What would be meant by the term ‘optimal location’ for a new Walmart supermarket?

Define the term ‘flow production’.

Define the term ‘productivity’.

Explain one situation in which psychological pricing would seem to be more appropriate than cost-plus pricing.

Jupiter Confectionery Ltd manufactures four brands of chocolate bar. It is a well-established business and relies heavily on the traditional qualities of rich-tasting chocolate and prestige packaging to sell its products. It rarely introduces new brands - its last launch was three years ago and this required substantial investment. The other three brands are over ten years old. The products are:

Orion - the newest brand, designed to appeal to teenagers with 'Star Wars' wrappers and a competitive price. Sales are increasing at a steady rate.

Venus - the original product of the company, a rich, dark chocolate bar with a black and gold wrapper. The same size as most bars, but slightly more expensive - to suit its image. Sales and cash flow from this product have helped to finance the launch of the other three.

Sun - the firm's only attempt at boxes of chocolates. There was intense competition in this high-value and high-profit margin market sector. Sales figures are given below.

$$\begin{array}{|l|c|} \hline \textbf{ Year } & \textbf{ Sales of Sun boxes of chocolates (units) } \\ \hline 2010 & 120000 \\ \hline 2011 & 125000 \\ \hline 2012 & 115000 \\ \hline 2013 & 123000 \\ \hline 2014 & 124000 \\ \hline \end{array}$$

Mercury - this is a very sweet, soft-centred bar that has been very popular with older consumers. Sales have declined in recent years because of imports of healthier 'low-fat' chocolates. Old stocks are being returned by retailers.

The marketing manager is concerned both about sales of Mercury bars and the sales record of Sun boxes. Should they both be dropped or could sales be revived? The manager decides to analyse the current sales of the range of products by using the product life cycle concept.

Evaluate three extension strategies that Jupiter Confectionery could adopt for the Sun brand of chocolates.

Define the term ‘innovation’.

Calculate the estimated annual profit from these two possible locations for a mobile-phone shop:

$$\begin{array}{|l|c|c|} \hline & \textbf{ Site A - city centre location } & \textbf{ Site B - shopping arcade out of the city } \\ \hline \text{ Estimated annual costs (including rent and labour costs) } & \$ 975000 & \$ 498000 \\ \hline \text{ Expected annual sales (units) } & 25000 & 17000 \\ \hline \text{ Forecast selling price per unit } & \$ 50 & \$ 45 \\ \hline \end{array}$$

The following situations involve some form of discrimination. For each, decide whether the discrimination is reasonable and should be permitted or is unreasonable and should be prohibited. Explain your reasons.

An airline requires its pilots to retire at age $60$ .

The operations manager at Westlife Jeans Ltd is concerned about the declining rate of productivity in the factory. He has collected the following data from factory records. Each worker is paid $\$ 3000$ per year and this has not changed for three years. New workers have been employed and put into the production department with training. The additional machines were purchased second-hand and some of them have proven to be unreliable. The operations manager has been told to increase productivity within six months, as it is believed that the labour costs of Westlife Jeans' main competitor are $20 \%$ lower. Although the marketing department admits that the higher quality of Westlife's jeans allows higher prices to be charged, the lack of cost competitiveness is cutting into profits. Falling profitability may make it difficult to raise the capital needed for any technological improvements in the factory - but, without these, profits could fall even further.

$$\begin{array}{|l|c|c|c|} \hline & \textbf{ 2012 } & \textbf{ 2013 } & \textbf{ 2014 } \\ \hline \text { Total output of jeans } & 50000 & 55000 & 60000 \\ \hline \text { Workers employed } & 20 & 24 & 30 \\ \hline \text { Number of machines used } & 10 & 12 & 15 \\ \hline \end{array}$$

For each year calculate the labour productivity and capital productivity for the Westlife factory.

Define the term ‘capacity utilisation’.

Select one example of adaptive creativity and explain why it is not 'innovatively creative'.

$$\begin{array}{|l|l|} \hline \textbf { Adaptive creativity examples } & \textbf { Innovative creativity examples } \\ \hline \text { Cameras in mobile phones } & \text { VolP (e.g. Skype) } \\ \hline \text { ATMs } & \text { Online banking and insurance } \\ \hline \text { iPad mini } & \text { iTunes } \\ \hline \text { Airbus A380 } & \text { Jet airliners } \\ \hline \text { Flat beds in business class } & \text { Low-cost airlines } \\ \hline \end{array}$$

With reference to one organisation that you have studied, evaluate how business strategy affects research and development.

Toyota is one of the best examples of a multi-site business with $52$ manufacturing facilities in $26$ different countries. In a typical recent $12$-month period, it opened its first factory in Mexico and opened its 13th manufacturing facility in the USA $-$ in Mississippi. Recently concern has been expressed by the company that its production capacity in the USA was starting to outstrip demand for vehicles, so this could be the last new factory the company builds there for some time.

Evaluate Toyota's decision to locate operating factories in so many different countries.

The last meeting between the marketing and operations directors of TTF was very heated. They each blamed the other for the disappointing rise in customer complaints and the fall in unit sales. The marketing director had complained that 'The number of faulty tractors leaving our factory has increased. Our reputation is being damaged by these faults and many former customers are now buying imported tractors. We have just lost a government order for $15$ tractors as our competitor was able to boast about their ISO $9000$ certificate.' The operations director had replied by saying that customers were becoming much more demanding and it was up to the marketing department to provide good after-sales service. ‘I have increased the number of quality-control engineers from five to eight and we are correcting more faults in finished products than ever before.’

$$\begin{array}{|c|c|c|} \hline & \textbf { TTF customer complaints } & \textbf { TTF sales in units } \\ \hline 2012 & 53 & 2345 \\ \hline 2013 & 78 & 2124 \\ \hline \end{array}$$

Describe two problems TTF experiences because of low-quality products.