Setting Business Aims & Objectives (AQA GCSE Business)

Case Study

Devine Jewellery (DJ) plc is an international business that sells a range of luxury jewellery items, such as bracelets, necklaces and rings. The business was started by British jewellery designer Dev Anand, who developed a unique selling point (USP) of jewellery that can be personalised with a message or initials. This USP has attracted customers from all over the world. All DJ products are crafted from high quality gold and gemstones. This has enabled DJ to create an exclusive brand image that has attracted wealthy customers.

As a profitable business, DJ’s shareholders receive dividend payments each year. Dev understands that his business must be willing to respond to current trends to maintain sales levels. Silver jewellery is very common, as it is much more affordable than gold. Reputable brands already sell jewellery in a range of precious metals, including silver.

Dev is keen to produce a new jewellery collection using silver instead of gold. The new collection would not be personalised or include gemstones. The current selling price of DJ’s best-selling gold bracelet is £4700. A silver version of this bracelet would be sold for £1175.

Case Study

HelloFresh has experienced rapid growth and now has more than 1.45 million customers worldwide. In 2017 it became a public limited company and is now aiming to break even.

In the UK, the selling price for one HelloFresh meal is around £5 per person with a minimum order value of £34.99. In a 2017 survey 59% of people said they had never subscribed to a meal-kit delivery service because it was too expensive, however the target market for HelloFresh expect a high-quality product and this requires a certain level of cost. For example, HelloFresh work with local suppliers to source seasonal, fresh food and its meal-kits are packaged mainly using recycled materials instead of cheaper solutions which have a more negative impact on the environment.

HelloFresh focuses its marketing activity online, including social media, to advertise meal-kits to its target market. HelloFresh sometimes combines advertising with a sales promotion, such as 50% off your first box, to attract new customers to its subscription service. Marketing is very important to HelloFresh as it operates in an increasingly competitive environment. In 2018 one major competitor launched a TV advertising campaign costing £2 million. HelloFresh incurred marketing expenses of £140 million in 2016 which increased to £215 million in 2017.

Table 1: Adapted from HelloFresh Extract of Income Statement (Euros have been converted to pounds)

Case Study

Adventures currently employs eight staff in the UK, who are all keen sporting enthusiasts. Adventures’ employees are expected to sell holidays and take payments but also deal with all customer enquiries such as advice on local facilities.

Sales have fallen recently and staff absenteeism has increased. Other rival businesses have increased their salaries. As John is unable to offer a competitive salary, employees have been asking for extra benefits. Discounts on holidays, commission or profit sharing are being used by different competitors.

John is drawing up a business plan to expand into ski holidays in the Italian resort of Folgaria. The business plan outlines the objectives of the business. Within three years, John aims to double profits and would like to have a 30% market share of ski holidays to Folgaria. To achieve this, the business would need to sell on average 2000 ski holidays each winter. Adventures will increase its number of employees to 10 to sell ski holidays, so the company is moving to a new office with more space. The new employees enjoy skiing; one of them will live in the ski resort for the winter and support customers when on holiday.

Case Study

Thorntons’ chocolates are made at its factory in Derbyshire. It employs experienced and highly skilled chocolate makers to design products and oversee production. It has approximately 200 stores throughout the UK.

At its store in Derby, Thorntons has successfully introduced job production where a chocolate maker shows customers how the delicious treats are made. Unique premium products can be made to order exactly as the customer requests. The store in Derby was chosen as it has lots of space for the production equipment. It is located near to the factory and each day a chocolate maker from there is selected to be sent to the store.

Thorntons offer franchising, called ‘Thorntons In Your Store’. The franchise is offered to existing business owners, such as card shops, who allocate space to sell Thorntons’ products. The franchise fee is £1000 for five years with the buyer paying for the fixtures and fittings needed. Predicted sales are between £80 000 and £250 000. To support the business owners Thorntons offer training and help with sales and customer service.

People in the UK like chocolate, but they’re eating less. The value of UK chocolate sales is growing but the amount of chocolate sold is falling. Customers are now buying chocolate as a treat. A third of British chocolate buyers splash out on premium products.

Case Study

Reusable drinks bottles are becoming more popular. Jake Webb is a product designer. A couple of years ago, Jake noticed that young people wanted to drink cold water on the go without having to buy single-use plastic bottles. He thought there was a gap in the market for lightweight, stylish bottles.

Last year, Jake developed a product he called the BEco Bottle. He bought some second-hand equipment to begin manufacturing bottles. The equipment can only produce small quantities meaning the unit cost per bottle is high. Jake has had to turn down orders with tight deadlines because production is so slow. Jake has also struggled to find a supplier who can provide the materials in the small quantities he needs. He eventually found a supplier, but it was unwilling to negotiate on the price.

Jake is planning to redesign his original BEco Bottle to make it appeal to the sports and fitness market. Retailers are keen to stock the sports bottle if the design and price are right.

Jake does not currently have enough equipment to manufacture both his original BEco Bottle and the new sports bottle. The new equipment needed would cost £20 000 to buy and Jake cannot afford this.

Although Jake has always used the fact that the BEco Bottle is produced in the UK in his advertising, one solution is to outsource production of the sports bottle to India. He has found a manufacturer in India who can offer a short-term contract and is able to use cheaper labour and materials. This means the sports bottle can be produced for 50% less than it costs in the UK. However, the manufacturer has asked Jake to remove some of the design features from the sports bottle, so it is easier to produce.

An alternative option is for Jake to use hire purchase to buy the equipment he needs and produce the sports bottle in his current factory. This would allow Jake to pay for the equipment in monthly instalments. However, it will take Jake four years to pay for the equipment and he will have to pay an 8% interest charge.