BUSS3 - Thurs 14th June - Anyone?

Have to admit, when compared to past papers this one was a strange one. The questions did seem a bit odd compared to past years and 1:45 is no way enough time for this exam

Q1) From my working out, I got:

ROCE=40456/83973+33000x100=34.58=35%
Asset Turnover=200000/83973=2.38=2.4

If you round it up by a decimal point, surely it's acceptable, right?

Q2) I mentioned celebrity endorsement with the likes of David Beckham and Zac Efron wearing their Superstyle brand's clothing wear. I then said that this could reduce their advertising costs as celebrity endorsement would easily attract more of their target market (15-25 year old males) to buy and wear their clothes.

I think I also said something about their product designs - bringing new product designs every 6 weeks keeps the customers attracted and thus excited about buying new products (designs) that come out. Thus, chances of more sales revenue and therefore, more profits.

Q3) I spoke about their change to a plc from a ltd company (from private to public) and spoke about their flotation being a success.

I think I also spoke about the just-in-time system as well as the lead production system and the fact that in times of high demand, they would be able to quickly deliver their products to customers etc.

Regarding employees, I spoke about the shares that they were given and the fact that labour turnover and absenteeism were low - this can be beneficial for the company as the workforce would be highly motivated by the shares that they were given and this would help ensure that they are productive which would increase the productive efficiency of the workforce, resulting in lower rates of absenteeism and labour turnover and also, an increase in motivation and commitment, as well as a reduction in unit costs. (The staff were also given pensions so I mentioned that too).

I mentioned that the 100% capacity utilisation implies that there is efficient use of resources but that staff would be stressed due to the workload etc, affecting motivation and production.

Q4) A lot of my 'FOR' arguments were things that I spoke about in Q2+Q3, with the addition of some calculations and a little more depth. For instance, I used the gearing ratio and I think current ratio, though I'm not too sure if I did use the current ratio. Anyway, the gearing was: 33000/83973+33000x100=28.2%=28%

I then said that as their gearing decreased from the last year, they could borrow more money (debt) to help fund their proposal as they already have high profits which are coming from high sales (like the 300% increase in sales due to celebrity endorsement-P.S. that's a crazy amount!)

I spoke of the HR strategy - I just said that maybe the Hard HR that they use could affect staff due to more management coming in, which affects the organisation structure because more communication and coordination difficulties would exist.

I spoke about Gemma being experienced in finance as she worked for Vodafone, and how this could help them because she would have some experience/expertise.

The company wanted to launch products for women (proposal) - I argued they would need innovation and R+D spending to ensure that they meet the needs of their market, and added that they needed detailed market research to see what women thought of the proposal.

I also mentioned the BRIC nations being used which brings benefits + drawbacks - e.g. quality may be affected but emerging markets=economic growth, so they could benefit from sales which increases revenue and thus profits. Also, I said franchises could be a negative thing because it could affect reputation and the corporate image as well as the profitability of the firm, and also spoke of how they should be giving dividends to shareholders (separate point).

I spoke about how Naheem Iqbal would feel about Gemma's plan and how other stakeholders would feel.

Of course, there were some other things that I spoke about but I can't quite remember what exactly.

Additionally, I spoke of Ansoff's matrix in saying that their current strategy was of market penetration, which was low-risk, but that their new (potential) strategies would be market and product development, which are riskier but could be rewarding (i.e. introducing women's wear would create a bigger customer base=more sales-more revenue=more profits, but to counter this, I said how would their current target market feel, so how would the males feel about their plans and would they buy the Superstule branded clothing again.)

One more point, I said they could use the extra profits to reinvest in the company, and also said that if they did give some of the profits as dividends to the shareholders, then the shareholders would be more satisfied with the company's performance and would thus invest more in the company.

My conclusion/recommendation wasn't particularly strong and I only wrote about 5/8 lines or so. I did say that they should go ahead as it will help with international competitiveness, amongst other reasons.

Can someone tell me what they think of some of the things I spoke of, and particularly, you, Jim. I'd appreciate some thoughts.

P.S

How did everyone, generally, feel about this exam?

Hi everyone,

I agree with the answers that masterwayne gave except for the last one where I made some different points and my conclusion was much, much longer. Personally I believed that the exam was very nice. And unlike most past papers, I think that the time given was fine for this exam cos I eve had time to write about 6.5 pages on the final question. Others in my class also found it easy so I'm expecting high grade boundaries

yer u are probably right. I found jan 2012 much harder but with a score of 49 (i think) I got 78%. this should be about raw mark grade boundaries as usually is buss it scales rly well!