Title 10. Case 10.pdf ✅

AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | +92 304 1122845 1 Case 10: M/J 2023, V3 (Case 1)
AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | +92 304 1122845 2 (a) (i) Place (a) (ii) The consumer market consists of businesses-to-consumer sales of goods and services for their own consumption. Consumer goods are ready for the consumption and satisfaction of human wants, such as clothing or food. Consumer goods are not used in the production of other goods, while industrial goods are known as B2C, FM sell 3 musical instruments to musicians and students who are the final users. (b) (i) LTO = (Workers left / Total Workers) x 100 = (24 / 108) x 100 = 22.2% (b) (ii) Increase employee salary would help to retain employees. As 6 employees left FM 3 because of higher pay at a competitor if FM increase wages employees will be more satisfied and less likely to leave. This would allow them to retain their high-quality employees which would result in improving the chances of future expansion into the international markets and help to meets its target to increase production. (c) 8 MARKS It might increase marketing costs > as the brand is not well known internationally and the competition is with much established businesses the promotion budgets would go up > this would result in more advertisements and hiring local brand ambassadors > reduces profit margins > makes it difficult to reinvest in the new mass customization line which is expensive. It might reduce costs due to economies of scale due to large scale production > as FM is planning to shift to mass customization to boost the production > with a large market and more potential for sales they would be able to buy raw material in bulk > get discounts > reduces cost per unit of guitar and keyboards > makes them more competitive in the foreign market against other established musical instrument businesses > more sales > sustain the tends of 45% increase in the last two years.
AATIK TASNEEM | O/A-LEVEL | BUSINESS & ECONOMICS | +92 304 1122845 3 (d) 12 MARKS Batch production – manufacturing process in which items or products are produced in groups. Mass customisation – manufacturing process that combines the flexibility and personalisation of custom-made products with the low unit costs associated with mass production. Shareholders are the owners of FM who invest their money in the company > they may benefit from mass customisation if it increases the sales and profits of FM by attracting more customers and creating a competitive advantage > mass customisation may also increase the value and reputation of FM as a customer-oriented and innovative company > [However], mass customisation may also reduce the returns and dividends for shareholders if it increases the cost and risk of production for FM > Mass customisation may also require more investment in research and development, technology, and marketing for FM , which may reduce the cash flow and liquidity for shareholders and may also result in a decrease their returns. [EVAL] Therefore shareholders can benefit from an increase in potential return, however it depends on the aim of the shareholders of the private limited company. Since this strategy is a long-term strategy. In the initial phase the return will drop therefore short-term investors will lose but once the returns flow in after international expansion the benefit from higher profits would be significantly higher. Employees provide the physical and mental human effort > they benefit as they might get promotion opportunities > with mass customization the production will increase and FM will enter the new international market > this would help to resolve issues that some workers were having of not having promotion opportunities or better pay at competitors > workers may feel more secure in their positions knowing that the company is thriving and likely to continue growing > further advancement opportunities in the future [However] there might be change of working practices> FM is moving towards a more capital intensive mass customization process > with workers already under stress to maintain quality and speed from an increase in sales the problem might increase > the new system require more complexity in the job + more skill requirements > increases the requirement to have a broader range of skills > undergo extensive training to meet the new job requirements > more challenging and stressful for some workers > for ones who don’t might be made redundant. [EVAL] Therefore workers can gain from opportunities, however this depends on the purpose behind implementing the mass customization method. If it is to increase production then it is beneficial for employees however if the company is implementing the new mass customization just to reduce labor force then only a selective highly trained workers would benefit and the remaining workers would lose. FINAL EVAL (1) Overall mass customization brings benefits to both worker and the shareholders however it is more beneficial for the shareholders. This is because it is directly related to boosting profits and cutting costs which ultimately benefits the owners. For workers it ultimately reduces employment in the long-term hence the benefit is only short-term. (2) However, it depends on how the mass customization is used. If the implementation continues to increase production and scale then it keeps increasing demand for labor. Even if they don’t hire new workers the jobs of the old workers are secure. (3) But if the implementation is not done properly it would just add to the cost and that will not only reduce profits for shareholders in the private limited company but will also tend to cost labor their jobs and increase problems like low pay and less promotion opportunities which the workers are currently facing in FM (4) Therefore, mass customization is a good method but the effectiveness of this method is how well it is managed. If FM first invests in labor training and then brings it the benefits are more likely.