OCR F297 Case Study

For the time series analysis would it be a three period moving average?

Reply 62

ebduff

4

Original post by akspop

Would anyone be able to help me with a question?
if the 13 marker was the 4 profitability ratio's
how to calculate each ratio (simplified)

1/ Gross Profit Margin

Measures the level of Gross Profit as a percentage of sales or turnover. Gross profit is the profit made before overheads or expenses are deducted. Higher margins are preferable to lower ones. eg. if the answer was 40%, this means for every £1 of sales 40p is gross profit.

(Gross Profits/Sales) x 100

Gross Profit = Revenue - cost of sales

Gross Profit = 13293 - 5858 = 7435

(7435/13293) x 100 = 55.93%

2/ Net Profit Margin

This measures the net profit as a percentage of sales or turnover. It takes into consideration direct and indirect costs and is a more realistic measure of profitability against sales than gross profit margin. It helps to measure how well a business controls its overheads. If they are low then there will be less of a difference between the gross and net profit margins. Higher profit margins are preferable to lower ones.

(Net Profit/Sales) x 100

Net Profit = Gross profit - overheads

Net Profit = 7435 - 7068 = 367

(367/13293) x 100 = 2.76%

3/ Return on Capital Employed (ROCE)

This measures how good managers are at maximising the return on the capital that has been invested into the business. The return should be greater than the return you would get from putting the money into a bank account.

(Net Profit (before interest & tax)/Capital Employed) x 100

(367/3264) x 100 = 11.24%

4/ Return On Equity (ROE)

This is similar to ROCE but it looks at the return on shareholder's funds. The answer gained should be compared with the interest that could be earned if the money was invested in a high interest bank account.

(Net Profit (after tax)/Equity Shareholder's Funds) x 100

Net Profit = 278920 <---net profit figure as above reduced by 24% which is the current rate of corporation tax!

Equity Shareholders' Funds = 3264000

(278920/3264000) x 100 = 8.55%

Hope this helped a bit!

Reply 63

Original post by akspop

What would you guys talk about when answering "should CCL acquire the golf pro shop at market harworth Golf Club, Justify your view".
What would your Plan/Structure be??

You would talk about the pay back period and diversification as your main points, and obviously the benefits and limitations of it :smile:

Reply 64

Original post by ebduff

I agree with you on your predictions however I have a feeling that with regards to the objectives they might ask how realistic they are in the context of CCL's current performance, simply because one of them isn't SMART?

Yes, you would say that for objective 3 to be achieved they would need to find out more information about who the leaders in their market are and the amount of market share they have in comparison to CCL as well as what the current value of the market is. And until they do so it will be unachievable to become the number one bicycle retailers in the East Midlands :smile:

Reply 65

Original post by MoBusinessGuru

Does anyone know why CCL should merge the two brands Malliot Jaune and Peddlers into a single identity - Summit Cycles?

We were told to say that in the recommendation not to merge the names together as it is a huge risk and could damage levels of profit for CCL as it would be an unknown brand and the two they already have are well known and have a good reputation. and to further this point go on to saying that perhaps they could change the Malliot Jaune stores and rename them as Peddlers stores as Peddlers already have a good brand image and brand recognition :smile:

Reply 66

Original post by j.1994

Would effect them because there will be less demand for their products as customers do not have the money to buy their products. Will affect CCL negatively because their revenue will be reduced and this is an issue especially when considering their alarmingly low net profit.

Will not directly affect CCL due to their Zero gearing policy so they do not need to worry about paying back loans etc.

Employment rates may cause customers to be more astute with their purchases. They may feel an investment in a Bicycle may be good in the long term rather than having a car as their will be fewer costs associated with a bike in the long term. This could help CCLs sales. However should be considered that Bicycles cannot directly replace a Car and if people were going to purchase a Bike its most likely to be second hand rather than a Luxury Bicycle which CCL offers.

About unemployment we were told to write about how as unemployment has increased levels of profit for CCL has also decreased and that the fact people are unable to purchase cars due to high costs such as petrol and insurance they therefore opted for a cheaper alternative as a bike. However this is only a short term fix and in the long run may effect CCL as people will only purchase one bike as their disposable income decreases :smile:

Reply 67

drplease

Could someone please tell me 3 points they will mention for, acquiring the Golf Pro Shop, comment on how CCL can achieve Break Even on Rockingham Peddlers objectives
What we should do is someone ask a essay question that may come up and each of us put three points up for each question and then if a question comes up we will be prepared!! Also who thinks Decision Tree will come up for 13 Marker????

(edited 10 years ago)

Reply 68

Original post by drplease

Could someone please tell me 3 points they will mention for, acquiring the Golf Pro Shop, comment on how CCL can achieve Break Even on Rockingham Peddlers objectives
What we should do is someone ask a essay question that may come up and each of us put three points up for each question and then if a question comes up we will be prepared!! Also who thinks Decision Tree will come up for 13 Marker????

My business teacher went on a course led by the guy who writes the papers and he said he doesn't waste time and make diagrams and spend time making sure numbers work for them not to come up and for students not to use them. He also told us this guy said he hates it when students don't use the numbers he has provided. So remember to put in numbers where ever possible. So it is a 99% chance the 13 marker will be the decision tree and not anything to do with ratios :smile:

Golf Shop

1.

Short Pay Back Period - 3 years 10 months also 7% ARR in comparison to the 13 years it will take to pay back the solar panels and they have -12.8% ARR

2.

Diversification

Achieving Break Even

1.

More Advertising - In the case study it doesn't mention anything about how they market themselves so my teacher has told us to bring this up

2.

You could also explain that because its evidently a seasonal business, and how UK summers aren't that great this will put people off going to campsites for their holidays and therefore this will have a significant impact on the amount of money the Rockingham Forest Peddlers will make per month. and then go on to saying it may not be realistic to have RF Peddlers to break even by the end of 2014 peak season etc :smile:

Other than that we haven't spoken about objectives much!

Reply 69

rdrd

If the fiscal policy comes up what would you guys write? How would you structure it?

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Reply 70

aliali8

Can anyone tell me how to structure the decision tree part b question which is most likely to come up. What would you talk about in each paragraph and set the answer out for choosing the best option.

Reply 71

Ollymurslove

10

Original post by aliali8

Can anyone tell me how to structure the decision tree part b question which is most likely to come up. What would you talk about in each paragraph and set the answer out for choosing the best option.

The question is likely to be "discus whether sponsorship would be the best option for CCL" or something around that.

I'd do an opening paragraph saying what each option is and a brief overview.
Paragraph 1- Advantages of the sponsorship method (or whichever method it says in the title), making sure you're referring back to the decision tree for analysis marks. Bring in qualitative factors like the increase of brand awareness, media attention etc.

Paragraph 2- the disadvantages of that option. Refer to the decision tree and the possibilities of it going wrong, opportunity cost etc. also about competitiors and if they do it too they'll be little effects.

paragraph 3- an alternative option. I'd do above the line as it usually is the decision trees most favourable. Talk about t as an alternative strategy with adv + Disadv for each.

Paragraph 4- conclusion. Answer the question, is it the best option? The evaluation makes are usually made here. Talk about what would happen in the long run vs short run if they chose the method and make sure you bring in some figures.

i was told not to talk about each promotional strategy, as apparently candidates go wrong by doing that as they waste time without gaining anymore analysis marks! Hope that helped :smile:

Reply 72

aliali8

Original post by Ollymurslove

The question is likely to be "discus whether sponsorship would be the best option for CCL" or something around that.

I'd do an opening paragraph saying what each option is and a brief overview.
Paragraph 1- Advantages of the sponsorship method (or whichever method it says in the title), making sure you're referring back to the decision tree for analysis marks. Bring in qualitative factors like the increase of brand awareness, media attention etc.

Paragraph 2- the disadvantages of that option. Refer to the decision tree and the possibilities of it going wrong, opportunity cost etc. also about competitiors and if they do it too they'll be little effects.

paragraph 3- an alternative option. I'd do above the line as it usually is the decision trees most favourable. Talk about t as an alternative strategy with adv + Disadv for each.

Paragraph 4- conclusion. Answer the question, is it the best option? The evaluation makes are usually made here. Talk about what would happen in the long run vs short run if they chose the method and make sure you bring in some figures.

i was told not to talk about each promotional strategy, as apparently candidates go wrong by doing that as they waste time without gaining anymore analysis marks! Hope that helped :smile:

thank you so much it made it much clearer. i hope decision trees really does come up

Reply 73

harriet6250

Does anyone have any positives for merging Maillot Jaune and Peddlers together? Ive just done an essay on it and spent the majority of it writing about how its a bad decision. The only positive ive got is that they could combine their marketing budget and therefore have more expensive advertisement...

Reply 74

Original post by harriet6250

Does anyone have any positives for merging Maillot Jaune and Peddlers together? Ive just done an essay on it and spent the majority of it writing about how its a bad decision. The only positive ive got is that they could combine their marketing budget and therefore have more expensive advertisement...

purchasing econ of scale due to stocking of both off and on road in all outlets.

Reply 75

northbrad30

Original post by harriet6250

Does anyone have any positives for merging Maillot Jaune and Peddlers together? Ive just done an essay on it and spent the majority of it writing about how its a bad decision. The only positive ive got is that they could combine their marketing budget and therefore have more expensive advertisement...

Pros:
Less advertising costs, only have to advertise one profit center rather than two
Potential increased sales, as they are selling all off their services/products in one store
Purchasing economies of scale, will likely be purchasing more stock so will likely get a large discounts

Cons:
Increased risk of developing a bad reputation, at current if there is a problem with one profit center it would not impact the other.
The current profit centers are specialized, Maillot Jaune sells on road bikes whilst Peddlers does rentals and off road bikes.
May lose some of their loyal customer base, and would have to invest in raising the reputation and awareness of the new store

Reply 76

ebduff

4

Original post by EmilyLauren1994

Yes, you would say that for objective 3 to be achieved they would need to find out more information about who the leaders in their market are and the amount of market share they have in comparison to CCL as well as what the current value of the market is. And until they do so it will be unachievable to become the number one bicycle retailers in the East Midlands :smile:

That was a rhetorical question, sorry.

Reply 77

drplease

I am really worried about this paper, second time doing it, basically the questions that come up I don't really know how to analyse, as in what point to say disadvantages and advantages. For examply, Acquiring the golf pro shop, I will talk about investment appraisal and the figures of ARR and Payback work out etc. But what adv and Disadv do you do? A disadv is that it is pretty long but what is an adv of acquiring the golf pro shop with a bad result of investment appraisal,
the questions on this paper are basically too vague, you write like a point but you don't know what to analyse please help :frown:

(edited 10 years ago)

Reply 78

Do we need to know how to calculate liquidity ratios or is it okay if I just know current ratio = 2.88 etc. Also, if I include feasibility and extent to which in the main body of the essay (AO4) will I still get marked for A04 or should I only include this in the conclusion?

Reply 79