Exam (elaborations)
BTEC level 3 unit 7 business decision making exam mock example layout
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BTEC level 3 unit 7 business decision making exam mock example layout
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Mock EXAMIntroduction
This report will analyse and justify a decision for the client who wants to open a successful
business. The client has £30,000 worth of funds and is considering setting up a mobile
business or a pop-up space to sell ice creams. This report will help justify the most viable
decision for the client in order for them to launch a successful and profitable business.
Market data and current situations
The sales of this product would operate in the ice cream and dessert market which has
grown by 6% since 2012. The ice cream industry accounted for £1.14 billion sales in 2017,
this segment grew 2.8% in 2016 and then 3.6% in 2017 - therefore demonstrating a
continuous growth in the market. The use of these figures demonstrates a clear opportunity
to enter into this market due to the fact that the demand is continuing to grow, the use of
having an increase of demand means that there is an opportunity for more businesses to
fulfil this. Within this market it is challenging and competitive due to the fact that there are
many well established brands which would pose a threat. Since the market is dominated by
well-known brands it is difficult for new businesses to launch and be successful. However
despite this there has been growth in many small and medium sized independent retailers
including farmers who produce and sell their own brand ice cream using their own milk
production. This therefore demonstrates that there is still an opportunity to be successful
within this market. Additionally, the older generations are less likely to buy ice cream, the
target market is primarily aimed at 5-34 year olds as this group are regular consumers of ice
cream. With ice-cream vans being popular with children, businesses use pester power by
having music that drives round villages and at popular locations such as the beach.
Mobile Business Human Resources
For the mobile business sales would primarily depend on the weather circumstances, poor
weather majorly affects demand. This therefore suggests that the use of staffing
requirements depends on the time of year. Throughout the summer months from may to
august the amount of staff required would be higher as the demand for ice cream goes up.
When operating within a mobile business little training is required since the staff just need
to learn how to operate the machines, handle cash and operate card machines. Temporary
staff would be needed for the business during summer months to meet demands in order to
maximise the profit margins. An advantage of having temporary staff is that it saves money
and time for the employer, the employee is not wasting money on the employee when they
are not needed for the business in the quieter months. However a disadvantage of hiring
temporary staff is that they will not have any financial security when their term ends,
meaning that they could find other jobs and then not return to the businesses as they want
that financial security for themselves. Then, in the quieter months part-time staff would be
required to attend special events that the business can operate at like birthdays and
additional celebrations. An advantage of having part-time staff also saves costs for the
business as well, as they only will work when they are needed. However a disadvantage of
this is that it also does not provide security for the employee.
Pop-up space Human Resources
, For the pop-up business full-time and part-time staff would be more suitable due to the fact
that it operates in a fixed location. The centre that it would operate in is close to motorways
and the catchment area has a population of £3.5 million. Additionally the shopping centre as
a whole has an annual footfall of 30m. This therefore demonstrates that it is a popular place
to visit with an opportunity to serve a vast amount of customers which requires a sufficient
amount of staff. It is useful for a business to have a mix of full-time and part-time staff, some
advantages of having part-time staff is that they come with lower associated costs for the
business, additionally hiring part time staff also leads to greater flexibility for the company
since these employees work flexible hours as the amount of work depends on the workload
of the business. Disadvantages of this provides the employees with less job security which
may be viewed as unattractive. The use of having full-time staff enables the business to gain
a loyal and committed member of the team, productivity is usually higher and there is
consistency with their workload. However the disadvantage of this full-time position does
lead to higher associated payroll costs.
Mobile business physical resources
For the mobile business there are many resources that are required to successfully operate,
one main resource that is needed is the ice cream van itself, if the business did not have this
it would not be able to run. An advantage of having this vehicle enables the business to be
mobile and change locations, if the business finds that sales are not meeting their targets in
a specific location they can then move to somewhere else more popular. Another advantage
of having this vehicle is that it provides convenience for customers, since most mobile ice
cream vans visit housing estates - customers have the product delivered to them and they
do not have to make travel arrangements to get to the product. However in order to reach
these locations the vehicle needs to run with fuel, with fuel costs rising it is expensive to run
the vehicle around so this would act as a disadvantage. The cost of fuel, road tax and wages
is 50% of the businesses revenue which is high costing the business £41,250.
Production equipment to make the ice creams is also needed for the business and if the
business decides to extend making frozen yoghurts and sorbets the business would need the
appropriate equipment for this. The cost for the production equipment is £15,000, and the
business also would need a first years trading licence to operate as a mobile business - which
costs £3,000. Therefore operating as a mobile business comes with many costs which the
client would need to take into consideration who has funds of just £30,000.
Pop-up space physical resources
The pop-up shop also has many physical resources that are needed for the business to run,
firstly the actual shop premises is a resource the business will need. The premises is located
in a highly populated area which is close to motorways and the catchment area has a
population of £3.5 million and the shopping centre as a whole has an annual footfall of 30m.
Therefore the advantage of this is that there is a sufficient amount of people who can come
and visit the store. Another advantage of this location is that customers who visit this centre
have an average spend of £120 on each visit, the business itself aims to sell high quality
premium priced products whilst providing a quality experience - so this therefore
demonstrates that the average customer will be able to afford their products. However,
having a store at a popular location like this primarily comes with high renting costs, so the
business would need to make a sufficient amount of sales each month in order to be able to
afford to stay at this location.
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