Beruflich Dokumente
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POTENTIAL QUESTIONS
1. Explain two reasons why organizations such as ACCORD implement corporate social responsibility
strategies [6 Marks]
Objectives to meet social responsibility have become increasingly common among businesses. A reason for ACCORD to implement
corporate social responsibility is that the image of the business and its products can be improved with a LOCAL, NATURAL
AND ETHICAL approach. This could become a major competitive advantage, attracting new customers and loyalty from
existing competitors, especially when competing against MNCs that source drinks from abroad, sell to teenagers through
supermarkets. Secondly, investors often prefer to invest in businesses that are socially aware. As a result, the business will be able to
attract the best-motivated and efficient investors more easily. An example was Jesse looking to clean his image by investing in
1
ACCORD. Or even the “business angel” which sought to invest and in this way, fund ACCORD, and even get involved in daily
projects.
The reasons why they implement CSR is in short, to improve their brand en image and customer loyalty.
Disadvantages:
● the sources of financing for ACCORD are limited as it is not listed on the stock exchange.
● Limited growth opportunities
In summary:
● A private limited company is a type of business, small to medium sized, that is owned by shareholders, who are often members of the
same family or close group. Being a private family canta , the advantages or benefits are that the company has privacy against their
competitors. This means that their financial performance and accounts are not open
● A family owned business, and a limited company, they have limited access to finance, as there are very limited shareholders.
However, being a Ltd. also means that the chance of being taken over by another officer shareholder is very less. Also, in the event of
death, there is always a continuation, as there are family members to help the business out.
3. With reference to ACCORD /the case discuss the usefulness of a vision and a mission statement. [6 marks]
The vision statement is more forward-looking and speaks to the long- term aims and highest aspirations on a business. A mission statement is
more grounded in the aim of accomplishing objectives to achieve the short-term goal, an intermediate step on the way to the vision.
Communicate to stakeholders the purpose of the ACCORD's existence. Guide the organization's aims and objectives
- Vision definition: The vision of a business is a written declaration of where the organization aspires to be in the future… where is the
business going? In the case of ACCORD which is the vision, Kayla’s vision was that Enrich had a first mover advantage in the energy
drinks market given that the Multinational Companies were only just beginning to consider the idea of an all natural energy drink.
Kayla regarded Enrich as a niche product. On the other hand, Aran saw things differently. He favoured a mass market approach. They
need to decide on the way forward.
- Mission Definition: States what the company's current goals and the purpose of the business existing… why does the business exist?
Enrich should be viewed not only as an energy drink but as a brand of related products and services, which would allow
Enrich to become a healthy lifestyle brand. As a general Mission but Aran and Kayla still needs to come together towards a
unique Mission.
- The vision and mission statements provide a focal point that helps to align everyone with the organization, thus ensuring that everyone
is working towards a single purpose, increasing productivity
A vision statement is a long term goal and vision of what the business wants to be in the future. Having a vision statement is very
useful as it gives ACCORD a sense of direction towards what they are working towards. In the case of ACCORD, they do not
have yet clear vision normission as Aran and Kayla are not yet on the same page. This means that the company is unaware what it
is working towards, which could have a negative effect on it result A vision is very useful as it inspires employees, attracts investors,
and helps in external finance acquiring as well. Communicating a vision to their stakeholders, including consumers, can create a brand
identity and loyalty as well.
Vision Statement Mission Statement
● States what the organization wants to be or do ● States the purpose and guides the actions of an
● Concentrates on the future direction of the organization organization
● Source of inspiration (driving force) for internal ● It is a declaration of an organization’s reason for
stakeholders existence (why it exists)
● Give the company a sense of purpose ● Symbolizes a company’s philosophies, goals and
● Provides guiding beliefs about how things should be ambitions
done ● Enables the organization’s stakeholders to understand the
● Informs strategic planning (where the organization wants desired level of performance
to be) ● Incorporates meaningful and measurable criteria
● It does not change overtime (expectations of growth and profitability)
● It is a broad statement ● Describes how an organization will execute its vision
(the tactics that make the vision a reality)
● Narrow and specific statements
Relevance to ACCORD:
- Problem… what the case says: ACCORD has no corporate strategy either, apart from a vision in either Aran or Kayla’s mind.
They exchange ideas and it seems that Aran vision usually prevails but it is not clear how much does Kayla support such vision, but
no written corporate strategic plan exists to achieve that vision. ACCORD has still no strategy “After three months of operation
without a decision, sales of Enrich were satisfactory but below forecasts”
- Motivation
- Productivity
ARAN KAYLA
● Aran believes that Enrich will be the first all-natural energy ● Kayla has questioned this USP, arguing that all-natural
drink on the market and considers “all natural” to be its energy drinks already exist.
unique selling point/proposition (USP).
● Kayla was concerned about the fact that this first attempt to
● Aran countered by saying that, in addition to providing conduct primary market research focused on people they
excellent nutrition for marathon running, Enrich would save already knew. Given Aran’s enthusiasm, she decided not to
athletes money: they would not need to purchase vitamins or tell him about her concerns.
go to the doctor as often. ● Kayla also thought that below-the-line promotional methods
would allow Accord to have tighter control over their
● Aran felt that Enrich should be viewed not only as an energy positioning as the foremost ethical provider of energy drinks.
drink but as a brand of related products and services, which
would allow Enrich to become a healthy lifestyle brand. He ● Kayla became convinced that Enrich could create a USP as
was already thinking about long-term goals. the only locally produced, caffeine-free, all-natural energy
drink. Enrich would be sold only through affiliated sports
● Aran thought that if Enrich was successful, they might and leisure clubs. The additional health benefits and cost
need to find a small factory. This factory would use savings experienced by their customers would strengthen
job/customized production. their USP and brand value.
● Aran knew the price of the Enrich range was significantly ● Kayla argued to Aran that establishing Accord and their
more expensive than those charged by the large MNCs, brand was more important than generating large profits in
which supplied an ever-increasing range of energy drinks, the short term – profits would hopefully follow in future
fruit drinks and other beverages. years. Kayla argued that Enrich had a first-mover advantage
● Aran saw things differently. He thought that treating Enrich in this particular market given that the multinational
as a niche product would narrow the other possible market competitors were only just beginning to consider the idea of
segments. He favoured a mass-market approach. Aran all-natural energy drinks. As such, Kayla still regarded
considered Enrich a significant product innovation. Enrich as a niche product.
Strengths Weaknesses
- 100% owned by Aran and Kayla - No marketing plan
- No shareholders to bear in mind - No relevant vision or mission statement
- Streamlines decision making - No Brand identity
- process as decisions can be made on the spot and - Insufficient guidance and lacks focus
not have to consult anyone else - \need additional suppliers of fruit and vegetables
- Kayla and Aran decided that Kayla should - Need financing and actual sources are not acceptable,
manage marketing and finance, and Aran manage angel investor nor jesse
the operations and supply chain. - MNCs, such as ABC, were large and experienced in the
- beverage market and had significant branding
- Competitive advantage - highly customizable goods - very advantages, economies of scale and wider promotional
attractive for the customer (lines 35-42) reach.
- The business would also have very high ethical
objectives, which would determine their future marketing,
operations and financial direction.
- first-mover advantage
- Solid strategy
Opportunity Threats
- suitable premises and production equipment to support - tertiary economy with few primary producers
the future growth of Enrich - Rising competition from MNC
- Some manufacturers argue that energy drinks can - Expensive factors of production
improve thinking skills and attention spans. - Regulation against Teeenager Consumption
- Enrich should be viewed not only as an energy drink but - Most medical pressure groups,
as a brand of related products and services, which would - 15 however, argue that energy drinks have negative side
allow Enrich to become a healthy lifestyle brand. effects, especially if consumed by younger consumers.
- Enrich could be frozen and transported to customers over They warn that the amount of caffeine and sugar
longer distances contained in these drinks can be harmful.
- Success of Energy Drinks: the idea of a drink based on - further research and development is required on Enriche
green tea, called Detox, which could allow athletes to Development
relax after a hard training - the price of the Enrich range was significantly more
- Sustainability - expensive than those charged by the large MNCs, which
- Money Saving for athletes supplied an ever-increasing range of energy drinks, fruit
drinks and other beverages.
- Accord t hrough social media said customers were
confused about whether Enrich was a fruit juice or an
energy drink
8. Using the Ansoff Matrix, discuss the growth strategy of ACCORD. [8 marks]
a. Define Ansoff Matrix - See link for diagram
i. Product/Market
1. Existing/Existing = Market Penetration
2. Existing/New = Market Development
3. New/Existing = Product Development ACCORD(DETOX)
4. New/New = Diversification
b. Different growth strategies used with each owner (i.e ARAN VS KAYLA)
i. KAYLA - NICHE PRODUCT
1. Concentration
a. ARAN New market (corporations looking for customised products) and new product (water bottles)
b. Kayla argued to Aran that establishing Accord and their brand was more important than generating
large profits in the short term – profits would hopefully follow in future years.
c. Kayla argued that Enrich had a first-mover advantage in this particular market given that the
multinational competitors were only just beginning to consider the idea of all-natural energy drinks.
d. Kayla still regarded Enrich as a niche product.
e. -
2. Diversification
a. New market (aging population that needed healthcare)
b. Aran felt that Enrich should be viewed not only as an energy drink but as a brand of related products
and coffee services, which would allow Enrich to become a healthy lifestyle brand.
c. He favoured a mass-market approach.
d. Aran considered Enrich a significant product innovation. If Accord waited to launch the brand as a
mass-market product,they would be missing out on potentially high profits.
11. Evaluate the decision of building a new production facility in another location in Europe. [8 marks]
- These MNCs, such as ABC, were large and experienced in the beverage market and had significant branding advantages,
economies of scale and wider promotional reach.
- To Compete, Aran thought They should borrow immediately for revenue and capital expenditures to finance increased production.
- Aran argued that they should expand production to lower per unit costs. They could then reduce prices and keep gross profit margins
- the same. He believed that sales would pick up in three months.
- After some further investigations into suitable premises and production equipment to support the future growth of Enrich, Kayla and
Aran found an affordable abandoned confectionery production plant that would increase the production capacity. Some of the older
confectionery-making equipment would need to be replaced.
- As they needed investment to progressed they look into two options:
- The angel investor wanted some involvement in the day-to-day management, which Kayla was reluctant to allow.
- Jesse, looking to rebuild his own brand identity after accusations of cheating, contacted Aran. But he feared a social media
backlash could undermine and tarnish the Brand.
-
13. In the context of ACCORD, explain the meaning of capital expenditure (line 54)
Definition : The money spent to acquire fixed assets in a business that will last for more than a year and may be used over and over
again. m
14. Explain why it is important that ACCORD generates new revenue streams
To become economically sustainable: Kayla carried out some further market research to see if the additional capacity could be used
for another drink that would complement Enrich. These drinks could form part of the lifestyle brand that Aran had envisaged. Her
investigations led her to discuss with Aran the idea of a drink based on green tea, called Detox, which could allow athletes to relax
after a hard training day y. As with energy drinks, the health effects of green tea to help athletes relax were non-conclusive. However,
Kayla argued that unless they introduced this new product, Enrich would struggle to be economically sustainable.
Having more than one source of income (revenue streams: income an organisation gets from a particular activity), might lead Accord
to have a higher total revenue.
15. State two stages in the product life cycle [2 marks, or 4 if explaining is specified]
Stage 1: Development
The design of the product is created, through creating a prototype, carrying out test marketing and sale of the product in small
quantities. Enrich is in this stage.
Stage 2: Introduction
The launch of the product in the market, where price strategies are used to make the brand known.
The market - Target market: Athletes. Healthy Consumers. selling only through affiliated sports clubs would enhance
their ethical credentials. Ethical Consumers.
The finance - Still do not have financing for the purchase of new premises and production
As Accord is a newly established business and thinking of increasing their production capacity, an internal source of finance that would be
likely suited for Accord would be the partnership’s personal funds. Personal funds is the easiest and most cost-effective way to provide for
the business. Using personal funds allows Kayla and Aran to have more control than other finance options. It also means that they don't
need to pay back or rely on outside investors or lenders, who could decide to withdraw their support at any time. Kayla and Aran would
retain full ownership of the business, which in turn means that they would receive 100 per cent of future profits.
However, using personal funds can be risky. This is due to Accord being a partnership and having unlimited liability, hence if business fails
Kayla and Aran would lose their assets. Additionally, Kayla and Aran may not have enough personal funds to finance their growth plans
such as setting up an additional production facility. Looking at Accord and their owners, using personal funds or any sort of internal sources
of finance would not be suitable this is due to Accord being a new business meaning there is no retained profits nor would they would not
have any dormant assets to sell-off. Kayla and Aran are also asking financial assistance from charities and NGOs. This would suggest that
they would not have enough personal funds to fund their business.
Accord could also use external sources of finance like bank loans or the business angel. A benefit of using short-term bank loans is that
Aran and Kayla can quickly get the finances needed. Banks can lend large sums of money and hence this is beneficial for Accord who would
need large amounts of finances to set up their additional production facility. However, bank loans need to be paid back with interest which
would add to the cash outflows of Accord and may damage its cash flow position. it is unlikely that the banks would want to lend Aran and
Kayla loans. This is due to bank loans tend to be more available for well-established and growing businesses rather than start-up
businesses. The reason for this is risk, banks prefer to loan to businesses with an established track record of profitability, which makes them
more likely to be able to repay the loan and interest. Banks also require a collateral and Accord may not have any suitable assets to offer as
collateral.
Kayla should also consider allowing the Business Angel to help Accord financially. Business Angels are extremely wealthy individuals who
choose to invest their own money in businesses that offer high growth potential. Business angels are likely to take a proactive role in the
setting up or running of the business venture also their wealth of experience and financial backing, angel investors can be a major
advantage to the survival and success of a newly established business like Accord. As Kayla has tried and failed in securing external
sources of finance, a business angel may be the best solution for Accord.
However, Kayla and Aran lose some control to the business angel. Another disadvantage is that the business might eventually have to buy
out the stake owned by the business angel.
1. Discuss whether or not RDM should use loan capital or share capital to finance their additional production facility (possible 10
marker)
● Share capital: consists of all funds raised by a company (Going public)? yep.
○ The amount a company reports on its balance sheet: only the total amount initially paid by shareholders.
■ Advantages:
- there is no debt
■ Disadvantages:
- limited cash as it is a Ltd no. , and take into account the interests of shareholders (harder to get to agreement)
● Loan capital: money that a business borrows from banks and other organizations for an agreed period of time… the company will be
paying interests
○ Advantage: You can ask for several loans and don't have “cash limit”
Which means, that a large sum can be acquired.
○
- Debts and interests, have to pay back, Decreasing current and acid test ratios (liquidity ratios depending if the
loan is considered as current or long-term liability.
- Also, banks need collateral for a loan, which means one of the company’s assets will be held by the bank until
the loan is fully paid back with interest.
Maybe for Finance, they will add a table in the actual paper on the costs of investment of the i new facility or related
and make us do an investment appraisal. Seeming that there is no finance in the case study, maybe they will add a
table in the paper with financial data.
Line 54 Requiring capital expenditures for automation - Capital expenditures
Line 105 Delivery costs for the customers
Line 107 Competitive pricing - strategies
Line 115-116 Finance expansion through either share capital or loan capital - Financing strategies
Appendix 2 700 km competitive pricing radius
Line 117 Considering private to public limited company transition to sell shares and acquire more capital
Possible Questions:
● Define share capital and Loan capital
○ Advantages and disadvantages
● Differences between public and private limited companies
○ Private limited companies: are companies that are not listed within the stock market,
■ Advantages:
● Allows centralized management, they do not have to share sensible info with others
● Separate liability
● There is continuity
● Easier access for finance
● More possibilities for expansion
○ Public limited companies: companies that are listed within the stock market
■ Advantage: easy financing
■ To reach a decision, all of the shareholders need to agree (or get what they want to agree… they
may not agree with a decision but it brings profit, they might lean on to agree)
● Define competitive pricing:
Selecting strategic price points to best take advantage of a product/service (based on competitors)
- Advantages: increases revenue (wholesale)
- Disadvantages: products may not be of the same quality.
● Profit and loss account: financial statement that summarizes the revenues, costs, and expenses incurred during a
specified period (the accounting period)
● Balance sheet: a statement of the assets, liabilities, and capital of a business or other organization at a particular
point in time, detailing the balance of income and expenditure over the preceding period.
● Break even point for a certain product
pizza time
Unit 4 - Marketing
1.
Due to the final stages in the product life cycle of the stoves, due to the declining sales in coal burning stoves, RDM’s main
way to expand the life cycle was to add an additional type of stove, the kerosene stove. This was one of the factors that led
RDM to come up with kerosene stoves. Another reason that RDM could have is that they can remain in a similar area of
product which is easier to adjust to than diversifying (new product in a new market).
2. Explain the usefulness of branding to RDM. [6 marks]
a. RDM has a weak brand identity, therefore rebranding RDM would enable the business to be more up to date thus new
customers as they would be fascinated by the brand that depends highly on job production, which is not labour intensive and
capital intensive. Rebranding, would add to the value of the brand, as brand name could have a price which could move the
company higher up in hierarchy as it would value more.While also, branding could give RDM a boost in the market enabling it
to grow as it would make it stand out. (important for customer loyalty and brand recognition)
b. Make the brand more recognizable - might need it now more due to them possibly moving towards the B2C sector rather than
their previous B2B model.
i. Advantageous during negotiating prices/location of the product with retailers
3. Explain which part of the marketing mix has been greatly focused upon. Justify your answer. [6 marks]
a. Product: one of the main focuses have been the healthcare devices manufactured by RDM since 1993 when Adriana decided to
add them to RDM’s portfolio in order to take advantage of the eventual retirement of the baby boomer generation. Thus
diversifying the company’s income sources, although in 2002 RDM stopped producing it’s other products such as the kerosene
stove and now has solely focused on manufacturing healthcare devices.
SO YOU CAN GET MOTIVATED (pink motivational strategy) *sing it with the music of breaking free of high school musical*
Dividing, Multiplying
There is no profit in business that we can’t reach
If were trying
So we are breaking even
Gat-gat-gat-gat-gat
Grrrat
Ba-ba-ba-ba
Brrat-tat-da-da-da-da
Ga-ga-ga-ga
Brrr-ah-da-da, brrr-ah-da-da
Brrr-ah-da-da-da, brrr-ah-da-da-da
Brrr-ah-brrr-ah, brrr-ah-ga-grrrat
Ru-ru-ru-ru-oh!