Unit 3: Marketing · A Level Business

SLS was set up in country A in 2024 by Cali and Faiza as a private limited company. Cali and Faiza own 52% of the shares and two venture capitalists own 48% of the shares. Cali and Faiza identified a market for an alternative to high-sugar ice cream demanded by health-conscious consumers.

SLS manufactures zero-sugar ice creams. Its unique selling point (USP) is the distinctive flavours of its zero-sugar ice creams. SLS’s ice cream retails for a higher price than its competitors. SLS has a mission statement of ‘bringing quality to the zero-sugar ice cream market’.

Initial market research

Cali and Faiza invested a significant proportion of their start-up finance in market research. The research showed:

• sales within the global zero-sugar ice cream market are forecast to increase by 15% per year until 2030.
• 48% of people asked said they would consider switching to a zero-sugar ice cream brand.
• 65% of people asked wanted a wide selection of flavours and carton sizes.

SLS decided to manufacture 10 flavours of zero-sugar ice cream in individual and share size cartons using packaging that is 100% recyclable. SLS is proud to only use the best natural ingredients. SLS started selling its products in a selection of premium supermarkets in country A.

The market and marketing

The zero-sugar ice cream market is supported by the government of country A who are concerned about health problems within the country. The government has identified diets high in sugar as one of the leading causes of these health problems. This has increased the demand for zero-sugar ice cream.

There are high levels of competition in the zero-sugar ice cream market within country A, with many new businesses offering similar products. There are currently five large businesses which control 60% of this market. The remaining 40% of the market is made up of many small businesses. SLS has developed a strong brand through social media marketing and free trials at some supermarkets. SLS has a 5% market share in country A.

The average monthly income in country A has increased from $500 to $510. This has resulted in the market for zero-sugar ice cream in country A increasing by 4%. However, SLS’s sales to retailers have increased by 8%. There have been no other changes.

Cali wants to increase profitability by increasing the price of each individual carton from $3.50 to $4.00. Faiza’s research has shown that this will result in a reduction of 20% in the quantity demanded.

Plans for expansion

Market research carried out by Cali and Faiza on country Z has identified the country as an excellent manufacturing base as well as a potential new market. Country Z is located a long distance away from country A. There is limited recognition of the SLS brand in country Z. To expand into country Z, SLS will need long-term borrowing of $3 million to open a factory and a regional office. Table 1.1 contains further financial information for SLS.

Table 1.1 Financial information 30th April 2026

There are empty factory units available to rent or buy in country Z. Country Z is investing in infrastructure for high speed WIFI and an improvement to the road system.

There are differences between country A and country Z, see Table 1.2. There are also social and demographic differences between consumers in the two countries. Cali and Faiza think that passing power to a regional office in country Z would be the most effective way of SLS responding to these differences. The new regional office would have responsibility for production, distribution and marketing of SLS’s ice cream in country Z.

Table 1.2 Comparison of country A and country Z

CC is a private limited company, based in country W, that sells cars. Gross domestic product (GDP) in country W has increased significantly in the last five years.

CC was set up in 2022 and for two years it traded online and from a small showroom in the centre of city A.

CC does not manufacture cars. The business buys cars directly from manufacturers and then sells these from its showroom and on its website.

Showroom relocation

In March 2024, CC purchased a large plot of land on a busy road in country W. It built a large showroom so that customers can view the cars and take them for a test drive. This investment was financed by a bank loan. In August 2024, CC relocated to the new showroom.

The new showroom building also has offices for the directors and managers and an area for internet sales. Figure 1.1 shows some data about the showroom relocation.

CC’s new showroom:

• opened in August 2024
• capacity to store 70 cars in inventory at any one time
• employee and customer parking for an additional 30 cars
• two other competitor car showrooms within 5 km
• closest populated areas: city A – 9 km away, population 500 000 city B – 21 km away, population 200 000.

Figure 1.1 Data about CC’s showroom relocation

Organisational structure

At a recent meeting of the board of directors, the efficiency of CC was discussed. Figure 1.2 shows the current organisational structure for CC in 2026. The number in brackets in each box shows the number of employees in that role.

Figure 1.2 CC’s organisational chart

CC’s finance director, Emele, thinks that the business has too many levels of hierarchy. She has proposed that CC delayers the company by making the showroom sales manager and the internet sales manager redundant. She has proposed that CC should invest in an Enterprise Resource Planning (ERP) programme which would take over most of the managerial functions currently carried out by the two managers.

The showroom sales employees are paid using commission based on achieving sales targets. The cleaners are paid country W’s minimum wage, and the other employees are paid a salary. The mechanics are paid a relatively high salary due to a skills shortage in country W. ERP investment appraisal

Emele has carried out an investment appraisal for the proposed ERP programme (see Table 1.1). There is no residual value for this investment at the end of its four-year life.

Table 1.1 Net cashflow for the proposed ERP software

Inventory control

The operations director, Tofua, is more concerned about the inventory held by CC. ‘When we were located at the old showroom, we held very little inventory’ said Tofua, ‘and it worked well for us. However, since opening the new showroom, we have been holding more and more inventory, and it is causing significant opportunity costs.’ Table 1.2 shows inventory and cost data for CC.

Table 1.2 Inventory and cost data for CC

The managing director, Olivia, thinks that reducing the inventory level in the showroom would be an inappropriate decision. She knows that many customers expect to be able to see and test drive a car before they agree to purchase it. Without inventory of the different car models CC sells, she worries that demand will decrease, especially with the current high inflation rate in country W.

Tofua has prepared a summary report of CC’s current inventory (see Table 1.3).

Table 1.3 CC’s current inventory

Sales forecasting

At a recent board meeting, Jing, the marketing director, presented the quarterly sales forecast. An extract from the quarter 3 (July to September) 2026 forecast is shown in Figure 1.3.

July and August – low sales due to customers prioritising vacations.

September – manufacturers launch new car models – high sales expected.

market trends – 35% increase in demand for electric vehicles.

Figure 1.3 Extract from Q3, 2026 CC sales forecast

Olivia, the managing director, is concerned that Jing’s forecast does not include more qualitative sales forecasting.

RR is a manufacturer and retailer of luxury beauty products. Reeta Roy started RR in 2016 after managing several small enterprises with limited success.

Using her creativity, Reeta produced the first batch of soap in her kitchen. Reeta used fresh ingredients from her home region of country X. Customer feedback was positive and Reeta decided to form a private limited company. RR rented a local factory to start production. The location of the factory was important as Reeta’s business plan was to work with local farmers who could supply fresh ingredients. RR decided not to use machines and instead recruited skilled workers to hand-make its products.

Reeta believes the culture of RR is essential in creating a luxury product. Reeta expects employees to share her pride in RR’s products whether they work in manufacturing or have face-to-face contact with the final consumer.

RR’s first retail store opened in 2017 selling only RR products. By 2026, RR had opened 22 retail stores in country X, with more planned.

Reeta’s leadership

Though employees admire Reeta’s determination, energy and charisma, RR has a high labour turnover of graduate level managers due to limited promotion opportunities and training. Reeta believes that leaders are born with the traits and abilities to lead.

Supply issues

The success of RR’s brand is built on using local ingredients. Sourcing quality ingredients to meet demand is a constant problem. RR occasionally has to accept a variation in the standard of ingredients. Some of RR’s products made using these ingredients have to be rejected after quality control. The operations manager has suggested that RR should introduce lean production.

Country X’s economic performance

Since 2016, there has been rapid economic growth in country X, see Table 1.1.

Table 1.1 Country X economic data

International expansion

RR plans to expand internationally. Reeta wants RR to expand by opening retail units in other countries. However, the marketing team believes that RR should start selling its products using information technology (IT), for example, by using RR’s website and social media. Reeta believes that selling online will have a negative impact on RR’s luxury brand. Reeta thinks that the consumer’s positive interaction with the retail staff is important.

Table 1.2 shows some information about the sales of luxury beauty products in country X.

Table 1.2 Sales of luxury beauty products in country X ($m)

A survey of RR’s consumers found that 60% said visiting an RR store was a key factor in their purchase decisions and that 45% would consider buying RR products online.

The marketing team has produced an investment appraisal for its IT proposal, see Table 1.3.

Table 1.3 Investment appraisal for the marketing team’s IT proposal

FSA

FSA is a multinational company and the market leader in beauty products. FSA is aiming to add to its portfolio of luxury brands. RR’s growing reputation has come to the attention of FSA’s Chief Executive, Gabriel Laurent. Gabriel met with Reeta to discuss purchasing 20% of RR’s share capital. Gabriel was impressed by Reeta’s vision for RR and her leadership values. Reeta has placed a high financial value on RR’s shares which is far greater than shown by RR’s latest published accounts. FSA’s Chief Financial Officer (CFO) is concerned by RR’s lack of detailed accounting data including financial ratios. However, Gabriel is convinced that buying 20% of RR’s shares at the value proposed by Reeta is a unique investment opportunity for FSA.

Pedro left school without any formal qualifications. Pedro was given the opportunity to work in a pie factory. This was owned by an entrepreneur who wanted to help unqualified young people.

Pedro spent six years working at the factory. He was quickly promoted because he was conscientious and showed initiative. When the business owner retired, she offered Pedro the chance to buy the business. Pedro raised capital from his savings, friends and family and bought the business. PPP became a private limited company, with Pedro as Managing Director. PPP is based in country A.

PPP manufactures a wide range of pies in its factory. The pies are sold to retailers in country A and other countries in the region.

Growth

PPP has grown steadily over the last few years. Its revenue and profits have increased by an average of 8% per year. Production capacity has been increased to keep up with demand. Growth has been financed by retained earnings and bank loans. Recent accounting data is shown in Table 1.1.

Table 1.1: Accounting data

External influences

Real incomes in country A and other countries in the region have been falling due to high inflation and low economic growth. Trade between country A and other countries in the region has become more difficult, due to country A leaving an international trade agreement. Consumers are changing their eating habits, and many people are eating less meat.

Marketing

When Pedro bought the business, he identified an opportunity to develop a premium product. Pedro asked the marketing team to carry out market research. The results of this established that there was a market for high quality, higher priced pies. Pedro discussed this new product development with all of his marketing team because he valued their opinions.

Once the premium pies were launched, PPP branded its products as either classic or premium pies. Most pies PPP produces still contain meat. However, a newly developed premium no‑meat vegan pie has started to sell very well. PPP is also planning to launch a new classic pie with a cheese filling especially for the export market.

Elasticity

Due to higher production costs PPP has increased its prices. Pedro has analysed some elasticity data for one type of classic pie and one type of premium pie, see Table 1.2.

Table 1.2: Elasticity data

Human resources

Pedro has always been a self‑confident innovator, both in terms of new product ideas and the way that PPP is organised and led. He is known for his social skills and is respected and trusted by his employees.

Pedro is also keen to help young unemployed people, in the same way as he was helped. PPP offers training apprenticeships in all areas of the factory. Trainees attend local colleges one day each week and are supervised by the department managers.

Pedro thinks employees are PPP’s greatest asset. As well as training apprentices, he offers competitive wages and all employees have opportunities for career development and promotion within PPP. Pedro is also socially aware as he rewards employees for good ideas from weekly kaizen group discussions. Many employees have been with the company for more than five years.

Process innovation

PPP’s current production process is labour intensive and pies are produced using batch production. All employees accept responsibility for product quality and are trained in quality assurance methods.

Pedro is considering investing in a new computer‑controlled pie‑making machine, see Table 1.3. This would increase production capacity in the factory. Factory employees would still need to complete the production process by adding the PPP pastry logo to the pies.

Table 1.3: Forecast net cash flow data for the proposed new machine

Pedro is undecided about increasing the use of machinery, especially as PPP will have to borrow the finance to purchase it.

KTJ is a private limited company based in country B in Africa. It was set up in 2014 by Ada Hadebe who is the majority shareholder and Managing Director. KTJ specialises in producing tropical fruit juices. KTJ’s mission statement is ‘to bring the tropical taste of Africa to the world through ethical relationships with farmers by focusing on sustainability throughout the supply chain’.

Sourcing fruit

KTJ’s range of tropical fruit juices includes baobab, papaya and pineapple. Juices are produced from seasonal fruits without added sugar or colourings. Most fruits are sourced from local farm cooperatives in country B. The farms are chosen for their sustainable farming methods which KTJ has to regularly audit. Some fruits, not grown in country B, are imported from other countries in Africa.

Employees

KTJ has a flat organisational structure. Ada encourages a ‘soft’ approach to human resource management (HRM) and believes in the benefits of delegation. Ada is proud that KTJ has won awards in country B for its substantial investment in employee training and development.

Plastic packaging

Recently, one of KTJ’s operations managers commissioned research into KTJ’s use of plastic bottles for its fruit juices. After six months of research the final report recommended that KTJ should in future only use plastic bottles made entirely from recycled materials. Ada is considering whether to implement this change.

Expansion

KTJ has an excellent reputation for the quality of its tropical fruit juices which are marketed as premium products. Export demand has increased significantly during the past two years, especially from other African countries. KTJ’s factory in country B is nearing full capacity. Ada thinks that KTJ should expand by processing tropical fruit in a location outside of country B. Ada authorised Gudaf, a junior market analyst, to prepare a report identifying the two best locations for the additional new factory. Gudaf visited multiple locations and prepared an investment appraisal. Gudaf will present the report to the Board of Directors next week recommending a location in either country C or country D.

Extracts from Gudaf’s report are in Table 1.1, Table 1.2 and Table 1.3.

Table 1.1: Information about country C and country D

Table 1.2: Investment data for country C location

Table 1.3: Investment data for country D location

Seasonal sales

Since 2018, KTJ has exported tropical fruit juices to the US. The US is one of the world’s most competitive markets for food and drink products. Sales are increasing and have met targets. Ada believes that KTJ can increase its market share significantly. Ada instructed the US marketing manager to carry out a market analysis and then develop a new marketing plan. The marketing manager is using time series analysis to help make business decisions. Table 1.4 is an extract of KTJ sales data in the US.

Table 1.4: KTJ tropical juice sales in the US by volume

Fluctuations in the exchange rate

Ada monitors the external environment carefully to identify changes that will impact KTJ. There have been fluctuations in the exchange rate of country B’s currency in recent years. At the last 75 Board Meeting Ada commented ‘financial markets have been unsettled by the recent change of government in country B. This has led to an average 20% depreciation in the value of country B’s currency. This presents both an opportunity for, and a threat to, KTJ.’

Lithium is an essential raw material used in batteries for electric vehicles, smart phones and other products. LBM has developed techniques to detect lithium using mapping technology. LBM sells its survey results to other mining companies. LBM’s annual revenue is less than $1 million and it is losing $2–3 million per year. LBM is planning to start its own lithium mining operations in country G, where it is based.

LBM has researched and developed two effective ways of mining lithium. The first is hot water mining and the second is hard rock mining. LBM became a public limited company one year ago. LBM has substantial finance obtained from grants, shareholders and crowdfunding available for investment. LBM’s revenue is forecast to rise rapidly once mining begins.

Sales forecasting

Annual global demand for lithium is rising considerably and forecasts show world supply will not meet demand after 2030. As LBM establishes its own mining operations it will need to forecast sales. There are likely to be variations in demand for electric vehicles and smart phones over time. It is difficult to vary the output from lithium mines at very short notice. Holding inventory of this raw material involves high costs. Alternatives to lithium are being developed.

Concerns of government

LBM is the only business in country G planning to mine lithium. The government is very concerned that:

• demand from industry for lithium in country G will not be met in the long‑term
• LBM is currently unprofitable
• LBM may be a target for a hostile takeover from a multinational business.

The government is therefore considering nationalising LBM.

Hot water lithium mining

Despite local opposition, LBM plans to open its first mine in four months’ time. Hot water from three kilometres underground will be pumped up to a factory where lithium and possibly other rare raw materials will be extracted from the water. After the extraction process the hot water can then be used for heating local housing. The Operations Director, Astor, estimates the project has a 15‑year life span. However, future cash flows beyond six years become increasingly uncertain.

Table 1.1 shows the data used by LBM in the decision to go ahead with the hot water mine. The data excludes costs and revenues from extracting other raw materials that may be found in the water. LBM has enough finance for the hot water mine if there are no adverse variances to the budget.

Table 1.1: Investment appraisal for hot water lithium mining

Human resource management (HRM) and the hot water mine

LBM uses a ‘soft’ HRM approach for its current 35 graduate employees. They are given delegated powers and decide their own work patterns individually or in self‑selected teams. Many of these graduates are involved in using the mapping technology to find new mines and developing mining techniques.

LBM has started recruiting 150 people to be employed at the hot water mine site. Ten new employees will be technology specialists who will closely supervise the work. The other new employees will be trained to operate machinery. The directors plan to use a ‘hard’ HRM approach for these machine operators.

Hard rock lithium mining

LBM is also planning to open a hard rock lithium mine in two years’ time. Lithium is found inside hard rock layers underground. LBM plans to drill into these, bringing rock to the surface to be treated to extract lithium. Astor has identified a suitable area 500 metres underground. Table 1.2 and Figure 1.1 show the results of some of his operations planning. The data was obtained from mining industry sources, suppliers of drilling equipment and the LBM Research and Development (R & D) team.

Table 1.2: Hard rock lithium mining project activities used in Critical Path Analysis (CPA)

Figure 1.1: Network for hard rock lithium mining project (durations in weeks)

WS is a public limited company. WS manufactures leather shoes for adults. It sells to major shoe retailers and to small independent shoe shops. WS products are targeted at three constantly changing markets: fashion, leisure and work. Its sales employees are reporting that small independent shoe shops have experienced an increasing demand for non-leather and recyclable shoes. There is a growing consumer awareness that resources used in production need to be sustainable. Jon, the Marketing Director, is very keen for WS to carry out an environmental audit.

Enterprise resource planning (ERP) WS uses different IT systems for managing production, marketing and human resources. Keri, the Operations Director, thinks that the processes needed to produce and market shoes could be more integrated. Greater integration could help to improve the efficiency of WS. Keri has begun to research ERP as a means of achieving this integration. She knows that ERP is very expensive and takes time to implement but she is convinced that it could offer WS substantial efficiency benefits.

Employee performance

WS uses batch production to produce different styles of shoes. The production employees at WS are:

• paid wages which are 10% more than the industry average
• increasingly complaining to their managers about production targets
• expected to train on-the-job
• expected to follow strict instructions
• given only limited opportunities for career progression.

Milo, the Human Resources Director, and Keri are concerned that the performance of production employees is declining. Table 1.1 gives data about production and production employees.

Table 1.1: Data about production and production employees

Marketing

WS sells its shoes into three markets: fashion, leisure and work. Each market has its own characteristics. WS shoes are medium to high price in each market. Research shows that consumers consider WS shoes are good quality for the prices charged.

Jon is preparing a marketing plan with the objective of increasing annual sales by 5% without entering any new markets. Table 1.2 shows time series analysis sales data Jon is using. Jon considers that time series analysis will help him make decisions to achieve WS’s marketing objective. Table 1.3 gives additional information about the markets WS sells to.

Table 1.2: WS time series analysis sales data ($m)

Table 1.3: Information about the markets WS sells to

Investor return

In recent years, the directors of WS have made long-term investment a priority rather than short-term increases in dividends.

The main shareholders in WS take an active interest in the business. At the next company Annual General Meeting (AGM) these shareholders intend to ask the directors to explain their method to increase investor returns. These shareholders will be looking for an effective method to achieve an increase in their return. Table 1.4 shows changes in key investment indicators and ratios.

Table 1.4: Change between May 2023 and May 2025

PAIR was set up in 2012 by Kaarina Laine, a graduate in Applied Artificial Intelligence. PAIR is a private limited company in country F. Kaarina, the Managing Director, owns 70% of the shares. Four other directors own the remaining shares.

PAIR’s mission statement is ‘to transform business use of robots’. PAIR designs and manufactures robots which use artificial intelligence (AI) to support business operations. PAIR’s most successful robot, the KB1, is an autonomous cleaning robot. In 2024 the KB1 had the leading market share in country F. It is also a successful export for PAIR. The global market for autonomous cleaning robots is competitive with many brands available.

Growth

The first version of the KB1 was launched in 2013. PAIR’s sales strategy focused on leasing to businesses to provide a cost-effective solution to cleaning the workplace. Initially sales growth was slow, led by the sales team contacting prospective customers to arrange product demonstrations and trials.

However, global economic growth after the pandemic led to labour shortages which affected the recruitment of cleaning employees. Consequently, many schools, offices and hotels approached PAIR to lease the latest version of the KB1. Revenue grew rapidly from 2021 but PAIR was unable to fully meet demand due to production constraints.

Innovative technologies

PAIR invests 7% of revenue in Research & Development (R&D) compared to the industry average of 5%. In 2023, the eighth version of the KB1 was launched providing a more innovative, powerful and quieter cleaner. This version has a longer battery life and can clean different floor types. It uses video technology to learn as it cleans.

In 2024, PAIR began development of a new AI delivery robot, Delbot, which will target the hotel market. It will deliver food, towels and other items to hotel rooms. Kaarina confirmed, in a press release, that the Delbot will be available to customers from early 2026. She commented that the whole process from concept to product launch will only take 18 months.

Organisational structure

PAIR has a flat organisational structure and is divided into functional departments. The R&D department uses a matrix structure creating one-off teams for specific projects. In 2024 PAIR employed a total of 120 employees.

Quality defects At the end of 2023 PAIR’s Operations Director reported increasing quality problems:

• the annual percentage of defective KB1s, reported by quality control inspectors, had doubled to 2%
• increased customer reports of KB1s not working properly
• increased complaints of poor customer service.

In June 2024 PAIR began the process of replacing quality control with quality assurance. This included:

• improved training of employees
• all production employees made responsible for quality
• targets for technicians to fix any faults reported by customers within 24 hours. a

Table 1.1 provides production and employee data for the KB1 factory. In 2024 PAIR had a labour productivity target of 2200 KB1s per employee.

Table 1.1 End of year production and employee data for the KB1 factory

Kaarina is concerned whether the decision to introduce quality assurance has been beneficial for PAIR.

Increase dividends?

Kaarina plans to expand the product portfolio and enter new international markets. PAIR’s growth has been financed from retained profit and long-term borrowing. Kaarina is now considering whether to change PAIR to a public limited company. Table 1.2 shows selected financial data and ratios for PAIR.

Table 1.2 Selected financial data and ratios for PAIR

The other four shareholders are dissatisfied with PAIR’s dividend payments and are pressuring Kaarina to increase dividends for 2025.

Contingency planning

In February 2025 a battery in one of the latest KB1 robots overheated causing a fire at the school where it was operating. The Operations Director investigated and found that there was a fault in the battery supplied to PAIR. Following the investigation PAIR issued a press release in April identifying the battery supplier as being responsible for the fire. The Marketing Director is concerned about PAIR’s lack of contingency planning. She has finally persuaded Kaarina to call an emergency board meeting to consider the benefits of contingency planning.

WCP was started in 2015 in Australia by Aldin. He wanted to use his enterprise skills for the benefit of society. Aldin persuaded several of his friends and family to invest and WCP was set up as a private limited company. WCP manufactures toilet paper using sustainable resources. Aldin wants WCP to be a profitable company, selling its toilet paper in high income countries. Aldin also has important social objectives for WCP. WCP donates fifty percent of all profits after tax to its own charity that works in low-income countries to provide better toilets and improve sanitation.

External influences

Inflation has been rising and economic growth is slow in all the main countries where WCP sells its products. Governments in these countries have increased interest rates.

There is increasing environmental awareness and higher income earners continue to buy ethically sourced and produced products.

Marketing

All WCP sales of its toilet paper are currently made through its website. The toilet paper is sent directly to customers from distribution centres in the US, Europe and Australia.

Customers have to order toilet paper in large quantities. WCP has a loyal customer base of ethically-minded customers who are prepared to pay premium prices for its toilet paper.

WCP’s toilet paper is presented in distinctive packaging. The packaging is brightly coloured and recyclable, displaying the WCP company logo and its slogan ‘We Care’. Effective customer relationship marketing ensures that customers are reminded to reorder toilet paper and are also kept up-to-date with the WCP charity’s projects worldwide.

Aldin wants to start selling WCP toilet paper in supermarkets in Europe. WCP need to decide on an appropriate integrated marketing plan to sell its toilet paper through supermarkets.

Elasticities

Using sales figures from the last two years, Aldin has estimated the elasticity data for online sales of the WCP toilet paper product. These estimates are shown in Table 1.1.

Table 1.1 Elasticity data for online sales of WCP toilet paper

Possible takeover

Aldin is always considering ways to expand WCP. WCP has the opportunity to take over GC, a successful company based in the US that manufactures eco-friendly paper products. Aldin thinks that this takeover would be an effective way for WCP to increase its scale of operations. Aldin is trying to raise the finance for the $8 million required to take over GC. He is considering raising this through long-term bank loans. However, WCP’s Finance Director has suggested that they

might convert WCP to a public limited company and raise the finance required through a share flotation. Table 1.2 shows extracts from WCP’s financial statements.

Table 1.2 Extracts from WCP’s financial statements

Human resources

Aldin supports creativity in WCP employees and rewards innovative ideas. All WCP employees have full-time permanent contracts and are paid above average salaries. Employee requests for flexi-time are granted whenever possible, as Aldin believes that work-life balance is important. Employees are offered relevant training to help develop their careers with promotion opportunities. Labour turnover is low and WCP has gained a reputation as an ethical employer.

The human resources management (HRM) approach at GC is quite different to WCP. The aim of GC’s approach is to minimise unit labour costs. Production line employees are paid the national minimum hourly wage and most have part-time or zero hours contracts. Team leaders on each production line are set daily targets and monitor employees’ work to ensure these are achieved. Labour turnover is high and employees complain about boring jobs and low pay.

If the takeover goes ahead, Aldin will consider whether to change the HRM approach at GC to be the same as the current HRM approach at WCP.

IPA is a private limited company in country N, a low-income country in Africa. Adesola Kalu set up IPA in 2019. It has a mission to provide technology access to millions of people through recommerce – the selling of previously owned or used products. IPA buys used smartphones, refurbishes them in its factory and then resells them. This provides consumers and businesses cheaper access to technologically advanced smartphones.

A fragmented but growing market

The market for refurbished smartphones in country N is growing rapidly. Most refurbished smartphones are sold during major festival periods. It is a competitive market in which no business has more than a 1% market share. In 2024 12 million refurbished smartphones were sold in country N and this is expected to rise to 14.2 million in 2025. IPA sold 104 000 refurbished smartphones in 2024, an increase of 24 000 from 2023. The average consumer of new smartphones upgrades to the latest model every 15 months. This short upgrade cycle has contributed to the growth of the refurbished market.

Marketing

The refurbished smartphone market is characterised by inconsistent pricing, stolen devices and untrusted offline retailers. IPA sells refurbished smartphones online through its website and offline through local retailers.

IPA aims to provide convenience, cost-effectiveness and quality assurance to its customers. IPA targets both start-up businesses and households. Promotion has focused on advertising on digital platforms. Prices are competitive. Generous credit terms are given when selling to business start-ups.

Adesola has set an objective to increase sales volume by 60% by the end of 2026. Research by the Marketing Director found that:

• potential customers are price sensitive
• promotional elasticity of demand is 0.7
• limited internet connectivity is a problem for businesses and households in rural communities.

The Marketing Director has proposed changes to the current marketing mix including:

• decrease prices by an average of 5%
• increase non-digital advertising expenditure with a campaign focused on advertising through billboards and buses.

Employment contracts

IPA has 55 employees of whom 40 are production employees who check and refurbish smartphones. The remaining employees include production supervisors, administrators, sales staff and technicians. Adesola is the Managing Director and there are also directors of finance, marketing, human resources and operations. Production employees are skilled and employed on full-time contracts. IPA invests in training of production employees and pay is competitive. However, at the last board meeting the Finance Director proposed that contracts for most production employees should be changed to zero hours contracts. The Human Resources (HR) Director is now considering the implications of this.

Expanding operations

Each smartphone is refurbished and quality-tested, with a 25-point quality check, by IPA’s skilled employees. IPA sells the refurbished smartphones with a 6-month guarantee.

As sales increase, IPA has to recruit and train new production employees. With low unemployment in country N, this is not easy. IPA’s factory is close to full capacity. Consequently, Adesola plans to upgrade machinery and extend the factory to meet expected future demand. Using network analysis, the Operations Director estimates the factory expansion and machinery upgrade will take a minimum of 24 weeks. Activities include:

• fit roof to new factory extension
• removal of old machinery (Activity D)
• ordering and delivery of machinery from Europe (Activity E)
• upgrading the electricity supply (Activity F)
• installation of new machinery (Activity G)
• testing of machinery.

A partial network diagram is shown in Fig. 1.1 (all activities linked to nodes 5 & 6 are shown).

Fig. 1.1: A partial network diagram for factory expansion (time in weeks)

Financial position

IPA is profitable but margins are low on each refurbished smartphone. IPA pays sellers of smartphones immediately when the smartphone is received at its factory. The Finance Director is worried about IPA’s liquidity and gearing, particularly as Adesola has committed IPA to rapid expansion plans. Selected financial data and ratios are shown in Table 1.1.

Table 1.1: Financial Data and Ratios

Fiscal and monetary policy changes

In 2024, economic growth in country N slowed and unemployment began to rise. In response 70 the government is implementing a policy to upgrade infrastructure in country N. This includes providing tax incentives for internet service providers to improve mobile phone connectivity in rural areas.

Further policy measures include a cut in the standard rate of income tax by two percentage points from April 2025. The central bank has also cut interest rates. 75

AH is a private limited company. It is a software business that specialises in messaging apps for smartphones. AH’s most popular app is called Rotate which is free to download and use. AH makes revenue by selling advertising space on Rotate to businesses. AH releases new software updates for Rotate regularly.

Timeline of AH

2025 July AH’s managing director presents a SWOT analysis (see Appendix 1) at the annual general meeting (AGM). AH develops a new version of Rotate, version 5.0. This is the biggest change to the software since it was launched. It contains a critical security update. Rotate version 5.0 passes AH’s quality control.

2025 August AH releases Rotate version 5.0 on 1 August. Many complaints are received (see Appendix 2). Rotate becomes a major news story. The board of directors eventually calls an emergency board meeting on 15 August. The operations director assures the board that version 5.1 will be released within five days to resolve the issues. The board agrees to inform customers and the media about version 5.1 and to increase the number of customer service advisors. The marketing director believes that AH should issue a public apology. Rotate version 5.1 is released and solves the issues. 2025 September Many news agencies continue to contact AH about Rotate 5.0. The marketing director resigns from her job and gives an interview to a global news agency (see Appendix 3).

2025 October A number of industry experts advise customers to delete Rotate from their smartphone. One of AH’s main competitors advertises their messaging app as ‘safer than Rotate’. Advertising revenue from Rotate falls by 50%. Use of Rotate falls for the first time since its launch. 2025 November The board of directors dismisses the managing director and operations director from AH.

2025 December A new managing director is recruited and is interviewed by a technology magazine (see Appendix 4).

2026 January Rotate is removed from online stores and will no longer be supported by AH.

Developing a marketing strategy

AH has developed a new messaging app called Candlestick. Candlestick has more features than any of AH’s competitor products and testing has been very positive. The new marketing director has been told to develop an appropriate marketing strategy to successfully launch the Candlestick app.

Appendix 1: SWOT analysis of AH in July 2025

Appendix 2: data about complaints received after Rotate version 5.0 is released in August 2025

• The number of complaints received by AH increases by 500%.
• Main issues involve: Data security – contact and banking data is being stolen from smartphones. Rotate stops working and forces the smartphone to power down. Messages being sent to the wrong person.
• AH’s customer service advisors are overwhelmed and customer waiting times increase from 8 minutes to 3 hours.

Appendix 3: extract from an interview given by former marketing director of AH in September 2025

‘It was a disaster waiting to happen. I tried to make the managing director aware of the problems, but he would not listen and that is why I had to resign.

I have no confidence in the future of the business.’

Appendix 4: extract from an interview with the new managing director in December 2025

‘AH apologises for the disruption caused by Rotate 5.0. We have decided to remove the Rotate app from all online stores in 30 days and will be releasing our new messaging app next year.’

FM is a retailer of low-price clothing. It opened its first store in country X in 1978. FM became a public limited company in 2010 with 150 stores in country X.

Fashion changes very frequently and so there is a fast changeover of clothing designs. FM’s customers are often unsure how long clothing designs will be in store. This encourages FM’s customers to purchase items as soon as they are available. Until 2020, FM’s promotion relied mainly on customers telling their friends and family about the clothing designs available in store.

FM’s marketing objective is to grow revenue faster than its competitors in all markets it operates in.

Timeline for FM

Appendix 1: Extract from CEO’s international distribution plan (2021)

• To open 25 stores across 7 high-income countries.
• Market research into potential new international locations for stores will cost $10m.
• New distribution warehouse to be built at a cost of $30m.
• Pan-global marketing to be used to target customers.
• Forecasted annual international sales of $180m.

Appendix 2: Operations Director’s report on the impact of the sustainable clothing range (2022)

• Average fabric costs 35% higher for this range than existing clothing ranges.
• Average prices 25% higher for this range than existing clothing ranges.
• FM blamed for using suppliers who have been discovered to use unethical practices, FM’s public relations costs tripled to deal with this.
• 21% of total sales volume from new sustainable clothing range.
• FM accused of misleading customers who question the sustainability of a $2 t-shirt.

Appendix 3: #fashionmania campaign plan (2023)

• Boost sales after the closure of stores during the global pandemic.
• Use of #fashionmania to collate online images from social media to promote clothes.
• Create areas in store where bloggers can take pictures of themselves in FM’s new clothes to post online.
• Use website as a medium to show new clothing designs and customers’ #fashionmania pictures.
• Sponsor a reality TV programme to promote clothing ranges.

Appendix 4: Selected financial and marketing data for FM

SH designs and manufactures a range of gaming headsets. SH is a private limited company based in country D. It employs leading technology specialists to develop innovative products. SH’s gaming headsets are sold through specialist computer game stores across country D. SH’s competitive advantage is innovation.

SH was set up by Sarah 20 years ago. She started the business with five employees. By 2017 SH employed over 520 people and had customers throughout country D.

Timeline of SH

Developing a new business strategy

Sarah was concerned about the reduction in SH’s profitability. She asked an external management consultant to produce a PEST analysis (see Appendix 4) that she could use to develop a new business strategy to enable SH to return to profitability.

Appendix 1: Summary of Sarah’s 2017 marketing strategy for SH

Objective – to become market leader for gaming headsets in country D by 2025.

Primary market research:

• 70% of all gaming headsets sold in country D are purchased by consumers under 30 years old.
• 65% of people said that range of features was the most important consideration when buying a new gaming headset, with price coming second.

Planned marketing mix:

• Product – continual upgrading of gaming headsets to include the latest technological features.
• Price – price skimming for all headsets in the SH range.
• Promotion – extensive advertising on digital platforms and television/billboard campaigns. Product endorsement with a popular celebrity.
• Place – gaming headsets sold in specialist computer game stores throughout country D.

Appendix 2: SH’s annual revenue data between 2017 and 2024

2017 2018 2019 2020 2021 2022 2023 2024 Year

Appendix 3: Analysis of SH’s financial data between 2017 and 2025

Appendix 4: Summary of consultant’s PEST analysis (2025)

QA is a technology business located in country A. It sells Artificial Intelligence (AI) devices that answer questions in consumers’ homes. These devices are called ‘smart speakers’. Consumers can link the device to other smart technology in their homes, such as fridges and televisions. Consumers can ask the device questions and it uses an internet connection to find the answers.

QA started trading in 2016 and demand for its first device QA1 was high. However, after the pandemic in 2021, the owners decided to sell the business. It was bought by QA’s senior management team.

Timeline of QA

Developing a marketing strategy

Sales of QA1 are in decline and there is poor public perception of QA as a business. The QA2 device has now been more fully tested and improved and needs to be relaunched. The business needs to develop a coordinated marketing strategy to achieve success with QA2.

Appendix 1: Extract from SWOT analysis of QA in 2021

Appendix 2: Decision tree for the launch of QA2

Appendix 3: Market research of QA2 in 2024

• 18% of QA2 devices were returned as faulty. All customers were given a free replacement product.
• 72% of customers thought the price was too high.
• An estimated 4m potential customers were unable to purchase a QA2 due to a lack of supply.
• 65% of customers would not recommend the QA2 to someone else. The main concerns were: poor product quality high price did not meet expectations given in promotional materials.

Daniel and Carl started a company for online teaching, Daniel & Carl for Education (DCE). DCE provides online tutors who work with students to help them pass their examinations.

Timeline of DCE

What is next for DCE?

Competition is increasing but Daniel and Carl do not want to compromise on the quality of the service the business provides. However, they are both aware that DCE needs to change if it is to survive. Carl thinks that transformational leadership is the key to survival, but Daniel remains uncertain.

Appendix 1: DCE’s approach to quality in 2020

As a service-based business, DCE believes its employees are central to its success. All tutors are qualified teachers with at least three years teaching experience.

Students are encouraged to provide feedback which is used to adapt the service offered. In 2020, 86% of students stated that they would recommend DCE to a friend.

Appendix 2: proposed changes to DCE’s promotion in 2022

Artificial intelligence (AI) to be used to:

• analyse customer searches
• optimise digital promotion
• target social media messages to students and parents.

Sales promotion:

• DCE loyalty scheme to reward returning customers
• one free lesson for every friend referred.

Appendix 3: DCE’s revised marketing objectives in 2022

1. Develop new services to increase revenue by 10% by the end of 2024 2. Maintain a strong brand identity

Appendix 4: Summary of market research data in 2023