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OCR Business Studies 2880 - June 2008 - ACC

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Although yeah thats a great point you kinda just explained why the 5% is a good idea. Tbh i'm not bothered about what it would cause the business to do, its about having an argument and counter-argument in the exam - what you've said its totally correct and an excellent counter-balance for the exam. It acts as like your long term strategy but then you expalin that there are problems with it.

One thing I would say though is that the case does mention one monopoly firm in the market, therefore it is unlikely they can be overtaken and also if ACC was to merge with them, the power of the bigger monopoly firm would undoubtedly be higher than ACC and therefore the brand ACC would be lost.

Depends really what OAM want to do.

Reply 41

Tipitman

Although you do have a point and I agree it is basicly about making up stuff that fits lol. But if you look at the case study there are other businesses which make stilton in the area and ACC is the second biggest. Now if ACC were to merge with some that were smaller than ther others then there would be no antitrust as the anti monoply laws state that if it is for the public good like creating new jobs then it is ok.

Then ACC could rise there price as the bigger company and this is likey to make the larger company rasie there price. If they were just to rasie there price normally there customers would just basicly say stuff you ill go the cheaper producer down the road. Which is the competitive nature of the oligopoly.

And it is put in the case study later on that the workers want a pay rise and just to bung it on the price and lateff basicly states he cannot do this due to loosing sales and thus revenue.

As for what OAM want to do that seems the most clear cut part of the case study. thay want a 5% return which seems abit modest considering you can get 6%+ in a bank and from then on I would assume OAM would want the company to get back on its feet and then to sell on the company for a profit.

(Btw thanks this is helpful lol)

Reply 42

adamtaylor18

Completely agree but remember, ACC are selling to supermarkets mainly and not in the way of their own shop. Surely if Lateef has any sense at all (which I doubt highly) he will increase their marketing and exploit what the firms strength's are.

I can see what you saying a merge with a smaller company may be beneficial for ACC but I see it as more of a 'last option' as it would be better to try and solve the problems in house by either using a website as methods of increased sales, or by increasing marketing or even increasing the number or retail outlets they sell too. By trying to combat it in house I feel that the likeyhood of ACC's profits increasing would be higher as they wouldnt have to split with another firm. (that is if your suggesting they use both factories and sets of employees to make the same brand cheese or its simply like a franchise method? i.e. ACC franchise out their brand to other firms)

Also being a private equity firm OAM are more than likey to just asset strip ACC if they havent reached the 5% roce and sell the company on. At the end of the day they are in it to make money but they dont care long term. (thats my hard stance view on it anyway lol screw ACC lets make money!)

I suppose this is good that we can all talk about this case study in so many ways becuase it makes it easier in the exam to come up with a well rounded answer. Im glad I joined this forum purely to discuss this case study!

Reply 43

ak47kalam

Guys... is merging even a viable option? Who said anything about the other Stilton manufacturers being either willing or able to merge?

Reply 44

adamtaylor18

again another counter point to put in an argument lol good one ak47kalam!

Reply 45

ak47kalam

I've noticed something with these exams; you can put in any ridiculous points, so long as at some point (preferably in the conclusion) you just go on to show why it's so ridiculous... And they'll give you the marks... Doesn't sound like very real business acumen does it? Sometimes I wonder what these exams really teach us, if anything at all...

Reply 46

Tipitman

You can put any point as long as you back it up and show you are evaluating. And in responce to others merging is a option because the companiesn smaller than ACC must be facing similar problems and so going to them and surgesting it is somthing they would likey recive well.

Also I agree that if they dont hit 5% they will just asset strip but this isnt there primary objective as they would rather sell the business. Of course I peronsally think they will proberly have to wind down the bsuiness but I cant just say that now can I lol.

And you think they teach nothing - our BS teacher spends large amounts of time on keywords to show evaluation and anaylsis. And its because thats what the exam board demands - as he says there are no marks for theroy.

Oh and quick note I have been looking at some answers to past papers and it doesnt even seem to me that we need a layout of a stragey I mean I know it - but it almost looks like a normal essay answer.

Another thing I just noticed Lateef himself is likey to be very skillful its the managment he has to deal with who are not - meaning there are worker relation problems right up in higer mangemnet. Example when talking about the finace with the mangement lateef got blank stares.

Reply 47

cricketmaestro123

How might ACC reduce their rising energy costs?

Reply 48

Tipitman

Either by negotiation or they could get another company to store there goods or by reucing the amount they use via new tecnology, green methods and getting rid of areas that drain it like packaging.

Reply 49

cricketmaestro123

Tipitman

Either by negotiation or they could get another company to store there goods or by reucing the amount they use via new tecnology, green methods and getting rid of areas that drain it like packaging.

do you have a revision guide for this?

Reply 50

Tipitman

No this is off the top of my head lol Puls are book is useless, mind our teacher goes on so much it sort of sticks.

Reply 51

bahram

Hi from the question on:

Evaluate Lateef Proposal for increasing ACC income?

how could you possibly break the question down and discuss the key points

Please reply as soon a possible Pleaseeee

Reply 52

Tipitman

Well you would look at his surgestions first then look at each one at both its good and bad points then finally you would look at them overall and reccomend one.

From the top of my head doesnt hey say to sell or by packaging facilites then online sales as well and more imports to the USA.

Reply 53

Tipitman

Here is a mock question I had on the subject please bear in mind it is a rush copy so not the best but it may help:

3. Evaluate each of the options, which Lateef has identified as ways of achieving his targets.

One of the options that Lateef has identified is to take others packaging and persuade other local cheese companies to close down there packaging and just to concentrate on cheese while ACC take over packaging. This is good therefore as it allows the local companies to cut down costs in packaging while allowing ACC to gain an extra income.

However this plan is not without its flaws. Firstly the workers in packaging are x-type and therefore are only really motivated by money. Therefore they are not likely to take on the extra work well and could well ask for more money. But on the other hand this being said, should they ask for more money this could be an opportunity to get rid of these employees whom might go on strike and replace them with cheaper, harder working polish workers. Furthermore the extra income would come in useful to the company, which need it, as they are currently making a loss.
Therefore as a whole while taking all points across the company could take on the work however they should be careful if they do, in how they handle the workers. As should they start to kick up a fuss the company need to remember they are in charge and that they can easily be replaced. Otherwise in the long term and short term people will become dissatisfied with the packaging at ACC and the company is likely to fail.

The second suggestion that Lateef made was to reverse the scenario and instead outsource they’re packaging. This therefore has obvious benefits they would pay less for packaging while getting rid of demotivated workers. However ACC should be careful in whom it selects to package its produce. As otherwise it may not be cared for properly which could lead to damaged produce as well as improperly wrapped produce. On the other hand with energy bills going up outsourcing maybe me a good option especially with the fact that the company may soon be on a variable contract therefore meaning that they will no doubt have to spend more on energy.

Therefore overall taking into account all the factors it is proberly ACC to outsource the packaging to another company. This is because there current workforce in my opinion would not be up to the job of packaging and further more looking at the points in more detail the rising energy costs and the most likely outcome that ACC will be on variable energy costs makes it unfinacially viable to start packing and storing there own cheese let alone anyone else’s.

Reply 54

bahram

Hi, he question:

How might ACC reduce their energy costs?

what is the question asking you to do?...........how do i break it down?

Please reply ASAP pleessssseeeeee

Reply 55

Tipitman

Its basicly asking you methods that ACC and Lateef can use to reduce there power useage. It id then asking you to identify and evaluate each of the methods, finally it is asking you to sum up and evauluate all of the methods and pick one or two you think should be used.

So it could be:

One way could be to negotiate with the suppiler....this is good because....however on the otherside of the coin its bad because......overall I belive that this is a ....... option....

Overal taking all the methods into account I belive ACC should do.......while implementing this.......together this will help bring down costs this therefore will allow ACC to reduce the amount spent on energy making them more profitable.

Any help?

Reply 56

Neddy127

investment of 300K
energy cost currently are 200k
is set to rise 45 %
a 10 % saving (case study) a year on energy costs = 20K a year doesnt acheive 8% aror required for investment by oam

if energy costs increased by 20 % then it would achieve investment worth ability

but its a long term thing oam are short etc..

my turn to ask

i need help on evaluating!!
any tips.. a structure and example in this context woukld be good

Reply 57

bahram

yes thank you............can you also help me on 1 other thing please?..........you know OAM want an ARR of 8%...........can you calculate what they get back in terms of money

Reply 58

Neddy127

the 300k over a payback time i think

Reply 59

Tipitman

Right basicly you need to use keywords/phrases

Analysis keywords:

however
therefore
moreover
on the other hand
in retrospect

Then to evaulate just use evaluation keywords/phrases

Evaluation keywords/phrases

Therefore taking everything into account
Overall
Weighing up the pros and cons
Taking into account the advantages and dissadvantages
Therfore in the long term
Therefore in the short term
The short term affect would be
The long term affect would be

If you throw all this into the mix:

ACC currently spends ...... on energy this therefore means...... it could however mean....moreover it could affect.....

Therfore taking in all the positives and negitives I reccomend...... this is because.....the short term affects will be.....the long term affects of this will be

Next question

They want 5% and this is 5% of 5mill added onto it which is - £5250000 ( I think but someone else may want to check)