Apply IB Business Management SL objectives to decisions about vision, mission, growth, profit, stakeholder interests and corporate social responsibility.
In 2022, AH’s costs increased, but it kept prices unchanged. For 2023, AH decided to change its pricing strategy and pass on all cost increases to customers.
Table 2: Selected financial information for AH for 2022 and forecasted financial information for 2023
Alfombras Horizonte (AH)
Alfombras Horizonte (AH) produces natural henequen* rugs in Yucatán, Mexico, and sells them online. AH rugs are very popular among young people because of their eco-friendly materials and AH's mission statement: "We are responsible with Mother Earth for our environment and ourselves."
In 2022, AH's costs increased, but it kept prices unchanged. For 2023, AH decided to change its pricing
strategy and pass on all cost increases to customers.
Table 2: Selected financial information for \(\boldsymbol{A
* henequen: a fibre plant from Mexico and Guatemala. Fabrics made from henequen fibre are used to make a wide variety of products, including bags, rugs and hammocks.
State two benefits to a business of having a mission statement.
The Bengaluru office is responsible for customers in Asia. In 2021, this region will account for 30 % of MM ’s business, but it is expected to account for 60 % by 2025. Today, the Bengaluru office includes divisions responsible for sales, commissioning the work required to provide customers with the product, and providing after-sales service. Other business functions, including the rest of the Sales Division, either remain in the United Kingdom or are outsourced. Rachel would like to move all of MM ’s operations to Bengaluru. Bengaluru is a rapidly growing city of over 8 million people. Some aspects of its infrastructure, such as roads and water, have struggled to keep up with the growth. Deteriorating air quality, mainly from traffic pollution, is also a significant problem. Bengaluru is known as the “Silicon Valley of India”, with a concentration of high-tech businesses. These businesses benefit from high-quality education and training facilities. Bengaluru is also home to its own film industry, which produces about 80 films each year. The rapid growth of Bengaluru means extensive construction of buildings, and Rachel believes that suitable premises could be found at lower rents than in the UK. Javed can see operational difficulties with moving some of the design functions of MM to Bengaluru. Although the country has a strong IT industry, London has a stronger creative industry. Many of the creative employees at MM, like its graphic designers and artists, are based in London and are unlikely to want to relocate to India. Many recent recruits to MM have also come from the London Academy of Creative Arts.
MM's Bengaluru office already serves Asia and the region is expected to grow from 30% of MM's business in 2021 to 60% by 2025. Bengaluru is a rapidly growing city with high-quality education and training, a strong IT industry, an existing film industry, excellent premises and potentially lower rents than the UK, although roads, water and air quality are problems. Relocating all operations could therefore improve access to customers, skilled employees and lower-cost premises, but London has the stronger creative industry and many graphic designers and artists may not relocate. MM's ethical objectives require it to avoid customers and contracts linked to human-rights abuses, persecution, poverty and poor environmental records. Country X offers a profitable contract to improve its image but has been accused of arresting critical journalists, persecuting religious groups and failing to address poverty and environmental harm.
Explain how the proposed contract with Country X may conflict with MM's ethical objectives.
SGS
SGS operates a worldwide delivery business. SGS's aim is to deliver all packages on time, at low prices, anywhere in the world. Its Chief Executive Officer (CEO) Jean-Paul Lominé is known even by customers as an autocratic leader. Twice a year he sets prices and targets for costs and customer satisfaction.
SGS has three main competitors, Company A, B and C.
Primary market research revealed that customers value delivery on time, but many would pay higher prices for a more environmentally friendly service. It also showed that customers did not know whether SGS followed socially responsible "green" (environmentally friendly) practices. Customers also believed that the company's current autocratic leadership style did not fit with "green" practices.
Jean-Paul decided to change his leadership style from autocratic to situational*. He wrote a new aim for SGS : to make it the world's greenest delivery company. He ordered the Operations Department to recommend possible strategies. The Operations Department suggested two:
- purchase new, energy-efficient airplanes
- adopt new software to set fuel-saving air routes.
The Finance Department calculated that purchasing new airplanes would be a significant cost resulting in higher prices to customers. Tactically SGS would purchase a new airplane each time an existing airplane required significant expenditure to keep it flying. Adopting new software would require major computer upgrades, but the cost of the investment would be quickly recovered from fuel savings. The Marketing Director reported to Jean-Paul that if customers did not realize that SGS was now more environmentally friendly, they might think that it had only increased prices. Jean-Paul, however, refused to listen to the Marketing Director.
* situational: style of leadership that is also called situation leadership
Discuss the interrelationships between S G S 's aims, strategies and tactics.