IB Business Management SL 2.4 Motivation and demotivation Question Bank

1. Belluno Frames (BF)
Image removed for copyright reasons
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.

2. Bangkok Shrimp (BS)
In 2011, an environmental catastrophe contaminated the waters off the coast of South America, one of the main fishing areas of the world. As a result of the catastrophe (and the resulting lower supply of shrimp), the price of shrimp worldwide increased by 30 %. Aroon Bhuvanadh, owner of Bangkok Shrimp (BS) located in Thailand, saw this as an excellent opportunity to expand his business. He decided to increase the number of his shrimp boats from two to three in order to benefit

from the higher prices and profits.
[image: http://commons.wikimedia.org/wiki/ File:Prawn_\%28PSF\%29.png; Pearson Scott Foresman]

The price of the new shrimp boat is $ 175000. If the selling price of shrimp remains at the current high levels, anticipated profits per boat after all expenses would be $ 35000 per year. If prices fall to pre-2011 levels, the profit would decrease to $ 10000. Aroon's bank will provide finance for the new boat. If the new boat is properly maintained, it will last longer than the proposed seven-year term of the bank loan.

Aroon captains one of the existing boats. He currently employs an experienced captain for the second boat, and he will have to recruit an additional experienced captain for the third boat.

Aroon's wife Kanya is worried that the price of shrimp may return to pre-2011 levels before the bank loan is repaid. For this reason, she wants to change the legal structure of the business from a sole trader to a private limited company.

Aroon has a vision: by taking advantage of the opportunity of the current high shrimp prices, he will own three shrimp boats and, later, can leave one boat to each of his three sons when he and Kanya retire in 2017.

2. Moverse
Moverse operates in the health and fitness sector. Moverse is not a traditional gym with machines (equipment) and fitness instructors (trainers). The instructors themselves travel and run fitness classes in the buildings of large companies. Instructors all work part-time and are paid wages on a time rate basis.
Moverse currently sells its services to several large companies. They have a total of 727 employees enrolled on its programme.
- Moverse charges a yearly fee of $ 145 for each employee participating.
- Moverse's fixed costs are $ 60000 per year.
- The variable cost per employee taking part in the programme is $ 45.