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B.M report

1A) I used the Production Planner to calculate my monthly income by entering the price I intended to sell the stationery sets at. I estimated my non-contract sales, pressed the calculate button, and by a trial-and-error process, I found an appropriate figure to ensure the business was running at 100% capacity, with production rates being generated accordingly.

B) i) A price below £2.49 would create a low profit, or even none at all.

ii) A price above £3.99 is too high, and you would not attract customers, as they would take their custom to the competitors.

C) The capacity indicator assists in decision making by showing you how production is coping with the demand. If under capacity, I need to produce more units to keep staff employed, if over capacity, will I be able to ensure that my staff would work over-time.

D) Three limitations of using the Production Planner in “business@work” includes being unable to change the price for the contracts, unable to print and unable to save work to personal folders.

E) Contract Production Unit are a fixed and pre-set legal agreement between you and the customer. Non-Contract Production Units are not set and must be estimated by considering the demand for the products.  

2. In Market Research, “Market Demand”; this information is vital, as it gives all the information needed on how many units are being demanded by the market.  “Competitor Pricing”; is important to know so that you can decide a final price for your stationery sets, either above or below the competitors price. “Competitor Market Share”;   this is an indication of how much market “space” is available. “Competitors Spending”; is valuable to know because it describes how much each competitor is spending on advertising and marketing and I can decide whether to spend more or less on it.

3A) – see attached.

·         B) 46, 732.53 / 113, 539.43 (x100) =

·         Gross Profit % = 41 %

·         10, 390.87 / 17, 632.53 =

·         Current ratio = 0.59 : 1

C) The Gross Profit could be improved by finding cheaper suppliers and increasing the selling price of the product.

4.  The cost of some expenses stay the same, they are set at a fixed amount for each month, for example rent, whereas an expense such as electricity will differ each month in accordance with how much is produced.

5A) The Advertisement and Marketing section of the Business Plan aids in future decision making as it details the media used to advertise and market the business and its product, and you can change the amount spent on this depending on sales.

B) Sales and Purchases within the Business Plan helps with future decision making as it details monthly the figures of sales against purchases and a decision can be made about buying more or less stock.

6A) Competitive Pricing is the strategy being used by all competitors in Month 3, and they are all using this as they are not really competing with each other.

B) The pricing strategy used by “StopPress!” in Month 12 is called “high-price strategy”, and is used in that the price level is set higher than competitors, as you think the market will take a view to presenting an excellent, “quality” image, therefore customers will pay more for their products, which means the company gains a profit.

7A) As with all new businesses, my stationery business may lack demand,  suffer from poor financial planning resulting in business failure/bankruptcy, and there may be poor employee relations established.

B) Within a sole trader type of ownership, there is unlimited liability, and complete responsibility for the business, whereas a Private Limited Company is a limited company, and the company is a legal entity separate from the owner/s. It is easy to raise capital for a Private Limited Company, perhaps because of the previous feature, and in a sole trader ownership it is difficult to raise enough money because the risk of failure is so high and liability unlimited.

8A) In developing my stationery sets, research into what “themes” the set could have to attract customers, research by asking people what their expectations of my type of product are and the most efficient method of production, could be done.

B) Three other stages of the Product Life Cycle include; introduction of the product, the marketing and advertising scheme to successfully promote the business and product, maturity of the product once it is well-established and sales “level-off”, and finally, saturation, when all possible avenues of marketing, etc, the product, have been explored.

C) The promotion of the stationery sets could be altered to prolong the “life” of them, for example, the colour of the sets. The place where the stationery sets are being sold, as for example, going online, could significantly prolong the life of the stationery sets, as you would expand your market base by a considerable amount. 

9. A form of a flexible working practice offered to my employees is “part-time”. This term refers to weekly basic hours that are less than that of the traditional “full-time”. “Flexi-time”, in which a balance between working in the office and working from home, is established, with only “core times” being compulsory to be present in the office, could also be offered.

10. Becoming a multinational business could be beneficial to my stationery business as it spreads the risk and increases sales. However, disadvantages would include possible language barriers, and a large financial cost to the business for setting up effectively over-seas.