Teaching the New Edexcel. Resources for Courses. A Level Business SAMPLE

Transcription

1 Teaching the New Edexcel A Level Business Resources for Courses

2 Uncle Wongs Big Decision Resources for Courses Teacher Instructions The purpose of this exercise is to get students to consider the quantitative and qualitative factors a business has to consider when choosing a location. This can be used as a synoptic A2 exercise or at the end of AS Theme 2 (omitting the net cash flow cards, as investment appraisal is an A2 topic) 1 Split the students into groups of 4 2 Give each group a copy of the scenario and a set of cards for both and 3 Encourage students to make calculations in order to provide numerical evidence to support their decision: 4 factory has a payback of 2 years and 2.4 months compared to 1 year and months for 5 Average rate of return for is : Total return 11-7 = 4m, Annual return = 4/3= 1.33m, ARR = 1.33/7 X 100 = 19% Average rate of return for is: = 2.7m, annual return = 2.7/3 = 0.9m, ARR = 0.9/6 x 100 = 15% 6 Profit for at full capacity is 6m x m = 5.5 Profit for at full capacity is 4m x m = Break even for is 2m/1.25 = 1.6m units, Break even for = 1.75m/1.35 = 1.29m units

3 Uncle Wongs Big Decision Resources for Courses 8 Capacity utilisation Yr 1 50% 50% Yr % 75% Yr % 87.5% 9 Labour productivity Yr 1 6,000 units per worker 5000 Yr Yr Encourage students to consider both quantitative and qualitative factors before making a decision. Extension activity Ask the students to choose the 3 most important factors and get them to justify their choices. Pose some What if questions to get the students to debate whether it would affect their location decision e.g.: The effect of a change in the /euro exchange rate. A large rush order from the French supermarket. A competitor opening a factory in either or.

4 Scenario Uncle Wong Foods is a manufacturer of chilled ready meals. They deliver to all the major supermarkets. Due to the perishable nature of the product, delivery time from the factory to the supermarket must be less than 8 hours. Uncle Wong Foods have expansion plans and have contracts to supply to a chain of French supermarkets. This will require them to increase their capacity and open a brand new factory. 2 potential sites have been chosen: or. Your task Consider the information cards for both and. Using this information decide which location Uncle Wong Foods should choose. You are advised to use calculations to support your decision.

5 4 hours 10% 1m 50 miles Initial cost 7m Fixed costs per year 2m Variable cost/unit 0.75 Selling price/unit 2 Year 1 2m Year 2 4m Year 3 5m 6 million units hours

6 Year 1 3m Year 2 4m Year 3 5m 1 million units Year 1 10% Year 2 8% Year 3 5% 6 hours % 2m 30 miles Initial cost 6m Fixed costs per year 1.75m Variable cost/unit 0.65 Selling price/unit 2 4 million units

7 Year 1 3m Year 2 3.2m Year 3 2.5m hours Year 1 2m Year 2 3m Year 3 3.5m Year 1 5% Year 2 3% Year 3 2% 0.5 million units 400

8 Teaching the New Edexcel A Level Business Resources for Courses

9 Resources for Courses Overview Entrepreneur cards is a kinaesthetic group activity designed specifically to develop students skills of analysis and evaluation in relation the characteristics of an entrepreneur. The entrepreneur cards can also be used to introduce the concept of the skills and characteristics of an entrepreneur or can be used as a main activity once this area has been previously been discussed. Resources need One set of entrepreneur cards per group (one master set has been provided which can be copied/ laminated) Roll of paper per group (the longer the better) Marker pen Blu-tack Teaching and Learning Strategy 1 Split the class into groups of around 4 6 students 2 Give each student a set of the entrepreneur cards, a roll of paper and a marker pen 3 On the board, draw the following which each group should replicate on their roll of paper Least important characteristic Most important characteristic 4 Students then need to discuss the cards and place them along the spectrum. This encourages students to make judgements as to the relative importance of the characteristics of an entrepreneur 5 When all the cards have been placed on the spectrum, the teacher should select students from the groups (a group at a time) to come to the board and place their cards on the spectrum The students then need to justify why they have placed them there and a further discussion can take place in relation to where other groups may have placed them.

10 Self-belief Initiative Risk-taker Determination Resilience Persistence Creativity Vision Passion Confident

11 Hardworking Ability to spot gaps in the market Problem solving Risk management Communication Planning/ organisation People skills Selling Negotiation Networking

12 Customer Service Financial awareness Leadership Coping with change Ability to multi-task Persuasive

13 Ability to delegate Good communication Confidence Ability to motivate Fair Team player Organised Dedicated Giving feedback Decisive

14 Not afraid to make tough decisions Inspire Develop people Co-ordinate Inspire Innovative Plan Set objectives Create a vision Risk taker

15 Friendly Supportive Take control Monitoring Passion Charisma Dynamic

16 Teaching the New Edexcel A Level Business Resources for Courses

17 Price Elasticity of Demand Resources for Courses Teacher Instructions This resource is intended for use after students have been introduced to the concept of elasticity of demand. Once they have been introduced to the concept, determinants and formula for Price Elasticity of Demand, they can practice using it for calculations and to interpret the results using tasks 1, 2 and 3 for each of the On the Case businesses in this resource. The Elasticity Extension exercises are intended to be used later in the course, as a Cross Theme challenge, when students have learnt about Pricing Strategies (1.3.3 in the Specification) and Profitability Ratios (2.3.1). The spreadsheet on the resource disk gives expected answers to the calculations.

18 Teaching the New Edexcel A Level Business Resources for Courses

19 Price Hike? Resources for Courses Teacher Instructions This activity encourages students to make use of the quantitative data given to them. Often ignored in exam settings, this activity forces them to use the data by giving them no case study. Resources Needed Students will need at least one set of data and instructions per group and a calculator. Other resources required depends on the format you wish them to present their information e.g. sugar paper for posters, computers for a powerpoint etc. Teaching and Learning Strategy Put students in small groups pairs to fours. Mixed ability groups may work well. Ask them to use the data to assess whether this business should increase their prices to increase profitability. This should encourage students to make links between the two themes they have studied. There are a few ways of doing this task e.g.: Assign students roles e.g. one student in the group is to look for evidence supporting a price rise, another is to look for evidence against the price rise and another student could look for alternative strategies for increasing profitability. They could then share ideas and create a poster to explain their conclusions Students could create a powerpoint presentation and feedback to the rest of the class Students could even do an essay individually or in small groups. The question title could be: Evaluate the likely impact of an increase in price on this business s profitability. (20) As an extension activity, ask students to consider what other information would have been useful in helping them make their conclusions and why.

20 Your Task

21 data information Fig 1 An overview of key competitors from this year. Your client is company H Sales ( m) Other; 80 H; 31 G; 40 A; 260 F; 33 E; 35 D; 50 C; 85 B; 100 Fig 2 Market Research Commissioned in 2012 Price elasticity of demand Income elasticity of demand Fig 3 Finance and operations data for the last two years This year Last year Revenue 36m Cost of goods sold 8.6m 8.2m Operating expenses 21.5m 21m Number of units sold 77m 80m Capacity utilisation 72% 75%

22 data information Fig 4 Data on employees Labour productivity index This year 97 Last year 99 2 years ago 100 Span of control This year 20 Last year 10 2 years ago 10 Fig 5 Data on scrap rate (percentage of products made which were not put up for sale as quality control officers found faults) This year This year Scrap Rate 2 years ago 3 years ago 4 years ago Scrap Rate

23 Possible answers What has happened to profitability? Profit has fallen from ( ) 6.8m to ( ) 0.9m this year Gross profit margin is now 72.26% whereas it was 77.22% last year Operating profit margin is now 2.9% whereas last year it was 18.89% Arguments for raising the price Arguments against raising the price PED is -0.9 which indicates price inelastic demand therefore revenue should increase as a result. It would help cover rising costs of goods sold. It would be usual to increase prices by a small amount in most industries just to cover inflation. They seem to have already tried cutting prices and revenue fell by 5m! By looking at revenue and number of units sold it can be seen that prices fell from 45p to 40.26p. Perhaps the opposite strategy should be tried. PED is difficult to estimate and this market research is out of date so it could have changed since then. It is also a risky strategy as it is close to being elastic so slight flaws in the market research could easily mean this strategy makes the situation worse. They are in a competitive market and they are a relatively small player in that market. Increasing prices may mean customers switch to one of the many substitute goods available. They already have low capacity utilisation. Raising prices will reduce demand and mean that they have even more spare capacity. Sales fell despite a cut in price so a rise in price could be a disaster. Alternative strategies to raise profitability: The scrap rate has increased greatly in the last year. At the same time the span of control for employees rose. Perhaps employees are just getting used to the transition of having less close supervision or perhaps some of these managers should be brought back. This could also help with labour productivity. If fewer products are wasted then hopefully profit margins will rise. Alternatively, they could consider a move to quality assurance from quality control to reduce the scrap rate. They could reduce operating expenses e.g. by moving to a smaller premises as operating expenses are rising but capacity utilisation is low. The operating profit margin has decreased at a faster rate than the gross profit margin so tackling more fixed costs should perhaps be a bigger priority The costs of goods sold figure has risen despite selling fewer units. The higher scrap rate may account for some of this change but the firm may also want to look into changing supplier of any raw materials they use, to increase gross profit margin Product development or another extension strategy to boost sales could be looked into Increasing the strength of the brand might be an option e.g. by having more unique selling points or sponsorship (if appropriate for the business type) Products are being sold for quite a low price which might indicate they are low skilled goods. The business could consider relocating and producing abroad where costs e.g. wage costs may be lower. It would be useful to know... The industry e.g. is the whole industry facing problems or just this firm? Is this a long term trend of declining profitability or has it just occurred this year? What are the industry average scrap rates, gross and operating profit margins? Do they have retained profit which could be used for rebranding or product development? Up-to-date price elasticity of demand estimates