Build your IB Business Management SL foundation through Unit 1 questions on how businesses are formed, organized, directed and evaluated.
A hotel combines human resources such as managers, receptionists, housekeeping and catering staff with physical resources such as the building, rooms, beach, restaurant, equipment and ICT, and financial resources such as investment, revenue and working capital. Martin read statistics and secondary market data, conducted a marketing audit and constructed a position map; he realized that The Imperial could attract travellers interested in safaris or cultural tourism. Jomo Kimathi moved from Kenya to the UK for a work permit and hotel career before returning to Kenya; Martin was born in London, studied and worked across cultures before returning to Kenya; Craig Chapman moved from Liverpool to Kenya to run an orphanage and remained there. These examples show domestic and international labour mobility driven by work permits, careers, personal heritage, family and humanitarian motivations.
Describe how a hotel such as The Imperial combines human resources, physical resources and financial resources for its business activity.
Belluno Frames (BF)
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Belluno Frames ( B F ) manufactures high-quality frames for glasses (spectacles). Like many other firms in the private sector in northern Italy, the business is small, family-owned, and operates as a private limited company. Giovanni and Elda Rizzo own 100 \% of the shares, nherit. Giovanni designs the frames. Antonio and two employees which their son Antonio will inherit.
B F is located in a building that Giovanni and Elda own, near their house, 42 kilometres outside of Belluno. Antonio and the two employees live in the same village as B F. The road to Belluno is narrow, with traffic that moves very slowly because of farm vehicles. Antonio, who wants the business to grow, has asked his father to rent a building in the industrial park in Belluno with good road access. BF's new location would be closer to suppliers and customers. It would also improve B F 's visibility.
Currently, B F sells on average 1300 frames per month. Each frame is sold at an average price of € 24. Below are the costs (all figures in € ) for B F at its current location and if it moved to the industrial park in Belluno.
Monthly fixed costs:
Variable costs per frame:
Antonio believes that B F 's sales will grow on average to 1700 frames per month in the new location. To reach that level, Antonio suggests that B F offer extra financial rewards in addition to their usual salaries to employees after 1300 frames have been sold each month (the current monthly average). Giovanni and Elda are reluctant.
Define the term private sector.
Identify two advantages for B F of operating as a private limited company.
Reading enables all People (RP)
R P is a non-profit and non-governmental organization (NGO) that teaches reading to financially disadvantaged children and teenagers. RP's mission statement is: "To educate those in need in order to foster social inclusion and change".
R P has 64 paid full-time staff and 350 part-time volunteers, mostly college students, who work in all areas of the city where R P is located. Volunteers do not work under contract. R P is experiencing communication problems. One young volunteer complained, "I often receive contradictory information. One person says one thing and another says something else". R P 's organizational structure is tall. There are several formal methods of communication present at R P, but most of the information passes through informal communication channels.
R P is planning to extend its literacy program to rural areas. The program will last five years. R P 's current sources of finance are insufficient to fund the new program. At present, R P is only financed by national businesses. Alice Lire, R P 's Chief Executive Officer (CEO), has contacted the government for financial support. However, the state budget is limited and chances of government cooperation are low.
As part of its corporate social responsibility policy, McMikey, a multinational company that markets products to children, is willing to pay for the books for the program for two years. Alice is ready to accept the offer, but she would prefer McMikey to guarantee its support for five years. However, there is internal disagreement at McMikey. The Finance Manager believes that it would be too costly. However, the Marketing Manager argues that McMikey's brand image would be improved by a longterm association with R P 's literacy program.
Define the term mission statement.
Explain one advantage and one disadvantage for McMikey of having a corporate social responsibility policy.
Klar
Klar is a factory that bottles mineral water for use in large water dispensers. The factory is located on a hill next to a spring from where water flows naturally. Klar uses a flow production method with a production capacity of 35 million litres per year. Klar has a 60 % share of the national market and also exports bottled mineral water to several countries.
A multinational company called Kaiser is interested in acquiring Klar. "If the acquisition takes place, we will expand Klar's production to gain economies of scale; we will also add a new range of flavoured drinks that will be produced in batches and sold in 1.5 litre bottles. Our maximum production capacity of flavoured drinks will be 3 million bottles a year," says Roman Hitschfeld, Kaiser's Production Manager.
The forecast costs for producing Klar's new flavoured drinks are as follows:
- variable cost per bottle:
- estimated sales price per bottle:
- fixed costs: .
Klar is facing fierce competition from other companies that use plastic bottles and offer lower prices to consumers. Although the cost of glass bottles is higher than plastic ones, up until now Klar has only used re-useable glass bottles to support its ethical objectives of being environmentally-friendly. Now, Klar is considering switching from re-useable glass bottles to non re-useable plastic ones. The environmental pressure group Plastic No More! is campaigning against the use of plastic. A spokesperson from Plastic No More! said: "there is a growing trend among consumers to purchase products that will not damage the environment, but we are still a minority".
Define the term pressure group.
Analyse one advantage and one disadvantage for Klar of having ethical objectives.