BUSS1 16th May 2011

I think that was a good answer.

The Question i believe was something like " Do you believe Kate's business can meet her 2 objectives?"

I found writing this and the previous one on business plans fairly difficult to start but nice when i got into it.

Here is roughly what i wrote:

Intro : How can she complete both targets? - Surely objective 1 is more realistic than objective 2.

Para 1 : Objective 1 is reachable if Kate sacrifices profit in her first year of trading by either buying more expensive ingredients ( variable costs increase ) and not passing the costs onto the customers. The cost of this is of-course the danger of failing in her first year especially when no sources of finances were mentioned in the case study.

Para 2 : If objective 1 is reached then objective 2 can be due to the increased demand for the product. While her Figure 1 is based upon no quantitative data or past trading history, it can not hurt her too much to set a target. The increase in demand due to objective 1 being met may indeed make her able to increase revenue substainsully; if she does do this it is indeed likely to be as Figure 1 suggests - slowly growing with a high in 2015.
The Figure is of-course mis-leading; rent can go up, variable costs can go up, another catering business may 'eat her up' by undercutting her.
Her lack of Financial planning such as a cash flow forecast leaves her wide open to the unknown, while she does have a consultant - he cannot predict the future of the markets, and she should of laid out a forecast to keep control on finances as she has such few Quantitative pieces of data and also as new profitable businesses often fail due to being insolvent (can't meet short terms debts).


Conclusion: Objective 1 is reachable, Objective 2 is reachable only if Objective 1 is reached as she currently has a small market share ( 1/6ish ).


Obviously my essay isn't from the mark scheme - but its hopefully it is a rough outline for what i felt they may of given marks for as it is what i wrote in the exam. ^^

I would welcome any opinions/extensions

I agree, her market research allowed Kate to find what her target market wanted and thus allowed her to differentiate from her competitors. I also wrote in my evaluation that it depends upon the reaction of competitors etc.

Kate was also relatively inexperienced so she might not be able to achieve objective one straight away because she is still learning!

Figure 1 was dodgy as it asked you to find the average profit but apparently the variable costs had increased so

Consultant question- I said that the consultant was experienced whereas she was not, informed her about legislation and the insurance she needed and therefore this meant she didn't have to waste time doing herself and therefore could focus on e.g. the market research.

Business Plan- I said she had found what her target market wanted and tailored her business around those wants.
Set targets with a long term outlook so its allowed her to focus on what she wants to achieve.
Useful for someone with little experience other than 'catering at friend's parties'
May convince bank manager to give her loan capital if Kate ever decided to expand
But...
No quantitative data- all guesswork.
Coupled with just relying on just the consultant may be high risk for her.