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.
Outline how SVT benefits from a fall in its unit costs (line 75). [3]
As the cost per unit decreases, SVT gains economies of scale. Economies of scale allows SVT to grow in the market and make their product more efficient and developed in the market. It allows them to generate more revenue.
Define market share. [2]
The percentage of all sales in a market that is held by a business
Measured in terms of volume and value
Explain any 2 pricing strategies that SVT can adopt for WF15 [6]
Cost plus - This pricing strategy adds a fixed amount (mark-up) to the actual cost of producing the water purifier. Hence, SVT would first determine the cost of the purifiers and then add a fixed mark-up to the cost of the purifiers in order to determine the selling price. This piece would then be applied when selling the purifiers in less economically developed countries. By setting the price in this way, SVT can ensure that it is earning a profit while still offering a competitive price to their customers. THis would address the issue of two of the SVT directors who are against subsidising the WF15 water purifiers and making other stakeholders in the business unhappy, such as shareholders who may receive lower dividends.
Loss leader pricing - This could be an effective way for SVT to increase sales of the WF15 water purifiers, particularly in low-income countries. This pricing strategy involves selling the product at a very low price, even at a loss, in order to attract customers and increase sales of other products. In the case of selling water purifiers in low-income countries, SVT could absorb all of this as a loss as part of its corporate social responsibility program by offering a basic, low-cost water purifier at a significantly reduced price. Although the business would make a loss on the sale of the WF15 water purifier, it is what several directors want, i.e the product to be a non-for-profit operation.
Explain one advantage and one disadvantage if SVT adopts a low-price strategy for the WF15 water purifiers [4]
As pointed out by Jayne Deez, a low-pricing strategy aligns well with SVTs long standing vision statement (which has remained the same since its founding). Doing so will make these water purifiers more accessible to the many low-income individuals and households in LEDCs.
Due to the perception associated with low prices, SVT may deter some customers who are more concerned about the quality of healthcare products and devices. This can have a negative impact on the demand for the WF15, even in low-income economies and despite the product meeting quality standards set by the WHO.
Prepare a suitable promotional mix for WF15 as a product. [6]
Advertising: This could involve creating ads for print, online, and broadcast media. The ads should highlight the benefits of using the portable water purifier, such as clean and safe drinking water on-the-go.
Public relations: This could involve generating positive publicity for the portable water purifier through media coverage, social media, and influencer marketing. The focus should be on creating awareness of the product and its benefits.
Direct marketing: This could involve reaching out to potential customers directly through email, mail, or social media. The messaging should be tailored to the target audience and emphasise the convenience and affordability of the portable water purifier.
What type of advertising is recommended for SVT to recruit specialised and highly skilled employees? [6]
- Online advertising: SVT can use online job boards and social media platforms to advertise job vacancies. This can help reach a wider audience and attract candidates who are actively looking for job opportunities.
- Referral programs: SVT can also use referral programs to encourage current employees to refer qualified candidates for job vacancies. This can help attract candidates who are already familiar with the company culture and values.
- Industry events: SVT can participate in industry events and job fairs to promote job vacancies and attract candidates who are interested in working in the water supply industry. This can help reach a targeted audience and attract candidates who are passionate about the industry.
Suggest a New marketing Mix for WF15 [10]
WF15 is a household water filter produced by Skandvig Terra PLC’s Consumer Products Division. The marketing mix, also known as the 4Ps, comprises product, price, promotion, and place.
Product:
The WF15 is a high-quality, durable water filter that removes contaminants from household water, making it safe to drink. Skandvig Terra PLC’s Consumer Products Division can improve the product by introducing new filter technology that removes more types of contaminants, making it more appealing to customers who are health-conscious. They can also introduce new colours and designs to make it more attractive to customers.
Price:
Pricing is a crucial component of the marketing mix. Skandvig Terra PLC’s Consumer Products Division can price the WF15 competitively to make it more accessible to customers. They can also offer discounts and promotions, such as a buy-one-get-one-free offer or a free filter with the purchase of a WF15.
Promotion:
Promotion is how a company communicates the benefits and features of its product to potential customers. Skandvig Terra PLC’s Consumer Products Division can promote the WF15 through social media platforms, such as Facebook and Instagram, to reach a wider audience. They can also collaborate with social media influencers to endorse the product. The company can also advertise the product on television, radio, and billboards.
Place:
The WF15 is currently sold through online retailers and select physical stores. Skandvig Terra PLC’s Consumer Products Division can expand the product’s distribution by partnering with more retailers to increase its availability. They can also create a direct-to-consumer website to sell the WF15 and offer free shipping to customers who purchase the product online.
In conclusion, Skandvig Terra PLC’s Consumer Products Division can improve the marketing mix of the WF15 by introducing new filter technology, pricing it competitively, promoting it through various platforms, and expanding its distribution
Describe the significance of first hand data collected by Jayne Dees in Sudan (line 107 - 111). [4]
The first-hand data collected by Jayne Dees in Sudan is significant for SVT because it provides valuable insights into the water supply challenges faced by people in developing countries. By experiencing the challenges firsthand, Jayne Dees was able to identify the need for low-cost, easily transportable water purifiers that can be used in countries where access to potable water is limited. This information can help SVT develop new products and services that are tailored to the needs of customers in developing countries. Additionally, the first-hand data collected by Jayne Dees can also help raise awareness about the water supply challenges faced by people in developing countries and encourage more companies to invest in sustainable solutions.
Outline two advantages for SVT’s Consumer Products Division being a brand leader (line 92). [4]
One advantage for SVT’s Consumer Products Division being a brand leader is increased brand recognition and customer loyalty. This can lead to increased sales and market share, as customers are more likely to choose a well-known and trusted brand over competitors. In the case of SVT’s WF15 product, being a brand leader could help establish the product as a trusted and reliable source of clean drinking water, which could be especially important in areas where access to clean water is limited.
Another advantage of being a brand leader is the ability to charge premium prices for products. Customers are often willing to pay more for products from a well-known and trusted brand, which can lead to higher profit margins for the company. In the case of SVT’s WF15 product, being a brand leader could allow the company to charge a premium price for the product, which could help offset the costs of developing and distributing the product in LEDCs.
Explain two benefits and one disadvantage for SVT having regional monopoly power in the countries in which it operates (line 7). [6]
One benefit of SVT having regional monopoly power in the countries in which it operates is that it allows the company to have greater control over the market. This can lead to increased profits and a more stable business environment. For example, SVT’s regional monopoly in Norway allows the company to have greater control over the water supply market, which can help ensure a steady stream of revenue for the company.
Another benefit of having regional monopoly power is that it can lead to greater efficiency and economies of scale. By having a monopoly, SVT can invest in infrastructure and technology that can help improve the efficiency of its operations. This can lead to lower costs and higher profits for the company. For example, SVT’s regional monopoly in Norway allows the company to invest in water treatment plants and regional water supply networks, which can help improve the efficiency of its operations.
One disadvantage of having regional monopoly power is that it can lead to a lack of competition, which can stifle innovation and lead to higher prices for consumers. Without competition, SVT may have less incentive to invest in new technologies or improve its products and services. Additionally, without competition, consumers may have fewer options and may be forced to pay higher prices for water supply services.
Recommend a suitable distribution channel for the WF15. [4]
A distribution channel that is suitable for WF15 are wholesalers, this allows for the producers to not have to focus on marketing but rather producing the product. Moreover there are lower transaction costs as the wholesalers are the customers and are the ones buying the products.
Describe the importance of effective distribution channels for SVT to distribute consumer products in LEDCs
- Distribution channels describe how the final good or service, such as the WF15 water purifier, passes from the producer to consumers in LEDCs (the end users). They enable the company to get products from the manufacturer to the end consumer.
- Distribution channels are even more important in less economically developed countries as they often face exceptional challenges including inferior infrastructural, communication, and transportation networks (such as road and rail systems).
- Effective distribution channels are necessary to ensure that SVT products are delivered efficiently and safely in a timely manner. This can also provide SVT with a competitive advantage by giving the business a presence in LEDCs, not necessarily for a profit but an improved corporate image for supporting low-income in LEDCs.
Describe two suitable pricing strategies that SVT can use for the WF15 water purifier. [4]
Penetration Pricing: as the WF15 is a brand new designed and created product, there will be little to no recognition around the world. Through penetration pricing, the water purifier will be set at a low price as it enters the markets for familiarisation as well as growth of sales. This allows for creating brand awareness and brand recognition for SVT through this pricing strategy.
Predatory Pricing: Another pricing strategy SVT can use is predatory pricing, where SVT charges a very low price for the water purifier, much lower than the production cost so as to damage the sales of competitors in the market. This is suitable for the process of initialization within the markets, which can then gradually be brought up to the ideal selling price.
Outline how SVT can benefit from levels of social media usage fast approaching the levels seen in advanced economies (line 138). [4]
- Increased brand awareness. With more people using social media, businesses have the opportunity to reach a wider audience and increase their brand awareness. By using social media platforms such as Facebook, Twitter, LinkedIn, and Instagram, businesses can create a strong online presence and engage with their target audience.
- Better customer service. Social media provides businesses with an additional channel for providing customer service. Customers can use social media to ask questions or report issues, and businesses can respond quickly and efficiently, improving the overall customer experience.
Suggest two possible pricing strategies that SVT can adopt for its WF15.
a. Price discrimination: SVT can charge different prices to different countries. For instance, it can charge cheaper prices for LEDCs for them to afford it and slightly higher prices for MEDCs to make a profit.
b. Cost-plus pricing: SVT can calculate the average unit cost of producing a WF15 and a percentage markup. This ensures that WF15 covers its costs and recoups its R&D costs. However, using cost-plus pricing may not appeal to the market as it may be too expensive for LEDCs.
Discuss the two marketing strategies that SVT can use? [4?]
- Differentiation strategy: This strategy involves creating a unique product or service that stands out from competitors. SVT can differentiate its products by highlighting their quality, reliability, and environmental sustainability. For example, SVT can promote its WF15 product as a high-quality water filter that is easy to use and maintain, and that provides clean and safe drinking water. This can help differentiate the product from competitors and attract customers who are looking for a reliable and effective water filter.
- Cost leadership strategy: This strategy involves offering products or services at a lower cost than competitors. SVT can use this strategy to attract price-sensitive customers who are looking for affordable water supply solutions. For example, SVT can offer its desalination services at a lower cost than competitors by investing in more efficient technology and infrastructure. This can help attract customers who are looking for affordable and reliable water supply solutions.
Examine the impact of implementing sustainability on SVT [10]
- Improved reputation: By implementing sustainable practices, SVT can improve its reputation as a socially responsible company. This can help attract customers who are looking for environmentally friendly products and services, and can also help attract investors who are interested in socially responsible companies.
- Cost savings: Implementing sustainable practices can also lead to cost savings for SVT. For example, by investing in more energy-efficient technology and infrastructure, SVT can reduce its energy consumption and lower its operating costs. Additionally, by reducing waste and improving resource efficiency, SVT can also reduce its material and disposal costs.
- Regulatory compliance: Implementing sustainable practices can also help SVT comply with environmental regulations and avoid fines and penalties. By reducing its environmental impact, SVT can also reduce its exposure to legal and reputational risks.
- Innovation: Implementing sustainable practices can also drive innovation and help SVT develop new products and services. For example, by investing in research and development, SVT can develop new technologies and solutions that are more environmentally friendly and efficient.
- Competitive advantage: Finally, implementing sustainable practices can also provide SVT with a competitive advantage. By offering environmentally friendly products and services, SVT can differentiate itself from competitors and attract customers who are looking for sustainable solutions. Additionally, by reducing its environmental impact, SVT can also improve its long-term sustainability and resilience.
Explain how SVT is environmentally and socially sustainable. [6]
- Environmental sustainability: SVT’s Desalination Division manufactures and operates desalination plants around the world, providing a sustainable source of clean water. Additionally, SVT invests in research and development to develop new technologies and solutions that are more environmentally friendly and efficient. By reducing its environmental impact, SVT can improve its long-term sustainability and resilience.
- Social sustainability: SVT is committed to improving access to clean water and sanitation in developing countries. For example, SVT developed the WF15 water purifier, which is a low-cost, easily transportable water purifier that can be used in countries where access to potable water is limited. Additionally, SVT invests in education and training programs to help local communities develop the skills and knowledge needed to maintain and operate water treatment facilities. By promoting social sustainability, SVT can help improve the quality of life for people in developing countries.
- Corporate social responsibility: SVT is committed to being a socially responsible company. This includes investing in sustainable practices, promoting diversity and inclusion, and supporting local communities. By being a responsible corporate citizen, SVT can improve its reputation and attract customers and investors who are interested in socially responsible companies.
Explain whether the low cost purifier identified for the LEDCs is being adaptively creative or innovative. [4]
The low-cost purifier identified for the LEDCs is both adaptively creative and innovative. It is adaptively creative because it is a new solution that has been developed in response to the specific needs and challenges faced by people in LEDCs. It is innovative because it uses new technology and design to create a product that is both effective and affordable. By combining adaptively creative and innovative approaches, SVT has developed a product that can help improve access to clean water in LEDCs and promote sustainable development.
Explain and evaluate the implications of the modernisation programme and reorganisation of the operations of H4’s UK factories. [10]
The modernisation programme and reorganisation of the operations of H4’s UK factories had several implications, both positive and negative.
Positive implications:
1. The modernisation programme helped in upgrading the technology and equipment used in the factories, which increased the efficiency and productivity of the factories. The case study mentions that the modernisation programme involved the installation of new machinery and equipment, which helped in reducing the lead time and increasing the production capacity of the factories. This resulted in increased efficiency and productivity of the factories, which helped the company to remain competitive in the market.
2. The reorganisation of operations helped in streamlining the production process, which reduced the lead time and improved the quality of the products. The case study mentions that the reorganisation of operations involved the implementation of a new production system, which helped in reducing the lead time and improving the quality of the products. This resulted in increased customer satisfaction and improved the reputation of the company.
Negative implications:
1. The modernisation programme and reorganisation of operations required a significant investment, which increased the financial burden on the company. The case study mentions that the modernisation programme and reorganisation of operations required a significant investment, which increased the financial burden on the company. This resulted in increased debt and reduced the profitability of the company in the short term.
2. The modernisation programme and reorganisation of operations required the employees to adapt to new technology and processes, which may have caused some resistance and disruption in the short term. The case study mentions that the modernisation programme and reorganisation of operations required the employees to adapt to new technology and processes, which may have caused some resistance and disruption in the short term. This resulted in reduced employee morale and increased turnover rate in the short term.
In conclusion, the modernisation programme and reorganisation of operations had a positive impact on the performance of H4’s UK factories, which helped the company to remain competitive in the market. However, the investment required and the short-term disruption caused by the changes were some of the negative implications that need to be considered.
Describe the importance of ecological sustainability for SVT’s operations. [4]
- Comply with environmental regulations and avoid penalties.
- Meet the expectations of its stakeholders, including customers, investors, and employees.
- Reduce its environmental impact and contribute to the protection of the environment.
- Improve its reputation and competitiveness in the market.
Describe the importance of social sustainability for SVT’s operations. [4]
- Reputation: Social sustainability can help to enhance SVT’s reputation as a responsible and ethical company that cares about the well-being of people and communities.
- Stakeholder engagement: Social sustainability can help to engage stakeholders, including employees, customers, and local communities, in SVT’s operations and decision-making processes, which can lead to better outcomes for all parties involved.
Describe the importance of economic sustainability for SVT’s operations. [4]
- Financial performance: Economic sustainability is critical for SVT’s financial performance and profitability. By maintaining a strong financial position, SVT can invest in research and development, expand its operations, and pursue new business opportunities.
- Innovation: Economic sustainability can drive innovation by encouraging SVT to develop new products and services that meet the needs of customers and address emerging market trends.
- Job creation: Economic sustainability can contribute to job creation by enabling SVT to expand its operations and hire more employees.
Outline how meeting quality standards set by institutions such as the World Health Organization (lines 123 - 125) is important for SVT’s launch of the WF15 water purifier. [4]
- Credibility: Meeting quality standards set by reputable institutions such as the WHO can enhance the credibility of SVT’s products and services, which can help to build trust with customers and stakeholders.
- Compliance: Meeting quality standards is often a legal requirement, and failure to comply can result in legal and financial penalties.
- Safety: Meeting quality standards can help to ensure that SVT’s products are safe for human consumption and do not pose any health risks.
- Market access: Meeting quality standards can help to ensure that SVT’s products meet the requirements of different markets and can be sold in different countries, which can help to expand SVT’s customer base and increase revenue.
Explain one feature of a public limited company (PLC) (line 1)
A company’s shares are publicly traded on a stock exchange. Through this the Public Limited Company can raise capital by selling its shares to the public, as there is a large pool of investors.
Explain one advantage and one disadvantage of being a PLC to SVT (line 1)
Advantage: SVT can raise its capital by issuing and selling its shares to the pool of investors. It also allows SVT to access a range of funding options, such as issuing new shares or borrowing against assets.
Dis-Advantage: As it is a PLC and numerous shares are issued to the public, the ownership of SVT will be more dispersed, and the original founders of SVT could possibly lose control over the business and its management and decision-making.
Explain one advantage and one disadvantage of a vision statement to SVT (line 2)
A: SVT management as well as employees would be driven by the motivation through the vision statement SVT has, which gives them an overall idea as to what their vision is, hence making aims.
D/A: The major disadvantage to SVT’s vision statement is its vague goal of “Making the world a safer place”. Numerous factors would have to be considered in order to achieve this vision statement’s aim, and may add to arising uncertainties within the employees and higher management. This in turn would negatively affect SVT and make it difficult for the PLC to achieve its goals.
Distinguish between a mission and vision statement (line 2)
MISSION: A statement of the business’s core aims, phrased in a way to motivate employees and to stimulate interest by outside groups.
VISION: A statement of what the organisation would like to achieve in the long term.
Discuss the effect of the acquisition to SVT (line 9)
SVT’s market share could possibly increase and can gain a competitive advantage in the growing vast market. Revenue and profit could increase.
Newer products and markets will be accessed in turn of SVT’s acquisition of other companies. This is seen in the case study where SVT’s takeover and expansion into other markets, such as the desalination market, and creating household water treatment products.
SVT’s acquisition of other companies results in an increase of . As it combines its existing and new resources and products for an increase in reachability to these new markets. Cost savings and efficiency are one of the few outcomes of the acquisition.
Cultural clashes and other factors can arise between SVT and the other company, in this case Geng PLC. The cultures followed and adhered to will differ from that followed in SVT’s, which could lead to resistivity and reluctance to change.
Difference between takeover and acquisition (line 49)
SVT took over its rival H4, essentially meaning that they bought the company, this is seen as a “hostile takeover”, an acquisition on the other hand would mean that SVT only bought a portion of H4 and not entirely.
Internal VS external motivation factors (line 55)
Financial motivation looks at paying the employees competitive salaries, this typically means that their salaries are increased, encouraging them to work harder.
The one time incentive payment made, encourages and motivates the workers to continue working at SVT.
- (a) Describe one advantage and one disadvantage of SVT being a public limited company [4]
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.
Explain possible Economies of Scale that may apply to SVT. [6]
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)
With reference to SVT, explain one advantage and one disadvantage of an organizational structure based on product. [4]
With reference to Skandvig Terra PLC (SVT), one advantage of an organizational structure based on product is that it allows for a clear division of responsibilities and expertise within the company. This is because each division can focus on its specific product and develop expertise in handling it. As a result, coordination problems that may arise under functional departmentation can be reduced.
On the other hand, one disadvantage of an organizational structure based on product is that it can lead to a loss of central control over each separate division. This is because each division may focus more on its own goals rather than the overall goals of the organization. This can result in duplication of functions and resources, leading to higher costs and less top management control.
b) Explain how internal and external growth have helped SVT to grow. [6]
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.
a) Define two characteristics of a not-for-profit organization. [2]
Non-distribution constraint: Any surplus revenues generated by the organization must be reinvested in the organization to further its mission rather than being distributed to owners or shareholders as profits.
Tax-exempt status: Not-for-profit organizations are often exempt from paying certain taxes because they provide a public benefit.
Their purpose is to help the society and not seek for profits. Its to help the community which may result in a positive change in the society.
Comment on the usefulness to SVT of break-even analysis. [6]
Break-even analysis can be useful for SVT when considering the WF15 project by helping the company determine the minimum sales volume needed to cover the costs of production. This information can assist in setting sales targets and guiding pricing strategies. By calculating the break-even point, SVT can gain a clearer understanding of the financial feasibility of the project and make more informed decisions on product pricing.
However, there are limitations to break-even analysis in this context. The case study suggests that SVT’s board of directors is contemplating a not-for-profit or even a subsidized pricing strategy for the WF15. In such scenarios, break-even analysis may be less relevant as the primary goal is to maximize social impact rather than profit. The focus on corporate social responsibility (CSR) and the need to make the WF15 affordable for those in LEDCs may lead the company to prioritize other factors over profitability.
Moreover, break-even analysis assumes a linear relationship between costs and revenues, which may not hold true for the WF15, given the unique market conditions in less economically developed countries (LEDCs). Factors such as fluctuating demand, variable production costs, and potential government interventions can complicate the break-even calculation and limit its accuracy.
In conclusion, while break-even analysis can provide some insights into the financial viability of the WF15 project, its usefulness may be limited given SVT’s potential focus on social impact and the complexities of operating in LEDCs.
Estimated cost and price data for WF15 (Table 1)
Fixed costs: $30,000 per year
Variable costs: $2.1 per item
Price: $2.5 per item
(b) (i) Using the information in above, calculate the break-even output for the portable water purifiers “WF15” (show all your working). [2]
fixed cost/unit contribution
Unit contribution = 2.5-2.1
30000/(2.5-2.1) = 75000
c) Recommend whether SVT should enter into a joint venture with SCW. [10]
Access to new markets: Sudan is a large and growing market with a population of over 40 million people. SCW has a strong presence in Sudan and has developed relationships with key stakeholders, including the government, NGOs, and local communities. This would give SVT access to a new market that it would not be able to access on its own.
Shared risk and costs: A joint venture would allow SVT to share the risks and costs of entering the Sudanese market. SCW would be responsible for the sales and distribution of the water purifiers, which would free up SVT to focus on its core competency of manufacturing.
Access to local knowledge and expertise: SCW has a deep understanding of the Sudanese market and its challenges. This would be invaluable to SVT, which would be entering the market for the first time.
Positive brand image: A joint venture with SCW would be seen as a positive move by SVT. It would demonstrate its commitment to social responsibility and its desire to make a difference in the world.
Disadvantages
Loss of control: SCW would have a majority ownership in the joint venture, which would give it more control over the business. This could be a disadvantage for SVT, as it would not be able to make decisions without the approval of SCW.
Potential for conflict: There is always the potential for conflict between joint venture partners, especially when they have different goals and objectives. This could be a problem for SVT and SCW, as they have different missions and values.
Financial risk: A joint venture is a financial risk for both partners. If the joint venture is not successful, both partners could lose money.
Recommendation
I recommend that SVT should enter into a joint venture with SCW. The potential benefits of the joint venture outweigh the risks. SVT would gain access to a new market, shared risk and costs, access to local knowledge and expertise, and a positive brand image. While there is always the potential for conflict between joint venture partners, I believe that SVT and SCW can overcome this challenge by working together and communicating effectively.
However, it is important for SVT to carefully consider the risks of the joint venture before making a decision. SVT should ensure that it has a clear understanding of the terms of the joint venture agreement and that it has a plan in place to manage the risks. SVT should also make sure that it has a good understanding of SCW’s business practices and its financial situation.
a) With reference to SVT, explain the term vision statement. How is
vision statement different from a mission statement?
A vision statement is a clear and concise statement that describes the desired future
state or ultimate goal of a company or organization. It outlines the company’s
aspirations and objectives for the long term, usually spanning a period of several
years or even decades, and serves as a guiding principle for decision-making and
strategy development.
In the case of Skandvig Terra PLC,. the vision provides a clear direction for the
company to work towards and helps to align their actions and decisions with their
overall mission and values.
A mission statement describes the company’s purpose, values, and primary
objectives. It is a brief statement that outlines what the company does, who it
serves, and how it operates.
On the other hand, a vision statement outlines the company’s long-term aspirations
and desired future state. It communicates the company’s ultimate goal, purpose,
and values, and serves as a source of inspiration and motivation for employees and
stakeholders.
In summary, while mission statements focus on the present and near future,
outlining the company’s operations, strategies, and goals, vision statements are
more future-oriented, describing the company’s ideal future state and overall
purpose.
With reference to SVT, explain three advantages of product-based
organization structure
A product-based organization structure, such as the one used by Skandvig Terra PLC
(SVT), has several advantages, including:
Specialization: Organizing the company into divisions based on product allows for
greater specialization and expertise in each area. Each division can focus on their
specific product or service, developing specialized knowledge and skills that can lead
to improved efficiency and quality. This can result in better products, lower costs,
and increased customer satisfaction.
Clear accountability: Product-based divisions have clear accountability for their
products or services. Each division has a specific set of responsibilities and objectives
that are directly tied to the success of their product line. This makes it easier to
measure performance and ensure that resources are allocated appropriately.
Flexibility: Product-based organization structures allow for greater flexibility and
responsiveness to changes in the market. Each division can adapt to changing
customer needs and preferences, as well as respond quickly to new opportunities or threats in their specific product area. This can help the company remain competitive
and innovative in their respective markets.
In summary, organizing a company into product-based divisions can lead to greater
specialization, clear accountability, and increased flexibility, which can improve the
efficiency and effectiveness of the organization.
a) With reference to SVT, describe two advantages of external growth [ [4]
lines 8-9
External growth strategies, such as mergers and acquisitions, can offer several
advantages to companies like Skandvig Terra PLC (SVT), including:
Increased market share: Acquiring another company can help VT gain access to
new markets or expand its presence in existing markets. This can increase the
company’s market share and improve its competitive position. In the case of SVT’s
acquisition of Geng PLC, the company was able to expand its operations into the UK
and increase its market share in the water supply industry.
Diversification: External growth can also provide opportunities for diversification,
which can help reduce the company’s risk by spreading it across different products,
services, or markets. By acquiring other companies that operate in different sectors
or offer complementary products, SVT can diversify its operations and reduce its
dependence on any one product or market.
Access to new resources: Acquiring another company can also provide access to new
resources, such as technology, expertise, or talent. This can help VT improve its
operations, innovate, and stay competitive in the long term.
Cost savings: External growth strategies can also result in cost savings, such as
economies of scale and scope, which can help improve the company’s profitability.
For example, by acquiring Geng PLC, SVT may be able to reduce its overall costs by
consolidating operations and sharing resources.
In summary, external growth strategies such as mergers and acquisitions can provide
companies like SVT with increased market share, diversification, access to new
resources, and cost savings, among other benefits.
b) VT’s marketing department recently used secondary market
research
TO, Explain three
advantages of secondary market research.
Secondary market research involves analyzing existing data and research conducted
by others, rather than collecting new data directly from participants.
Here are three advantages of this type of research:
Cost-effective: One of the main advantages of secondary market research is that it
is generally more cost-effective than primary research. This is because the data
already exists and does not require new resources to be collected. Therefore,
companies can save time and money that would be required to conduct their own
research.
Time-efficient: Another advantage of secondary market research is that it is time.
efficient. Since the data already exists, companies can quickly access and analyze it. This can be particularly useful when companies need to make decisions quickly or
when time is a critical factor.
Access to large data sets: Secondary market research also provides access to large
amounts of data, which can provide a more comprehensive view of the market or
topic being studied. In addition, since the data comes from a variety of sources,
companies can compare and contrast information from different studies and sources
to get a more accurate and complete picture of the market or topic being studied
Identify one internal and one external stakeholder of SVT. Explain
their interest in SVT.
One internal stakeholder of SVT is its employees. SVT’s employees are interested in
the company’s success as it affects their job security and income. They want the
company to remain profitable and sustainable, as this will provide them with a stable
income and job opportunities. Additionally, they may be interested in the company’s
expansion plans and opportunities for career growth within the company.
One external stakeholder of SVT is the government. Governments have a vested
interest in ensuring that their citizens have access to clean and safe drinking water.
ST provides this service to millions of people around the world, and governments
rely on the company to maintain the infrastructure needed to deliver this service.
Additionally, governments may be interested in regulating SVT’s activities to ensure
that they are operating in compliance with environmental and public health
regulations. As a regional monopoly, VT’s prices and level of service can also affect
government relationships with the company and the public perception of their
oversight role.
Accept any other relevant internal and external stakeholder.
Explain the evidences of non-financial motivation methods used in
SVT.
SVT has implemented several non-financial motivation methods to engage and
motivate its employees. Here are some evidences:
Flexible working time: By offering flexible working hours, SVT is showing that it
values the work-life balance of its employees. This can improve job satisfaction and
reduce stress levels, leading to increased productivity and motivation. The fact that
ST offers three different shifts for employees to choose from further demonstrates
its commitment to meeting the individual needs of its employees.
Teamwork: By encouraging teamwork, SVT is creating a sense of belonging and a
supportive work environment. This can lead to increased motivation and job
satisfaction, as employees feel that they are part of a team working towards a
common goal. The focus on teamwork also promotes collaboration and knowledge
sharing among employees, which can lead to better problem-solving and decision.
making.
Induction training: Providing induction training for new employees is a sign of SVT’s
commitment to employee development and growth. By investing in the training and
development of its employees, SVT is showing that it values their skills and
contributions. This can lead to increased motivation and job satisfaction, as
employees feel that their work is valued and that they have opportunities to learn and grow within the company.
Explain the following:
Corporate social responsibility (CSR)
Charities
Corporate social responsibility (CSR) refers to the actions taken by a company to
ensure that its operations have a positive impact on society and the environment. This
can include activities such as implementing sustainable business practices, reducing
the company’s carbon footprint, promoting employee well-being, supporting local
communities, and engaging in philanthropic activities.
Companies that engage in CSR recognize that their actions have a broader impact
beyond just their financial performance, and aim to contribute to the social and
environmental well-being of the communities in which they operate.
Accept any other relevant explanation
Charities are organizations that are established to support a particular cause or group
of people through fundraising and charitable donations.
Charities can be set up to support a wide range of causes, such as supporting
individuals with medical conditions, providing assistance to those affected by natural
disasters, or promoting education and cultural initiatives. Charities are typically
registered as non-profit organizations, and are subject to regulations that ensure
transparency and accountability in their operations.
Accept any other relevant explanation
Note: Case reference /application is NOT needed to get full marks.
Outline the differences between payback period and ARR
The payback period and the accounting rate of return (ARR) are two commonly used
methods for evaluating investment opportunities. Here are two differences between
payback period and ARR:
Focus on profitability vs. liquidity: Payback period focuses on the liquidity of an
investment, while ARR focuses on its profitability. Payback period is used to evaluate
how quickly an investment can generate cash flows to recover its initial cost, and is
often used by companies to assess the liquidity of their investments.
ARR, on the other hand, measures the average annual return on investment as a
percentage of the initial investment, and is often used to assess the profitability of an
investment over its lifetime.
ARR takes into account both the initial investment and the returns generated over
time, while payback period focuses solely on the time it takes to recover the initial
investment.
Net cash flow Vs. Profit: Payback considers only net cash flow, where as ARR takes into
account profit.
Using the information given in the Table 1, calculate payback period for the [2]
proposed solar powered water purifiers. Show all your working.
Pay back = 3 years and 9.2 months
Working 1 mark + correct answer 1 mark
Using the information given in the Table 1, calculate average rate of return
(ARR) for proposed solar powered water purifiers. Show all your working.
ARR = $ 1 400 / $ 10 000 X 100 = 14.4%
Working 1 mark + correct answer 1 mark
Using the information from the case study, additional information above, and
your results from (c) and (d), discuss whether SVT go ahead with the plan
As per the information provided, the cash inflows and outflows for introducing solar-
powered water purers on a test basis nave been prepared by a private business
consulting group. The payback period is 3 years and 9.2 months, which means that the
project is expected to generate enough cash inflows to recover the initial investment
in approximately 3 years and 9.2 months and ARR is 14. 4%. Based on the payback
period and ARR, it appears that the solar-powered water purifiers project is a
financially viable and potentially profitable investment for SVT.
However,
While financial considerations like payback and ARR are important factors to consider
when making investment decisions, there are several disadvantages to relying solely
on these metrics.
Ignoring non-financial factors: Financial metrics like payback and ARR do not take into
account non-financial factors that may be important to the company, such as the
impact on the environment or the company’s reputation. Focusing solely on financial
returns can lead to short-term decision-making that ignores the long-term
consequences.
Inaccurate projections: Financial projections are based on assumptions about future
cash flows and can be subject to error. If the projections are inaccurate, the investment
may not be as profitable as expected, or the payback period may be longer than
projected.
Opportunity cost: Relying solely on payback and ARR may cause the company to miss
out on other opportunities that have a higher potential return or greater social impact
but may have a longer payback period. This can result in missed opportunities for
growth and innovation.
Risk: The payback period and ARR do not take into account the level of risk associated
with the investment. A project with a shorter payback period may have higher risk,
and the company may be better off investing in a less risky project with a longer
payback period.
Limited perspective: Payback and ARR are just two financial metrics and do not provide a comprehensive view of the investment. However, it’s important to note that financial analysis is just one aspect that the board
of directors should consider before making a decision. VT’s commitment to corporate
social responsibility and making a positive impact on the world is also a crucial factor
to consider.
In this case, the solar-powered water purifiers can help address the lack of access to
clean water in less economically developed countries, which is a significant problem.
Therefore, if the board of directors believes that the solar-powered water purifiers
project aligns with VT’s vision statement and corporate social responsibility goals,
they should consider moving forward with the project, despite any potential risks or
uncertainties.
It’s important to note that in some cases, corporate social responsibility initiatives
may not have a clear financial return on investment, but they can still provide value to
the company in terms of reputation, employee satisfaction, and societal impact.
Other points:
Clash among directors regarding pricing
Selection of distribution channel
Accent an orner rvan discussion
Define the term public limited company (line 1). /2 marks
A public limited company (PLC) is an incorporated organization, so the owners are a legal
separate entity from the business itself. The company is listed on a public stock exchange, I.e., its
shares can bellegal vitraded boughtsold) on a oublic stock exchange to/ov the general oublic
- State two teatures of chantes (line 104 .2 marks
Possible features include:
An organization that performs useful social or environmental functions, e.g., improving the
lives of the less fortunate, promoting education, or supporting environmental causes.
It does not orimarily seek to generale a proi
A charity is a non-profit organization, so has tax advantages due to its status and purpose
in creating benefits for other members of society.
It relies on donations as its main source of finance. These can come from individuals,
foundations, and other organizatons to fund their operations.
- Define the term vision statement (lines 2, 116).
This is a formal/official statement of the organization’s overall goal, designed to facilitate decision
making. It refers to what the firm ultimately wants to achieve in the future. It expresses the long.
term aspiration of the organization
Describe the purpose of a vision statement
Ine vision statement of a business is a writen declaration of where the oroanization asores to be
in meluure
The vision is therefore the overall long-term goal of a business. Having a vision statement gives
the organization and its interna stakeno ders a clear sense of ouroose and direction. It orovides
strategic direction and describes what the owners or founders want the organization to achieve in the future.
- Explain two advantages of a takeover as a method of growth for SVT
Explanations could include any of two of the following points:
Greater market power from increased market share (line 90). having taken over rival
businesses (line 49).
Greater profit from larger scale operations (line 88), which generates a better return
on investment for VT’s shareholders.
The combined efforts can enable more investment in research and development to
Improve theSvis international comoelitiveness and sustamnable growin
It enables competitive and dynamic companies such as SVT to take over inefficient
firms and turn them into more efficient and profitable businesses, such as H4 PLC.
Economies of scale (line 57) enable SVT to gain cost saving benefits from being an
even larger organization.
Synergies, such as shared knowledge (networking economies of scale) and capital resources
Takeovers can soread risks for the company by enabling it to diversiy his proouc
range (line 49).
It can be used as a defensive strategy to prevent the company itself against a
takeover threat. By growing in size, VI becomes less of a target for takeover bids
from rival companies in Europe, the USA, and other parts of the world in which it operates
With reference to sut describe two functions of the human resources department
Possible functions could include a description of any two of the following:
Recruitment and selection
Training (including induction)
Performance management
Employee relations, e.g., dealing with employee grievances, conflicts, and disciplinary
actions
Workforce planning
Explain two benefits for H4 PLC of labour turnover being consistently below the national
average
Low labour turnover is good for SVI because it reduces the cost and disruption
associated with replacing departing employees. When employees leave a company, the
business must invest time and resources into recruiting and training new employees. This
can be a time-consuming and costly process, especially for businesses that require
specialized skills or knowledge
In addition, high turnover can create a disruptive and unstable work environment, which
can have negative effects on morale and productivity. Long-tenured employees often
have a deeper understanding of the company’s operations and culture, which can help
create a more conesive and ellecuve work envronmen
Low labour turnover also signals that employees are satisfied with their jobs and the
company as a whole. This can improve the company’s reputation and make it easier to
attract new talent in the future.
Finally retaining experienced and skilled emplovees can helo a business maintain its
competitive advantage and reduce the risk of intellectual capital loss. Employees who
have been with a company for a long time often have valuable experience, knowledge,
and relationships that can be difficult to replace. By retaining these employees, a
business can benefit from their exoertise and ensure the smooth operation of its
operations.
Describe one advantace and one disadvantage of high staff turnover resulting from SVT’s modernisation programme for H4 PLC
Possible advantages could include
Better and faster exchange of new and innovative ideas and skills from new employees.
The average age of the employees who left H4 PLC was 61, so new employees replacing
them would be younger and potentially more innovative as well as cheaper to hire.
Possible disadvantages could include:
Requires SVT to spend on recruitment pratices. This can be costly, time consuming, and
challenging, e.g., SVT had to fund trips for 300 employees to go to visit the flagship
factory in Norway (line 71).
There is lead time needed for new employee during their induction training, which
reduces productivty, at least temporarily.
Outline two disadvantage of an increase in labour turnover
Higher costs of recruitment as vacant positions need to be filled, such as the 300
vacancies caused by the “significant exodus* of former employees, e.g., time and
money needed to advertise, shortlist, and interview workers.
An increase in induction and training costs for new staff, such as SVT’s induction
training that included a visit to its flagship factory in Norway (lines 70 - 71).
There could be a negative impact on the quality of customer service, at least in the
short run as new staff need to be trained and acclimatized to SVT’s corporatel culture:
this could result in customer complaints and a poor corporate image.
Describe why it is important for SV to be aware of staff turnover at the organization.
A significantly high labour turnover rate, as caused by the significant exodus (line 65)
can damage the corporate image of SVT. This is due to the sense of instability
caused to empoyees as well as the disrupions cause the company s operations
Risinallevels of labour turnover suggest there are oroblems with stat motivation and
resistance to change at SVT. This is likely to result in higher recruitment costs for the
companv. atleast in the short term.
Similarly, addressing labour turnover issues can improve employee loyalty and
commitment to SVT, thereby improving productivity / the quality of the services
provided by the company.
Describe the meaning of an autocratic leadership style
An autocratic leader is someone who makes all decisions within an organization or division of the
business. S/he tells the workers what to do rather than allowing them to make autonomous
decisions. Fence, decision making is quick, but only reflects the opinions of the leader.
Describe the term situational leadership style
This is a leadership theory that suggests there is no single “best’ leadership style. Instead,
effective leadership varies depending on the situation at hand, the person or team involved, and
the task that needs to be accomplished
Describe two characteristics of an autocratic leadership style
Possible responses could include a description of any two of the following:
Decision making is limited to the autocratic leader, such as Ariadne or a very small
team of directors at SVT.
There is limited, if any, consultation or discussion between Ariadne Johansen, the
director of the Engineering Division, who is described as the autocratic leader, and
her team of employees (lines 21 - 22).
Workers in the Engineering Division are simply told about any decisions at SVT and
what they need to do.
The autocratic director dictates all the working practices and operational processes
within the Engineering Division of SVT.
Communication is downwards and one-way only (from the top of the hierarchy to the
bottom).
Outline two benefits of an autocratic leadership style
Decisions can be made quickly as Ariadne does not need to consult with others
before making any decisions for the Engineering Division. This helps SVT to respond quickly to changes in the environment or to take advantage of opportunities that may
arise.
Clear direction is provided as Anandne provides clear direction and quidance to
emolovees in her division. This helos employees in her team to stav focused and
motivated, as they know what is expected of them.
Unpopular but important decisions can be made as autocratic leaders such as
Ariadne are not afraid to make unpopular decisions when needed. This can be
beneficial during times of crises or when difficult decisions need to be made.
Fewer chances of conflicts as autocratic leaders make decisions on their own and do
not take into consideration the opinions of others in their team. This reduces the
chances of conflicts between individuals or groups in the Engineering Division.
More control as autocratic leaders have better control over their division or areas of
responsibility within the organization - because they make all the decisions. This can
be beneficial when SVT’s Engineering Division needs to make drastic changes or
when it is facing a crisis.
Exolain one benefit and one cost to SVT of using non-financial methods of motivation to
reward employees
Possible benefits include an explanation of any of the following points:
Non-financial rewards provide employees with recognition for their hard work and effort.
This recognition gives VT’s employees a sense of satisfaction and accomplishment,
which can ultimately lead to improved job satisfaction and productivity.
Non-financial rewards can create an environment/culture of appreciation, trust, and
inclusion. This can help to foster more positive relationships at work
between SVT’s employees, managers, and directors.
Non-financial rewards have the potential to increase employee engagement and
motivation. By providing employees with incentives such as flexible work arrangements
or recognition awards. Vcan make its emolovees feel valued and aoprecialed. Ims in turn can lead to greater commitment to the organization (employee loyalty), and
improved performance and profitably.
Non-financial rewards can help to reduce labour turnover. By creating a stronger culture
through trust and empowerment of workers, SVT can help to retain its most valued and
productive employees and ensure that they remain engaged and motivated.
Possible costs include an explanation of any of the following points:
The main cost associated with providing non-financial methods of motivation is the cost of
time and resources. They require SVT to invest considerable time and effort into
researching, planning, and implementing the most suitable non-financial rewards for its
workforce across the world
There is the risk of the non-financial rewards do not add real value as employees may no
appreciate these as much as financial methods of motivation, such as bonuses. nav
nses, and promotions. This can theretore lead to resentment and a fall in motivation
Describe the meaning of flexible-working contract
This is an employment agreement that provides employees with more control over the timing
and/or arrangements of their employment, such as changes to new working hours or new roles
and work processes
Explain two possible human resource strategies that SV7 can use to reduce employees
resistance to change
Get employees more involved in any decision-making process, such as by
encouraging employee participation and consulting with the workers (asking for and
listening to their opinions and suggestions), especially when there are significant
changes such as following a takeover or acquisition.
The directors can try to be open and honest by fully explaining the reasons for the
change (such as contractual changes) and emphasizing the positive outcomes in
order to gain support tor the change.
Improved communications between employees and senior leaders; open and clear
communication can help to improve employer-employee relations by avoiding
misconceptons and mIsunderstanangs.
Reassurances can be provided. such as oromises to orove necessary training for
those with new roles and responsibilities following the change, such as reorganization
after a takeover of rival busineses (line 49)
In the context of SVT, distinguish between capital expenditure and revenue expenditure.
Capital expenditure refers to spending by SVT on acquiring, maintaining and/or
upgrading its fixed assets. It represents a financial investment in the business, e.g.,
its flagship factory in Norway.
Revenue expenditure refers to the money that SVT needs for the day-to-day or
ongoing running of the business, such as finance for salaries to its emplovees and
directors.
In the context of SVT, describe the meaning of income streams
This refers to the money or income that flows into SVT from its various business activities, such
as the revenues earned from its four divisions, e.g., SVT earns revenue from operating of
desalination plants across the world as well as the exoected sales of the new WE 15 water
purifiers.
Describe how profit (line 88) is calculated.
Profit is the surplus from sales revenue after all production costs have been deducted. IE., profit
= sales revenue - total costs
Outline how equipment and machinery (line 47) is recorded in VT’s final accounts.
SVT’s equipment and machinery are types of fixed assets, i.e., non-current assets that are used
in the production of goods and services. As such, equipment and machinery are not intended for
resale and exoected to nave a usefullife of more than 1 monins from S Vis oalance sheet date
Explain the importance for SVT of developing new products to meet changing consumers
needs.
Developina new products to meet chanoing consumers needs is incrediolv important tor ovas a
company owned sharenders, an Up•o date pontolio
products. the companv can remain competitive on a alonal scale and ensure that its products are
of high qualltv given its vision statement and meet the ever-evolving needs of its customers
SVT uses market research (line 134) to gain insights and understand how their customers’ needs
are changing. This knowledge is essential in order to develop new products and services that
meet customer needs. New product development also helpd SVT to identify and capitalize on
emerging opportunities in global markets. For example, launching new products such as the
W1F15 water purifier in LEDCs can help to increase the company’s profits and boost its brand Image
Product life cycle for SVT
Fresh Water division – Maturity: SVT‘s potable water product is likely in the maturity stage as it has been supplied since the company‘s foundation and the market is still growing. However, it is unclear whether there has been any decline in sales in the past.
Desalination division – Growth (Desalination plants): Both small and large desalination plants are likely in the growth stage since sales of the smaller plants has increased by 300%. This increase in sales indicates that the product is still in the growth phase since a maturity would result in a smaller but steady increase in sales.
Engineering Division – Introduction (Wind turbines): SVT‘s wind turbine product is likely in the introduction stage as the company has only just begun manufacturing them in 2022 and is only able to produce a limited number (10) per year.
Consumer product Division – Growth (Water filters): SVT‘s water filter product is likely in the growth stage since the company is still acquiring smaller businesses and aiming to become the brand leader, indicating that there is no room for growth and the product has not yet reached maturity.
BCG Matrix
Cash Cow - Fresh Water Division: This division is the largest supplier of potable water to nearly 200 million people around the world and has a regional monopoly in each country in which it operates. It generates a high market share and a steady cash flow for the company, making it a cash cow.
Stars - Desalination Division: The desalination division of SVT operates in 19 out of 120 countries and provides 15% of the world’s desalination capacity, and the market for desalination is growing rapidly. Therefore, this division is a star as it has a high market growth rate and a high market share.
Question marks - Consumer Products Division:This division manufactures home water filters, which are not the primary business of the company. This division has consistently increased their contribution to SVT’s overall profits. They are increasing their market share through internal and external growth strategies, such as takeovers on smaller water filter manufacturers in Europe and the United States of America. They are aiming to become the brand leader in this market.The consumer products division has low market share and high growth potential, making it a question mark.
Question mark transitioning to Star- Engineering Division: The Engineering Division of SVT is one of the industry leaders in productivity per employee. They are big enough to complete a takeover on a rival engineering company, H4 PLC, therefore the market share cannot be small and implies that it is large, but also does not directly state that it is large. They also have achieved and have cut costs of employment, becoming more efficient and increasing their profit margin. There is also a large demand for wind turbines which is expected to keep growing each year, meaning there is high growth potential. Due to these reasons it can be implied that they have high market share and high growth potential, making it a star..
Apply Taylors theory
Benefits:
Autocratic leadership style leads to high productivity and more control
Boosts worker’s morale since they’re paid like others
Workers paid based on their results (differentiated piecework)
As a result of money gained workers are encouraged to work hard and maximise their productivity.
Limitations:
Disregarding any non-financial rewards
Employees carry out boring repetitive tasks (no clear career path if they’re doing the same thing then there’ll be no improvement
H4 PLC could also afford to lay off workers as productivity levels increased.
Dissatisfied workers will start to leave: high labour turnover (WORK, LIFE, BALANCE)
Apply Adam’s theory of equity
People seek fair balance between their outputs and inputs
Benefits:
Employees are motivated to gain justice
Would allow SVT to concentrate more on its employees and listen to their needs
Combines both financial and non-financial rewards
Job satisfaction if directors are listening to employee
Limitations:
Work motivation is disrupted.
If no change happens, employees will start to leave (high labour turnover)
Subjective: what counts as fair to the employer may not be the same as what is fair to employees.
Can’t work in the autocratic leadership style of Ariadne Johansen who will only focus on doing the work rather than listening to employees.
Apply Herzberg’s theory
Hygiene factors -factors that don’t affect motivation but if they are not present, they may demotivate the workforce
Salary (hygiene factor): SVT offered their employees very competitive salaries that rivalled other businesses, and they haven’t had a shortage of salaries for their employees. This lowered the employee’s dissatisfaction, hence lowering turnover.
Working conditions: Since employees would spend a huge time working due to their long shifts; they must work in good conditions in order to lower their dissatisfaction
Motivators - factors that help staff gain job satisfaction
Recognition: giving a sense of recognition from the business to the employee would make them feel more wanted and important rather than just workers or robots, hence giving them recognition would help in motivating them.
Advancement: promote workers for their achievement and loyalty.
Job enlargement (motivator): SVT applied job enlargement in their business such as the Trip to teach young kids in LEDCs for 3 months after 10 years of employment. This motivated workers to continue working in the business in order to reach this trip and achieve CSR goals.
Work itself: since the employees would work for many hours, the job they’re doing would lose meaning hence resulting in less motivation. So, giving a sense of purpose to the employee’s work would help motivate them.
Achievement: working for many hours employees would also lose their sense of achievement, which would result in less motivation. Hence giving them a sense of achievement by giving small rewards to the employees would result in a higher sense of achievement which would motivate them
Job empowerment: Wouldn’t be possible due to the autocratic leadership style present in the engineering department. It can mean that their is an organization culture of power with a centralized decition making.
Benefits:
It would remove any dissatisfaction and motivate workers to continue working for the business = lower turnover rate
Higher motivation would lead higher efficiency
Limitations:
It ignores external factors such as how competitors treat their employees which might lead to dissatisfactions.
Motivation methods can be subjective, which means that not all employees can be satisfied or motivated through Herzberg’s methods
Pink theory
Benefits:
It invokes creativity and Innovation
It creates a self-belonging since it is an internal source of motivation, so they make more effort in their work rather than the bare minimum
It can build greater trust between the employer and the employee, and within teams. Furthermore, it can create loyalty towards the company = less staff turnover.
Limitations:
Like in SVT, Pink’s theory is more modern and those who are older are already used to the carrot and stick technique, so it might not work on everyone and they will lose like how SVT lost their older workers.
Some people might not even be interested in the job in the first place and are there for money as the only goal. In that case motivation internally might not be what motivates them, instead they will prefer financial rewards
There may be a lack of direction in the work done, hence struggle to achieve business objectives and fit into tight time schedules.
