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    What did everyone put for q2? I just said it wasnt successful as sales revenue fell by £70m and but countered it by saying market share increased and so did profit
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    For Q3 my point against borrowing was that the increasing financial instabilty due to high current liabilities would mean issues to pay back.....


    Therefore to ensure no issues, dividends could be reduced and such profit could be retained and used internally instead of increasing debg
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    (Original post by Hann11)
    Anyone agree with the proposal due to the fact the current market was declining and a new growth strategy was needed in order for the business to achieve its aim of increasing profit margin???
    I did
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    (Original post by Hann11)
    Anyone agree with the proposal due to the fact the current market was declining and a new growth strategy was needed in order for the business to achieve its aim of increasing profit margin???
    i think the aim was to "significantly increase profits". Q4 the main points i think FOR were really weak liquidity (3.2 ROCE and 0.3:1 current ration) so major change needed and the proposal met the payback and ARofR targets. Also declining package holiday market, growing short-haul flight market (23% in by 2019) and declining revenue resulting from the decreasing value of the current market.
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    (Original post by JoshFlySon)
    Gearing ratio was only 50% after which is an acceptable level and isn't too high
    i know, i said "at least some of the money can be borrowed" because thats what the guy i was replying to wrote in his answer. but i agree with you that borrowing the £300 million was fine.
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    Attachment 550017550019Attachment 550017550019

    Hey,

    This is the basics of what I wrote, did anyone do similar?
    I'm aware theres one or two typos -_-
    Attached Images
      
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    Non-current liabilities were really low (£700M) = -£700M not +£700M
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    did they give us payback expectations?
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    (Original post by Guèpard)
    did they give us payback expectations?
    Yeah they did, 4 years.
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    I didn't like that paper at all, everyone seems to have found it hard so low grade boundaries seem likely. Q1 I found VERY ambiguous, I didn't know whether they wanted me to talk about why they set the objectives in general or why they set those specific objectives. Anyway...

    Q1- I said they set the objectives for checking in time, percentage of flights on time etc higher than the industry average because they were offering a high quality service, it gave them a competitive advantage, differentiation strategy etc. Second point was that they set their budget for staff training very high so that the staff were motivated, would then give good customer service, making repeat purchase more likely etc.

    Q2- I think my 'for' point was that they had increased their market share despite the market getting smaller overall and their marketing budget decreasing. Then for 'against' I said it may still have been bad for their finances because their revenue decreased so even though it was successful, it didn't actually improve the profitability of the business.

    Q3- I said they would have access to borrowing the £300m as their gearing was 41.something % so they could afford to borrow it. They I said that actually with the £300m their gearing would be 50% so may put future investors off. Said it all depends on the interest on the loan, repayments etc.

    Q4- My first 'for' point was that the ARR and payback met the investors expectations. And then that meant that they may be able to offer higher levels of profit which the investors said was important. My second 'for' point was that they needed to adopt a strategy for growth which their current strategy isn't because of the decreasing market size, because the investors expected higher levels of profit. My 'against' point was about HR- threat of industrial action, declining motivation etc.etc.

    Overall it went well but my timing was completely off, if I'd have had 10 more mins I would have felt a lotttt happier with it!
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    (Original post by Guèpard)
    did they give us payback expectations?
    Yes, within 4 years
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    (Original post by MattMorris___)
    Yeah they did, 4 years.
    OH MY I cant believe i didnt see that, I think the pressure got to me oh well I calculated it correctly at least.

    Thanks
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    (Original post by Jt18976)
    What did everyone put for q2? I just said it wasnt successful as sales revenue fell by £70m and but countered it by saying market share increased and so did profit
    FOR- i put, the profit margin increased because prices increased, which was down to the marketing department. the increasing profit margins were more significant then the decreasing revenue and therefore profits went up each year.

    Against- even though the market share increased every year, it was not significant enough to offset the declining value of the market and therefore this resulted in decreasing revenue each year
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    (Original post by Guèpard)
    OH MY I cant believe i didnt see that, I think the pressure got to me oh well I calculated it correctly at least.

    Thanks
    3 years and 1 month, correct?
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    That exam was so easy - I thought I was sitting a GCSE at one point.
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    (Original post by MattMorris___)
    3 years and 1 month, correct?
    Yeh well I wrote 3 years and 0.9 months , I dont know if I miss marks for not rounding ?
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    (Original post by Business Boy)
    That exam was so easy - I thought I was sitting a GCSE at one point.
    What did you put for each answer?
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    Can anyone answer this - what happens if you put the wrong answer for a calculation, but show your working and apply a logical chain of analysis??
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    Here's what I put-1) Defined Operational/Targets
    -They can use the Industry Ave as almost a benchmark-Referred to their high quality image and reputation
    -Their targets of reliable and on time flights might allow them to charge a premium price
    -Targets needed to be SMART otherwise they can have a de motivating effect if not met and are unrealistic

    2) Defined Marketing Activities
    -Mentioned how Market share had increased within the market by 9%, this was a good sign, however, the market is failing and so firms may be leaving allowing Kings' to gain market share that way so doesnt really tell you if it was because of their marketing activities
    Increase in profits was good whilst industry average profits actually fell into a loss making situation, so that was good - pleases shareholders
    Also questioned how we'd know its successful as there were no past objectives stated and so an increase in market share or profitability, although is a good thing may not have actually been what their corp and marketing objective was set out for

    3) Gearing was 41% and if they got a loan for £300 million
    - Gearing would increase to 50%, although that can be classed as highly geared, it all depends on the businesses financial situation as being highly geared isn't necessarily a bad thing (If the company has high revenues and profits they can cope with any level of gearing).
    Mentioned ARR (15.6%) and Payback (3 years and 28 days) meeting the demands of Financial director.
    Shorter Payback is good- less risk, less interest to pay
    Lack of expertise of Thea, needs to pay attention to other directors as they are more experienced
    Marketing Director worried and needs to negotiate with Thea in order to receive a satisfactory budget for marketing which will allow the strategy to be successful.
    4) My argument went like this
    Point 1- For the approval Current market is failing (ev, perhaps its just short run and will improve in future)
    Entering new high growth market could allow them to meet Long Run Objectives of improved profitability
    Ev- Requires training budget to make sure staff can uphold high level of quality and good customer service
    Need a significant marketing budget or an effective marketing strategy to make sure they can compete with Easyjet and Ryanair as they have greater finance and could retaliate to Kings' entrance to the market by spending more on marketing themselves
    They need to differentiate and provide food and reserved seating as a way of competing with Ryanair etc and gain market share through differentiation as opposed to being low cost

    Point 2- For the approval
    Payback was quicker than Finance Director demanded and so less risk involved + lower interest repayments
    Ev- Questioned reliability of figures
    ^ can't remember what else I said for this point, but I do know I said more..
    Labour Turnover is low compared to Industry average-> lower costs for business need to uphold that low level of turnover

    Point 3-Against the approval
    HR Director worried and Trade Union threat
    High levels of TU membership- difficult to change strategy and make redundancies^^
    Need to consult with TU and HR Director in order to make the change effective
    Redundancies= Higher costs, difficult to compete on costs/price if costs are high so again need to seek other ways of competing
    Damage brand image- new strategy could be less effective because of damaged public image therefore demand could fallDamaged confidence from employees and so therefore people may choose to quit + customer service may be damaged due to unhappy employees

    Conclusion- yes should accept- Need to differentiate themselves from EasyJet etc by providing services that they're not satisfying and this will allow them to charge premium prices (reserved seating and food)
    -Also need to seek other forms of distribution channels like online (which is increasing in use) and stop using travel agents as they're not effective anymoreI think that's pretty much everything I said.
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    (Original post by londonr0se)
    I didn't like that paper at all, everyone seems to have found it hard so low grade boundaries seem likely. Q1 I found VERY ambiguous, I didn't know whether they wanted me to talk about why they set the objectives in general or why they set those specific objectives. Anyway...

    Q1- I said they set the objectives for checking in time, percentage of flights on time etc higher than the industry average because they were offering a high quality service, it gave them a competitive advantage, differentiation strategy etc. Second point was that they set their budget for staff training very high so that the staff were motivated, would then give good customer service, making repeat purchase more likely etc.

    Q2- I think my 'for' point was that they had increased their market share despite the market getting smaller overall and their marketing budget decreasing. Then for 'against' I said it may still have been bad for their finances because their revenue decreased so even though it was successful, it didn't actually improve the profitability of the business.

    Q3- I said they would have access to borrowing the £300m as their gearing was 41.something % so they could afford to borrow it. They I said that actually with the £300m their gearing would be 50% so may put future investors off. Said it all depends on the interest on the loan, repayments etc.

    Q4- My first 'for' point was that the ARR and payback met the investors expectations. And then that meant that they may be able to offer higher levels of profit which the investors said was important. My second 'for' point was that they needed to adopt a strategy for growth which their current strategy isn't because of the decreasing market size, because the investors expected higher levels of profit. My 'against' point was about HR- threat of industrial action, declining motivation etc.etc.

    Overall it went well but my timing was completely off, if I'd have had 10 more mins I would have felt a lotttt happier with it!
    You seem to know what you're talking about so I'll ask you, would I get marks for saying that revenue fell at a less proportionate rate than the value of the market?
 
 
 
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