Practise Edexcel Business questions on objectives and strategy, applying strategic choices to a firm’s resources, stakeholders and competitive position.
Extract A The Peloton Business Model Peloton, founded in 2012, manufactures and sells two products for customers to use at home when exercising. The first is the Peloton Bike, an indoor cycle with a touchscreen monitor and a starting price of $2 245. The second is the Peloton Treadmill; this has a touchscreen monitor and a starting price of $4295.
Peloton customers pay a monthly subscription of $39. This gives them access to exclusive virtual sport content streamed directly to their monitors where they can compete against other subscribers. If they do not want to compete against others, they can follow a class from the Peloton large fitness and sport library.
The Peloton headquarters is in New York. It has become the largest interactive fitness business in the world and in 2019 became a public limited company. It has customers in the US, Canada, UK and Germany and has recently expanded into Australia.
There has been a huge growth in virtual fitness classes as fewer people attend traditional gyms. This has led to an increase of 153\% in Peloton's revenue since March 2020.
Extract B Selected financial data for Peloton 2020 and 2021
Extract C Peloton's mission statement Peloton uses technology and design to connect the world through fitness, empowering people to be the best version of themselves anywhere, anytime.
Extract D Peloton completes takeover of Precor for $420m cash in April 2021 Precor is one of the largest global commercial fitness equipment manufacturers with a large number of sales in the US. Its fitness equipment can be found in hotels, universities and businesses in 90 countries.
With this takeover, Peloton expands its US manufacturing capacity and is able to increase its research and development capabilities with Precor's highly-skilled employees. This is expected to speed up Peloton's penetration of the global commercial market.
Extract E Peloton recalling all treadmills In May 2021, Peloton announced recalls of 126,000 treadmills over safety concerns. The announcement marked a major reversal of Peloton's initial reaction. It comes after weeks of discussions with the US Consumer Product Safety Commission (CPSC) over reports of faults with the Peloton Treadmill.
In a statement, Peloton apologised for not acting more quickly after reports of one death and dozens of injuries. "I want to be clear; Peloton made a mistake in our initial response to the CPSC's request that we recall the Peloton Treadmill," CEO John Foley said. "We should have listened to them from the outset. For that, I apologise."
Peloton shares closed nearly 15\% down. This wiped $4.1bn from Peloton's market value.
Peloton share price February-August 2021
Extract C Peloton's mission statement Peloton uses technology and design to connect the world through fitness, empowering people to be the best version of themselves anywhere, anytime.
Using Extract C, discuss the possible benefits for Peloton of having a mission
statement.
Extract A The Five Guys' family, freshness and customisation Jerry and Janie Mitchell lived in Arlington, Virginia. In 1986 they gave their five sons a choice: start a business or go to college. The business route won and the family opened the first Five Guys - named after the five brothers.
To this day, the formula remains simple: 'Burgers and fries cooked to perfection' in keeping with Jerry's philosophy of 'To perfect and to serve.' The family is still very much involved in the business, meeting every Tuesday.
Five Guys is organised differently from other fast-food burger outlets. You will not find a freezer in any Five Guys restaurant because everything is cooked from fresh ingredients. Food is prepared every day for maximum freshness including hand cutting the potatoes. Employees do the cooking without timers and are trained to judge the food's readiness by sight, aroma and texture. In other fast-food outlets machines are used to cook the food and timers are relied on to indicate when the food is ready to serve.
The burgers, hotdogs and sandwiches come with up to 15 free toppings, giving 250,000 combinations to choose from. If you had one a day, it would take you 684 years to try them all and the milkshake machines give over 1,000 possible combinations.
Extract B Selected financial data for Five Guys (UK and Europe) 31 December 2020 and 2021
Extract C Data for purchasing a new £10000 milkshake machine for a Five Guys restaurant
Extract D How to Incentivise Your Crew The fast-food industry is well known for its over 100\% labour turnover levels. Many businesses are relying on employee incentive programmes to retain their workers.
One popular way is using mystery shoppers. A mystery shopper is a person employed to visit a shop or restaurant anonymously to assess the quality of the goods and services.
Five Guys uses mystery shoppers to assess the quality of its food and the customer services given by employees. The information gathered from mystery shoppers is used to create weekly, monthly and quarterly rewards programmes for its employees.
Five Guys rewards the top 200 restaurants every week. The weekly reward is anywhere from $900 to $1 300 per restaurant. The money is shared between the employees working in the restaurant when they were mystery shopped.
Molly Catalano, Director of Communications and Marketing at Five Guys, said, "We think that our success can be seen in the increasing mystery shopper scores over time, in the satisfaction of our employees and in our growth as a company. We have seen success in all three areas."
Five Guys is still expanding and has 1,600 locations in 19 countries across the world.
Extract E Five Guys launches merchandise collection Five Guys, known for its burgers, hot dogs and milkshakes, has launched the first of its clothing lines branded with the Five Guys logo in the UK.
The main item from the collection is the black and white embroidered unisex college jacket that pays tribute to Arlington, Virginia, where the brand was founded in 1986. This follows the current trend for American-styled clothing, which has seen college jackets feature in high street and designer collections during summer 2022.
Alongside the college jackets are the official Five Guys t-shirts, featured in red, black and white, branded sweatshirts and hoodies, baseball caps and red-and-white checked sports socks. There is even a lightweight rain jacket with the Five Guys logo.
Prices start from £10 for the socks to £75 for the college jacket. T-shirts cost £20 each, while sweatshirts are priced at £35 and hoodies at £45. All can be purchased at the Five Guys online store.
Using Ansoff's Matrix, assess the possible benefits to Five Guys from launching its
new clothing merchandise.
Extract A Kellogg's Corporate Strategy Founded in 1906 by W.K. Kellogg, Kellogg's started to produce breakfast cereals such as Kellogg's Corn Flakes but has since ventured into other food products. Its product portfolio today includes convenience foods such as snacks, biscuits, waffles, pastries, cookies and crackers. Kellogg's vision is simply to 'Enrich and delight the world through foods and brands that matter'. Its strategy ranges from being the best provider of breakfast products and global provider of snacks to doubling sales in emerging markets. Kellogg's spends more than 8\% of its revenue building its brand that is helping the business to become a powerful name in some of the developing markets in the world. Kellogg's uses a mix of demographic, geographic and psychographic segmentation to market its 1,600 food products that are produced in 21 countries and sold in more than 180 countries. It reinvests profits to produce more innovative food products and to improve its product mix.
Extract B Kellogg's in 2017
Sales Revenue (\$m) per region
Main Products by sector (\%)
Extract C Kellogg's to run summer hours scheme for Manchester-based staff Kellogg's is running a summer hours scheme for its Manchester-based staff. The scheme, now in its 15th year, lets all 420 employees based at its headquarters in the UK finish work at 12.00 on a Friday provided they have done a full week's work. The summer hours scheme is designed to boost productivity and give employees greater flexibility so they enjoy long weekends, pursue hobbies and spend extra time with friends and family. The UK HR Director at Kellogg's, said: "Flexible working is something we take very seriously at Kellogg's. Research shows people who feel they have a good work-life balance work 21\% harder than those who do not."
Extract D Kellogg's cuts sugar levels in Coco Pops by 40\% - and says they taste better Kellogg's says it has improved Coco Pops by reducing the amount of sugar in the cereal by 40\% and adding more chocolate powder. The changed recipe, which also has 10\% less salt, now has 17g of sugar per 100g rather than 30g.
Bridget Briggs, of Kellogg's, said: "We have listened to people who buy Coco Pops. We have reduced the total sugar content of the cereal without affecting its great chocolatey taste." UK health campaigners urged other companies to follow Kellogg's as nearly two-thirds of adults and a third of children are overweight. Professor Graham MacGregor, Chair of Action on Sugar, said: "We hope Kellogg's will change all of its cereals and set an example for all other food manufacturers. We need compulsory sugar-reduction targets with strict penalties for those who do not comply."
Extract E Kellogg's statement of comprehensive income for the year ending 31st December 2017
Explain one aim of portfolio analysis for Kellogg's.
The UK Government has a policy to cut sugar in breakfast cereals by 20% before 2020.
Assess the likely implications of this policy for Kellogg's corporate strategy.
Assess the likely implications of this policy for Kellogg's corporate strategy.