Practise explaining how innovation influences business decisions and organisational change for IB Business Management HL with real exam-style questions and mark schemes.
Benno is a soft drinks manufacturer. Its mission statement is “to produce healthy drinks without damaging the environment”. Competition in the healthy soft drinks market is fierce. Benno uses a competitive pricing strategy. However, sales of Benno’s drinks have fallen significantly over the last five years, particularly in the 12–18 age group. The business has no accumulated retained profits.
Benno is committed to innovation and corporate social responsibility (CSR). Its research and development division has recently invented a new biodegradable drink pack ring that starts to break down within two hours of contact with sea water. It dissolves fully in 48 hours. Currently, 98 % of pack rings are made of plastic and when dumped in the sea are responsible for the death of many sea creatures.
A focus group of loyal customers used regularly by Benno’s marketing department is wholeheartedly in favour of the new drink rings. However, the marketing director has read recent studies that suggest: • purchases of green products are not increasing, despite the positive attitude of many consumers towards sustainability and biodegradable products • consumers continue to prioritize price when purchasing soft drinks.
Benno
Benno is a soft drinks manufacturer. Its mission statement is "to produce healthy drinks without damaging the environment".
Competition in the healthy soft drinks market is fierce. Benno uses a competitive pricing strategy. However, sales of Benno's drinks have fallen significantly over the last five years, particularly in the 12-18 age group. The business has no
accumulated retained profits.
Benno is committed to innovation and corporate social responsibility (CSR). Its research and development division has recently invented a new biodegradable drink pack ring that starts to break down within two hours of contact with sea water. It dissolves fully in 48 hours. Currently, 98 % of pack rings are made of plastic and when dumped in the sea are responsible for the death of many sea creatures.
A focus group of loyal customers used regularly by Benno's marketing department is wholeheartedly in favour of the new drink rings. However, the marketing director has read recent studies that suggest:
- purchases of green products are not increasing, despite the positive attitude of many consumers towards sustainability and biodegradable products
- consumers continue to prioritize price when purchasing soft drinks.
To manufacture the new drink rings, machinery costing million would be needed. Drink ring production unit costs would rise from 10 cents to 15 cents and prices of a six-pack of Benno soft drinks would have to increase by 5 %. Benno's net profit margin on a six-pack is 10 %.
Benno's director of corporate social responsibility favours the change to the new drink rings but is opposed by both the finance director and marketing directors.
Define the term innovation.