serving employees. SVT offered incentives for employees to sign new flexible-working contracts, but a significant number of employees chose to leave the company instead. This could result in a loss of experience and expertise, as well as potential disruption to operations in the short-term.
Fourth, SVT faced challenges in filling the 300 vacancies that were created as a result of the exodus of former H4 employees. Highly skilled and specialized employees were in short supply in the UK, which could have implications for future recruitment and retention of talent.
analyse the implications of SVT being a multinational corporation.[6]
SVT being a multinational corporation has several implications. On the one hand, it allows the company to diversify its business portfolio, access new markets, and benefit from . On the other hand, being multinational also exposes the company to a variety of risks, such as currency fluctuations, political instability, and regulatory differences between countries.
One advantage of being a multinational corporation is the ability to access new markets. For example, SVT’s expansion into other countries has allowed the company to supply potable water to millions of households and diversify its revenue streams. Moreover, being multinational allows SVT to benefit from by centralizing certain functions, such as research and development, production, and marketing, which can lead to cost savings.
However, being multinational also exposes the company to several risks, such as currency fluctuations, political instability, and regulatory differences between countries. For example, if the currency of a country where SVT operates devalues, the company’s revenues will decrease. Similarly, political instability in a country could lead to a disruption in SVT’s operations and a loss of revenue. Finally, regulatory differences between countries can create challenges for SVT in terms of compliance and adapting to local laws.
In conclusion, while being a multinational corporation has several advantages, such as and , it also exposes the company to risks. SVT needs to carefully manage these risks to ensure its long-term success.
With reference to Jayne, discuss the qualities that an intrapreneur must have.[4]
Jayne, the director of the Consumer Products Division, is an example of an intrapreneur within Skandvig Terra PLC. An intrapreneur is someone who operates within an existing organisation and brings a spirit of entrepreneurship to their work.
To be a successful intrapreneur, one must possess several key qualities. Jayne, for example, has demonstrated the following qualities:
Creativity and innovation - She has developed a new home water filter product that has resulted in significant revenue growth for the Consumer Products Division. She has also developed a sustainable packaging initiative that has reduced the division’s carbon footprint.
Risk-taking - Jayne took a risk by investing in the development of the new home water filter product. She also advocated for the sustainable packaging initiative, despite potential resistance from other stakeholders.
Evaluate SVT’s outreach programme.[8]
SVT’s Outreach Programme is an initiative that aims to benefit society by offering free skilled labour to less economically developed countries (LEDCs). It is a long-term commitment that offers SVT employees a chance to participate in the program after ten years of continuous employment. This CSR initiative by SVT has several strengths and weaknesses, which are as follows:
Strengths:
SVT’s Outreach Programme has helped several LEDCs by offering skilled labor to various projects such as teaching in schools, repairing infrastructure, and providing training to local people.
The program offers a three-month paid career break to SVT employees, which can help employees develop new skills, gain new perspectives, and increase their job satisfaction.
The initiative has a positive impact on the company’s reputation, as it is seen as a socially responsible company that cares about society.
Weaknesses:
The program only offers skilled labour, which may not be the most effective solution for the problems faced by LEDCs. Other solutions such as providing funding, resources, or developing local businesses may be more effective.
The program is limited to SVT employees who have completed ten years of continuous employment, which may exclude employees who have valuable skills or experiences that could benefit the program.
The program may create a dependency on foreign aid, which may hinder the development of local businesses and economies in LEDCs.
Examine the scope of a PPP model (not for profit) for an organisation like SVT for the new product WF15. [6]
A PPP model, or Public-Private Partnership model, is a type of collaboration between the public and private sectors to achieve a common goal, usually a public service or infrastructure project. However, in the case of a not-for-profit organisation like SVT, the scope of a PPP model for the new product WF15 may differ from a for-profit organisation.
The following are some potential scopes of a PPP model for SVT and WF15:
Collaboration with government agencies: SVT could partner with government agencies to develop and distribute WF15 to low-income or underserved communities, as a public service. The government agency could provide funding or other resources to help SVT achieve this goal.
Partnership with other non-profit organisations: SVT could partner with other non-profit organisations that share similar values and mission to help distribute WF15 to communities that could benefit from it.
Collaborating with private sector companies: Even though SVT is a not-for-profit organisation, it could still partner with private sector companies to develop WF15. The private sector company could provide resources and expertise to help SVT develop and distribute WF15.
Fundraising and grants: SVT could also use a PPP model to raise funds and apply for grants to help fund the development and distribution of WF15. SVT could partner with foundations and other philanthropic organisations to raise funds and apply for grants.
Crowdfunding: SVT could also use a crowdfunding model to develop and distribute WF15. Crowdfunding allows individuals to contribute small amounts of money to help fund a project. This could help SVT reach a wider audience and raise funds more quickly.
Overall, the scope of a PPP model for SVT and WF15 would involve collaborations and partnerships with government agencies, other non-profit organisations, private sector companies, and fundraising and grant opportunities. The focus would be on providing WF15 to communities that could benefit from it, rather than generating profits for SVT.
State two features of a family-owned business as a form of business ownership (line 51). [2]
Family control: Family-owned businesses are controlled by a family or a small group of families who have ownership and management control. This means that the business decisions are often made by family members or close relatives.
Long-term focus: Family-owned businesses are often focused on long-term success and sustainability, rather than short-term gains. This is because the family has a vested interest in ensuring the success of the business for future generations, and may prioritise reinvesting profits back into the business instead of taking them out as dividends.
Identify two features of non-governmental organisations (NGOs) (line 104). [2]
Non-profit: NGOs are typically non-profit organisations that do not distribute profits to owners or shareholders, but instead use their resources to pursue specific social or environmental objectives. They are often focused on advocacy, education, and/or service delivery to address societal issues.
Independent: NGOs are independent of government control and are typically run by a board of directors or trustees who are responsible for setting organisational strategy and ensuring that the organisation’s activities align with its mission and values. This independence allows NGOs to operate flexibly and respond quickly to changing circumstances.
Identify two features of charities (line 104). [2]
Charities are organisations that are tax-exempt under the law because they are dedicated to charitable purposes that provide a public benefit. This means that charities are exempt from paying taxes on any income or donations that they receive. This tax-exempt status is granted by the government in recognition of the public benefit provided by charities.
One way that charities are able to raise funds is through donations from the public. Charities often rely on the generosity of individuals and businesses to support their activities. They may use various fundraising methods, such as direct mail, online donations, fundraising events, and corporate sponsorships, to raise funds from the public.
Explain two advantages and one disadvantage for SVT to be a PLC (line 1). [6]
Advantages:
Increased access to capital: As a PLC, SVT can raise large amounts of capital by issuing shares to the public. This provides the company with greater financial resources to invest in its operations, expand its business, and fund research and development activities.
Limited liability: Shareholders of a PLC have limited liability, which means that their personal assets are protected if the company faces financial difficulties. This makes investing in SVT more attractive to potential shareholders, as they can invest without the risk of losing more than the value of their investment.
Disadvantage:
Increased regulatory requirements: As a publicly traded company, SVT is subject to various regulatory requirements, such as those related to financial reporting, disclosure of information, and corporate governance. Compliance with these regulations can be time-consuming and expensive, which can increase the company’s administrative costs and reduce profitability.
Distinguish between STV’s aims (line 93) and objectives (line 74). [4]
In the context of the given text, the aims of Skandvig Terra PLC (STV) refer to the long-term goals or the overall vision of the company, as stated in its vision statement: “Making the world a safer place”. Aims are broad and aspirational and may not be measurable.
On the other hand, the objectives of STV are specific, measurable, achievable, relevant, and time-bound targets that the company sets to achieve its aims. For example, the objective of the Fresh Water Division is to supply potable water to nearly 200 million people around the world. Objectives are more focused and help the company to track its progress towards achieving its long-term goals or aims.
Describe how SVT’s Outreach Programme in LEDCs helps to fulfil its corporate social responsibility (CSR) (lines 95 - 115). [4]
The SVT’s Outreach Programme in LEDCs helps to fulfil its corporate social responsibility (CSR) in several ways. Firstly, the programme aims to provide access to education and healthcare to underprivileged communities, which aligns with SVT’s CSR goals of promoting social and economic development. For example, the programme has set up schools in remote areas of Africa, providing education to children who would otherwise have no access to it. This helps to promote literacy and knowledge, which are important for economic growth and sustainable development.
Secondly, the programme also focuses on promoting sustainable development through the use of renewable energy sources. This aligns with SVT’s CSR goals of reducing environmental impact and promoting sustainable business practices. For instance, the programme has installed solar panels in several villages in Sudan, providing access to clean and sustainable energy. This helps to reduce the dependence on fossil fuels and promotes sustainable development.
Explain the importance of corporate social responsibility (CSR) for SVT. [6]
Corporate social responsibility (CSR) is becoming increasingly important for companies like SVT, as it allows them to demonstrate their commitment to social and environmental issues beyond their core business activities. This is particularly important given the heightened awareness of the impact that companies have on the environment, society, and the economy.
In terms of the text, SVT’s CSR initiatives are important for several reasons. Firstly, they help to improve the company’s reputation and enhance its brand image. By engaging in socially responsible activities, SVT can demonstrate that it is a company that cares about more than just profit, and is committed to making a positive contribution to society.
Secondly, CSR initiatives can help to attract and retain talent. Employees are increasingly looking for employers who share their values and are committed to making a positive impact on the world. By demonstrating a strong commitment to CSR, SVT can attract employees who are motivated by these values, and help to retain existing employees who are looking for a sense of purpose beyond their job.
Thirdly, CSR initiatives can help to mitigate risk and reduce costs. For example, by implementing environmentally-friendly practices, SVT can reduce its carbon footprint and minimise the risk of regulatory fines or reputational damage from negative environmental impacts. Similarly, by promoting diversity and inclusion, SVT can reduce the risk of discrimination claims and promote a more inclusive workplace culture.
Overall, CSR is an important aspect of SVT’s business strategy, as it allows the company to demonstrate its commitment to social and environmental issues, attract and retain talent, and reduce risk and costs. By embracing CSR, SVT can not only improve its bottom line, but also contribute to the greater good of society.
Using the case study, explain two strengths and one weakness of SVT. [6]
Two strengths of SVT are:
Monopoly in Regional Water Supply Networks - SVT has a regional monopoly in each country in which it operates, providing it with significant competitive advantages. This ensures that the company is the sole provider of potable water to its customers, allowing it to set prices and control the market. This also eliminates the need for competition, providing SVT with a stable revenue stream. For instance, SVT’s Fresh Water Division supplies potable water to over 1 million people in Norway and millions of households in over 20 other countries, giving it a dominant market position.
Diversified Business Portfolio - SVT has diversified its business portfolio by expanding into other business sectors, such as desalination and household water treatment products, through the acquisition of other companies. This has enabled the company to increase its sources of revenue and spread its risks across different sectors. For example, the Desalination Division of SVT provides two income streams by manufacturing and operating desalination plants worldwide, and by producing smaller desalination plants for installation on seagoing vessels. This has enabled the company to be less vulnerable to market fluctuations.
One weakness of SVT is:
Resistance to Change - One weakness of SVT is its employee’s resistance to change, particularly in terms of shifting to a new working schedule. This was evident when the company took over H4 and attempted to modernize its operations by introducing a 24/7 shift pattern, but met resistance from a significant number of long-serving employees. This resistance could have led to a loss of productivity and hampered the company’s efforts to achieve its goals. Although the company overcame this resistance by offering a one-time incentive payment to employees who agreed to sign a new flexible-working contract, it still resulted in a significant exodus of employees who refused to sign the new contract, leaving the company with 300 vacancies to fill.
Overall, despite this weakness, SVT’s strengths of having a regional monopoly in its market and a diversified business portfolio have enabled it to be successful in providing potable water and related products to customers around the world.
Describe how SVT’s external growth strategy may help it to become the brand leader in Europe and the US (lines 91 - 92). [4]
Increased market share: By acquiring other companies, SVT can increase its market share and expand its customer base. This can help the company to establish a stronger foothold in the markets where it operates and gain a competitive advantage over its rivals.
Diversification of product portfolio: Through acquisitions, SVT can expand its product offerings and diversify its portfolio, allowing it to cater to a wider range of customer needs and preferences. This can help the company to attract more customers and strengthen its position in the market
Explain two advantages and one disadvantage of external growth strategies of SVT’s Fresh Water Division (lines 27 - 33). [6]
Advantages:
Increased market share: External growth through acquisitions or partnerships with other water companies can help SVT’s Fresh Water Division gain access to new markets and increase its market share. This can help the division to achieve economies of scale, reduce costs and increase profitability.
Diversification: By acquiring other water companies or investing in new water projects, SVT’s Fresh Water Division can diversify its product range and reduce its reliance on any one market or product. This can help to reduce the impact of market fluctuations and provide the division with more stable revenue streams.
Disadvantage:
Integration challenges: Acquiring or partnering with other companies can lead to integration challenges, including issues with culture, management styles, and communication. These challenges can be time-consuming and costly to overcome, and may distract the division from its core business activities.
Explain two possible reasons for SVT’s decision to take over H4 PLC in 2015 (lines 49 - 50). [6]
Diversification: SVT’s Engineering Division was primarily focused on manufacturing water treatment equipment and power turbines. By acquiring H4 PLC, SVT diversified its product range and gained access to H4’s expertise in manufacturing steam and gas turbines. This would allow SVT to expand its operations and potentially increase its revenue streams, especially in the area of electricity production.
Economies of scale: SVT’s takeover of H4 PLC allowed it to achieve economies of scale in the manufacturing process. By combining the operations of both companies, SVT could increase production efficiency, reduce costs, and improve overall profitability. Additionally, by modernizing H4’s factories and implementing a new shift pattern, SVT could maximize the use of its assets and increase production capacity.
Outline two STEEPLE factors that influence SVT’s growth strategies [4]
Environmental: Climate change and increasing global temperatures are leading to changes in the availability of potable water in many parts of the world. This is likely to increase demand for SVT’s products and services, particularly in areas where water scarcity is becoming a pressing issue. SVT could respond by expanding its operations in areas experiencing water shortages, or by investing in research and development to develop new, more efficient water treatment technologies.
Political: As a provider of critical infrastructure, SVT is likely to be affected by political decisions related to water management and regulation. Changes in government policies or regulations, particularly in regions where SVT has a regional monopoly, could have a significant impact on the company’s growth prospects. For example, new regulations could make it more difficult for SVT to expand its operations in certain countries, or could require the company to make significant investments in new technologies or infrastructure to meet new standards.
Explain two possible types of for SVT as a large multinational company [6]
There are the cost-saving advantages that businesses can enjoy by enlarging the scale of its output. Examples of possible for SVT include:
Technical : Being a large business, SVT can afford to invest in sophisticated and innovative technologies to increase scales of output, thereby reducing the per unit cost of production. H4 PLC’s factories also operate 24/7, using modernised operations, which again helps the company to achieve technical .
Financial : Large businesses like SVT are usually able to borrow more money and at a lower cost (interest rate change). This is because they are more ‘credit worthy’. For example, SVT represents lower risk for a financial lender, such as a commercial bank, because it is an established multinational company with operations in 21 countries and is profitable so can benefit from more favourable rates of borrowing.
Marketing : Large businesses like SVT can spread their advertising and substantial marketing budgets over a large volume of output as well as purchasing their stocks/inventory in bulk, at discounted prices, e.g, electric pumps, pressure gauges, hoses, and osmosis system (water filtration system).
Explain the importance of the human resource management (HRM) department [6]
Human resource management refers to the business function or department responsible to all aspects of personnel in an organisation.
- A division where HRM is important is in terms of Human resource planning. This is the management process of forecasting an organisation’s future demand for, and supply of, human resources in order to ensure that it has the optimal number of employees with the right skills in the right place at the right time. Given the large scale of operations, including employees at Geng PLC and H4 PLC, this function is vital at ensuring the company operates efficiently.
- Another area where it is important is for the training and development of employees. They provide adequate and relevant training. This training can have a positive impact on staff motivation and productivity because confident and competent employees lead to greater job satisfaction and higher levels of output. At SVT this includes training employees so that they feel sufficiently upskilled to transition to new work systems and processes, such as the innovative technologies introduced at the company to enhance the speed and quality of production lines.
- The HRM department is also responsible for managing organisational change as well as the potential resistance to change that often comes with this. This includes communicating the purpose and benefits of change and developing improved communications channels. This can help to prevent conflict within the workplace, such as the mass exodus of highly experienced employees when H4 PLC was taken over by SVT.
Give/list examples of financial (extrinsic) and non-financial (intrinsic) motivators.
Financial (extrinsic) motivators:
Salary increase or bonus
Commission or profit-sharing
Stock options or equity in the company
Employee benefits such as health insurance or retirement plans
Paid time off or vacation days
Expense accounts or reimbursement for work-related expenses
Tuition reimbursement or professional development opportunities
Performance-based bonuses or incentives
Travel allowances or company-paid trips
Signing bonuses or relocation assistance
Non-financial (intrinsic) motivators:
Recognition and praise for a job well done
Opportunities for personal growth and development
Autonomy and decision-making authority
Feeling of accomplishment or job satisfaction
Meaningful work that aligns with personal values
Positive work environment and company culture
Opportunities for creativity and innovation
Flexibility in work schedule or location
Collaborative work environment and teamwork
Feeling of making a difference or contributing to a greater cause.
Outline one monetary incentive and one non-monetary incentive to motivate employees at SVT. [2]
In the case study, SVT offered a one-time incentive payment to employees who agreed to sign a new flexible-working contract in the Engineering Division. This was a monetary incentive that motivated some employees to accept the new contract and work a different shift pattern. This shows that monetary incentives can be effective in motivating employees to take specific actions.
One non-monetary incentive that SVT could use to motivate employees is recognition and praise for good performance. This could include public recognition in company-wide meetings, emails from senior management, or awards for outstanding performance. This type of incentive can be particularly effective for employees who are motivated by a sense of achievement or recognition, rather than purely financial rewards.
Compare and contrast the leadership style of Yannick and Ariadne. [6]
Yannick and Ariadne have different leadership styles. Yannick has a situational leadership style, which is adaptive and flexible, while Ariadne’s style is perceived by some employees as autocratic. Yannick is able to respond quickly to unexpected changes in the external environment, such as finding alternative sources of potable water in response to climate change. On the other hand, Ariadne’s leadership style has led to the Engineering Division being one of the industry leaders in productivity per employee. However, Yannick has clashed with Ariadne on several occasions because machinery needed to update water treatment plants has been delayed due to Ariadne having different priorities.
In summary, Yannick’s situational leadership style works well in a division that has to respond quickly to unexpected changes, while Ariadne’s autocratic leadership style has led to high productivity but may hinder collaboration and adaptability in response to changes.
Examine the effectiveness of the leadership style displayed by Ariadne [4]
Many employees view her as an autocratic leader. Advantages of this can include: Quick decision making because Adriane makes all decisions within SVT’s Engineering division. Another advantage is that all expectations and communications are clear, productivity may be high. After all, the Engineering Division is an industry leader in terms of productivity per employee. However there are some disadvantages, one can be the demotivational effects because employees are not empowered to make autonomous decisions. There also might be a lack of trust within the team as communication is top-down and one way only. Therefore, highly skilled and experienced team members of the Engineering Division may feel there is a lack of trust in them when making important decisions.
With reference to SVT, describe two steps in recruiting employees. [4]
Identification - defining the job description, basic roles, responsibilities, necessities etc needed to fulfil the job.
Selection - Analyzing and reading different applicants CVs etc and deciding which candidate is best suited for the job described.
Define Induction training. [2]
Induction is training done to new recruits to familiarise them with the firm’s policies as to decrease the time needed to be familiar, which impacts productivity.
Explain two advantages of induction training towards SVT employees [4]
Faster Adjustment: Induction training helps new employees to adjust to their new work environment and job role more quickly. This can be achieved by introducing employees to the company culture, policies, and procedures, as well as the expectations and responsibilities of their job. For example, SVT’s HR department arranged for new employees hired to fill vacancies created by the exodus of former employees from H4 to undergo induction training that included a visit to SVT’s flagship factory in Norway. This helped the new employees to familiarise themselves with the company’s culture and innovative technologies used in production, making it easier for them to adjust to their new roles.
Improved Job Satisfaction: Induction training can also contribute to job satisfaction, as it helps employees to feel confident and prepared for their job. This can reduce stress and anxiety, leading to a more positive work experience. For instance, SVT offered a one-time incentive payment to employees who agreed to sign a new flexible-working contract, which would include accepting a new shift pattern every six months. This not only helped the company to overcome resistance to the new shift pattern but also helped employees who accepted the contract to feel more satisfied with their job, as they were able to adapt to the new working hours while receiving additional financial incentives.
Explain the factors leading to low labour turnover in the engineering division. [4]
Svt’s lack of financial and non-financial rewards towards their employees. SVT could highly benefit from giving their employees fringe benefits and rewards such as accommodation and health care benefits. This can largely increase the motivation of the employees which results in lack of low labour turnover. Due to their new flexible work contract, which requires employees to shift their working pattern every six months, this caused many older employees to leave the company due to lack of consistency and structure in their work schedule and in the organisation.
Explain how SVT could overcome high labour turnover [4]
High labour turnover can be difficult to overcome as it can create a bad image for the firm
SVT can overcome high labour turnover by advertising the jobs in areas that have the type of workers that they need, for example on online platforms such as LinkedIn.
Implementing motivation theories such as job enlargement and job enrichment. Job enlargement is basically giving workers variety in what they do, and job enrichment is giving employees more challenging and complex tasks so that they can reach their full potential. This leads SVT to overcome high labour turnover as it gives the employees a higher sense of responsibility and confidence when it comes to being trusted with responsibilities and decision making for the company.
How did the flexible work-time contract affect SVT positively? [4]
SVT has to pay less for resources. Due to flexible work time contracts
The company has to spend less money on infrastructure as the employees just come and go according to their preference. Due to employees having flexible work-time contracts, they are more motivated as they can work according to their time comfort and preference. This is highly motivating as the employees will put in higher efforts into their work, as they will be working when they are highly energised and motivated. Another way that the contract affected SVT positively is that, due to the fact that the older employees left the company, this created an opportunity for SVT to recruit and hire new and younger employees with a higher and newer skill set, which will allow new ideas to come into the company. This will be highly beneficial for the company in the long run.
Explain the importance of induction training to an organisation like SVT . [4]
Induction training is a type of training that an employee receives when first starting a job, this is a type of on the job training. Induction training is important for the employee as it teaches them the workings of the organisation and the company’s organisation culture.
Evaluate any two sources of finance available to a profitable organisation like SVT. [6]
Bank Loans: A bank loan is a traditional source of financing that allows a company to borrow a sum of money from a bank and pay it back with interest over a set period of time. This type of financing is usually used for long-term investments, such as purchasing new equipment or expanding operations. SVT can use bank loans to finance its expansion plans, including building new water treatment plants or acquiring new companies. One advantage of bank loans is that they usually offer lower interest rates compared to other forms of financing, such as issuing bonds. However, the disadvantage is that the company must have a good credit history and may be required to provide collateral or a personal guarantee.
Equity Financing: Equity financing involves selling shares of a company to investors in exchange for capital. This type of financing can be used to fund a variety of business activities, such as research and development, marketing, and expansion. One advantage of equity financing is that the company does not have to pay back the capital or interest, as investors receive a share of ownership in the company instead. This can be a great way for SVT to raise large sums of money without taking on debt or risking bankruptcy. However, the disadvantage is that the company will need to share control and profits with its investors, which can lead to conflicts of interest and a loss of autonomy.
In conclusion, bank loans and equity financing are two viable sources of financing for a profitable organisation like SVT. Each option has its own advantages and disadvantages, and the choice ultimately depends on the company’s specific needs and financial situation.
Examine any 2 sources of finance available to them for launching WF15. [6]
Equity financing: SVT could consider issuing new shares in order to raise the required capital for the launch of WF15. This would involve selling ownership in the company to new investors in exchange for cash. Equity financing has the advantage of not creating any debt obligations for the company, which can be attractive to investors who are concerned about a company’s debt level. Additionally, if SVT is able to successfully launch WF15 and generate profits, the value of the company could increase, leading to capital gains for shareholders. However, equity financing can dilute the ownership stake of existing shareholders, which may lead to a decrease in the value of their shares.
Bank loan: SVT could also consider obtaining a bank loan to finance the launch of WF15. This would involve borrowing a fixed amount of money from a bank, with a set repayment schedule and interest rate. Bank loans have the advantage of providing a fixed source of financing, which can help with budgeting and planning. Additionally, the interest paid on the loan is tax deductible, which can reduce SVT’s tax burden. However, bank loans also create a debt obligation for the company, which can be a burden if the launch of WF15 is not successful and the company is unable to generate sufficient profits to make the loan payments.
Overall, both equity financing and bank loans have their advantages and disadvantages. SVT should carefully consider its financial needs, the potential risks and rewards of each financing option, and its ability to repay any debt before making a decision.
Outline one fixed cost and one variable cost for SVT. [2]
One fixed cost for SVT could be the salaries and benefits of their executive team. This cost remains the same regardless of the level of production or sales.
One variable cost for SVT could be the cost of raw materials, such as chemicals and energy, used in the water treatment and desalination processes. This cost will vary depending on the level of production or sales.
Explain subsidy as a source of finance. [4]
A subsidy is financial assistance provided by the government or a public authority to support a specific activity or industry. It is a form of financial support given to businesses, organisations, or individuals to help them offset their costs or increase their revenue.
In terms of finance, a subsidy can be seen as a source of funding because it provides financial resources to the recipient. For instance, a government may provide a subsidy to a business to help it start or expand its operations, or to encourage the development of a new technology or product.
Subsidies can take various forms, such as cash payments, tax exemptions, loan guarantees, or direct funding. They can also be targeted towards specific industries or groups of people, such as farmers, small businesses, or low-income households.
From the perspective of the recipient, subsidies can be a valuable source of finance because they can help reduce the cost of production, increase revenue, or provide access to capital that might otherwise be unavailable
Describe two suitable sources of finance for SVT’s WF15 project in LEDCs (lines 126 - 131). [4]
One source of finance SVT can be the retained earnings SVT has developed over the years of being a PLC, through the profits and share capital they obtain. This internal source of finance will not pose threat to SVT, as no external factors will affect the financial inflow and outflow throughout their sourcing for WF15.
Another source includes government grants and/or subsidies as the government can directly assist SVT in raising finance for initiation for the WF15 project. This could also pose threats to SVT through reporting requirements and other legalities, as the requirements to submit reports can be time consuming as well as inaccuracy would lead to several problems within the financial calculations and the trust within the organisation.
