OCR - F297: Strategic Management (June 2011) Watch

sewelly6
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What other questions have you done Ricken? It's josh from business ha ha
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rickenram
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ha ha though it was you !!! :P

Evaluate Sue’s objective of a 75% room occupancy rate? [18]

With a decline in room occupancy rates, it can be noted that Wilhelm has acted well, being that a negative slope can be identified. He has therefore set Sue the objective accordingly, which is partly smart being that a time is given to implement this change (2013)

We are told that currently costs are allocated through how many staff employed within each profit centre. With the wedding conference able to project healthy profit margins due to very little staff being employed within this profit centre, it is true that a sense of dis-equilibrium is present this has implications about how profit margins are recorded, which therefore may not be conveyed with much accuracy. A more accurate approach, absorption costing, would allow Sue to have more clarity with regards to profit margins. With absorption costing involving a contribution to all direct and indirect costs a more accurate margin can be calculated, allowing the hotel to have less of a burden of overheads, which can therefore be spread more evenly with other centers of the business. This has implications on the budget of the hotel, which if the costing is calculated with regards to revenue as apposed to staff in each profit centre; the hotel may be able to retain more profit to be used as part of the marketing budget.

With more money available to market the core of the business, this shows potential for meeting the tactical objective of increasing occupancy rates to 75%. With table 1 showing more international interest in BPL, this leads to an opportunity. With part of BPL’s most valuable assets ‘the par 74 golf course’ Sue could advertise BPL in international golfing magazines, as I would assume with fairer allocations of costs, budgets could potentially improve. With this said a promotional offer could be used within this advertisement, with discounts offered on the hotel and perhaps a package scheme with regards to the golfing facility. This may help stimulate demand, thus increasing the occupancy rates.

Assumptions can be made, regarding the slump in occupancy rates in 2010, which faces Sue with an issue particularly regarding UK visitors. With 2008/2009 causing economic anxiety due to the recession it seems that we would expect by 2010 (end of recession) the rates would steadily increase due to consumers having more disposable income. We however see quite the opposite; being that BPL reflects an income elastic service, it is true that consumers have lost confidents into spending as much on luxuries, and this can be noted as a lagging indicator being that consumer confidence is yet to arise. This faces Sue with the biggest issue, as from figure 1 an 8% decrease in Uk guests shows the affects of the lagging indicator mentioned. Market research should be pursued on this issue, as a simple reduction in price may help stimulate demand and lead to a 75% occupancy rate being that the service is income elastic.

Overall I believe that the objective could potentially be met by 2013. However much market research needs to be undertaken whether it is secondary data on the popularity of golf, or the GDP of the UK via the government census. This would give Sue a clear focus on how to market BPL accordingly. It must also be considered whether Wilhelm has set this objective with thought, as it could be questioned whether this tactic is part of a bigger objective of perhaps growth or profit, it is however unclear of the long terms objective of BPL and this also should be taken into consideration as the business lacks clarity in the long term, other than what seems to be its main focus; to satisfy its shareholders.
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sewelly6
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There very good answers Ricken! Good development on all points hope i can do something like this tomorrow! Have you answered anymore?
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rickenram
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haha cheers pal, i started another one but havent finished

Evaluate the extent to which economic changes might impact on BPL’s profit margins. [18]

An inevitable, but unpredictable factor that affects any business is a change in the economic environment. For BPL, we know that the recession had affect on the visitors from the UK, but perhaps didn’t really reflect what would be expected to be a bad year of trading. In fact, coming out of recession sees a worse situation for BPL as ‘revenues were down’ and ‘profit margins had decreased’ this I believe is down to little consumer confidents, particularly within the UK.

With regards to economic change in the future, an increase in inflation rates would see an increase in GDP. With goods and services being more expensive, this has implications for particular profit centers of BPL. Each of the restaurants may see an increase in the costs of supply, the food. With this threat, it can be noted that it would take a strain on the profit margins of BPL and with Wilhelm setting the tactical objective of ‘reversing the decline in revenue and profit margins’ this does little to help this objective. However, the Michelin listed restaurant Ostlers, may be able to absorb the extra cost by increasing its price for food, and although the food reflects an elastic product I however believe that customers would likely pay being that the cost is high anyway. I believe this may help maintain its profit margins, although perhaps not aid Wilhelm’s objectives, although during a tough economic climate this objective may have to be compromised into a more realistic one.

Another change in the economic climate could take the shape of an increase in interest rates. As there are little long terms debts owed (gearing 2.5%) A threat could be that the opportunity to borrow more and help pay of the businesses current liabilities (£595,000) as if interest rates are high, the business would have to pay back more money which would take strain on the profit margins of BPL. This would also take an effect on the opportunity to help the liquidity of the business. I however believe that the dividend payable to shareholders could be temporarily not be paid which would help the liquidity and also the profit margins of BPL.
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sewelly6
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Good work mate, what do you need for UNI? What you on at the minute?
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rickenram
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need AAB , im **** at business tho so need to pull together for this exam !!!

how are your requirements ???
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sewelly6
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BBC - Need at least 60% in this exam! What did you get in the other business papers?
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rickenram
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not well, retook intro and marketing tho :P hopefully that will pull it up, might get in uni with a C for business tho :P
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sloth1
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Yeah please, its really helpful
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King Teddy
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Hi everyone, roughly how much should I expect to be writing for the 18 mark questions? Up until now I've been aiming for 2/2 and a half pages per answer, trying to get a solid introduction, level 4 conclusion and 2-4 good detailed points in the middle!

Is this about right for hitting top marks? Someone said about including around 6 points, which is news to me :eek:
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rickenram
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i have a stakeholder thing my teacher wrote

Evaluate the extent to which BPL could be viewed as a success.

The root of the question depends on two elements; the perspective of those viewing the business and what they then believe constitutes Success. This is therefore a stakeholder question and should be tackled with this in mind.

The main stakeholders at present in the business are the shareholders, the management, the staff, the local authority, the customers and the community.
The Shareholders
From the case study we are told that that it is the golf club members who form the majority of the shareholders in BPL and that they view it as ‘a Lifestyle choice rather than as a financial investment’ Ln 122. This will have a major effect upon the way they will view the term success. From a financial view point the figures for BPL appear ‘acceptable’ given that it is still making a Profit with a product that is almost certainly Income Elastic in a harsh economic environment. Its liquidity ratios @ CR= 1.42 and AT= 1.05 show that it is solvent and not under threat from a liquidity standpoint at present. Using the figures from the Balance sheet we can see that its ROCE is 6.2% which still compares favourably with low risk investment options such as high interest bank accounts. However further investigation of the Balance sheet seems to pose questions about the validity of these figures as the assets ‘Buildings’ and ‘Land’ seem vastly undervalued. Using the figures also provided in the case the case study the cost of basic undeveloped agricultural land, without planning permission, would value the land alone @ £2m (an increase of 33% on the given net book figure). A realistic upward revaluation of these assets would almost certainly reduce the ROCE on BPL to negligible levels. However, as stated it is not from a financial viewpoint that shareholders are viewing BPL as a business but rather as members of a private and exclusive club who treat it as a way of ensuring extra ‘privileges’ through ownership. Should these shareholders ever sell up on mass to a more financially focused set of shareholders then the current status quo would become unsustainable.

The Managers
Whether the mangers view the business as a success will depend upon what element of the business they are controlling and their personal view of Willhelm’s management style. Whilst budgetary breakdowns are not given for individual departments the impression given is that Profit centres such as the Events are making a healthy profit, but that this may be due to unfair distribution of overheads onto the Restaurant. In addition other areas of the business such as the Leisure Club also feel that Bias is being exercised when operating decisions are being made (in favour of the Golf members who also make up the majority of the shareholders). Willhelm, as a manager, seems to rather like playing managers off against each other but this can only serve to undermine a coherent approach to strategies and the tactics required to carry them out. It may also reduce the individual manager’s commitment to the organisation as a whole and may not be viewed as a successful approach.

The Staff
Overall not much information can be gleaned from the case study as to the feeling of the staff as a whole as to the success of BPL. Whilst Front of house staff are obviously feeling aggrieved at the change in ‘tips’ policy it must be assumed that lower level staff in other departments reflect the opinions of the senior managers. It must be remembered that Front of house staff represent the public face of BPL and that a negative attitude on their part may be passed onto customers, thereby damaging the reputation of BPL as a whole. In a time of recession the staff will generally be happy to keep their jobs and so the voicing of negative opinions may be kept to a minimum. Staff may also feel under threat due to the downturn in customer numbers

The Customers
The view of this group appears to be somewhat split. Many of the customers are the Golf Members who also make up the majority of the shareholders and this has been dealt with in a previous section. With ‘external’ customers however, BPL seems to be less successful and this is being reflected in the drop in both room occupancy of the hotel and the waiting list for golf club membership. Customers from differing international groups may be seen to view BPL with in different ways given the data in Fig 1, however, these changes in numbers may be fairly arbitrary depending on the numbers of rooms and the fall in overall occupancy. The cause of the overall drop in customer numbers may well be due to the change in economic environment, however, Correlation is not Causation and BPL should immediately carry out market research to ascertain if this assumption is correct as failure to address other problems could lead to major issues.

The Local Authority
Overall the local authority will BPL as a success at it is a major attraction to the area and employs local people to staff it. In addition BPL does attract some visitors from overseas and this with raise the profile of the area in general. This is something that will reflect well on the local economy and therefore the authority.

The Local Community
This will be expected to be similar to the view of the Local Authority, however there have been some complaints about the noise from the Clay Pigeon Shooting which may increase if activities such as ‘car off-roading’ were pursued. Additionally external visitors coming to the hotel will increase passing trade for satellite businesses but will also provide increased competition for local restaurants and Pubs.
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AndSparkles
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(Original post by sewelly6)
BBC - Need at least 60% in this exam! What did you get in the other business papers?
I need BBC too!

(Original post by rickenram)
need AAB , im **** at business tho so need to pull together for this exam !!!

how are your requirements ???
Can I ask how long those answers are taking you to write? They just seem too much to be done in such little time :s

(Original post by rickenram)
not well, retook intro and marketing tho :P hopefully that will pull it up, might get in uni with a C for business tho :P
Speaking of retaking... did anyone get an amazingly crappy grade for People In Organisations?

(Original post by King Teddy)
Hi everyone, roughly how much should I expect to be writing for the 18 mark questions? Up until now I've been aiming for 2/2 and a half pages per answer, trying to get a solid introduction, level 4 conclusion and 2-4 good detailed points in the middle!

Is this about right for hitting top marks? Someone said about including around 6 points, which is news to me :eek:
It was me who said about 6 points. How have you been told to write your answers? I've never been taught any other structure then to write a point, then apply to case study, analyse it and evaluate it. Rinse and repeat until you get to the number of marks.
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sloth1
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Thanks rickenram

We've been told only to wrote about a maximum of 3 points and try hit level 4 with all of them. I cant do it but manage to usually get level 3.
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rickenram
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^^^^^^i wrote the 23 mark in about 40 mins and the 18 mark in 30 mins, a little over time but good practice !!!
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AndSparkles
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(Original post by sloth1)
Thanks rickenram

We've been told only to wrote about a maximum of 3 points and try hit level 4 with all of them. I cant do it but manage to usually get level 3.
Wow, seriously? We've never been told to do less then 4...

(Original post by rickenram)
^^^^^^i wrote the 23 mark in about 40 mins and the 18 mark in 30 mins, a little over time but good practice !!!
That's not bad.. my problem is always noticing when I'm going off topic.. and then the waffling begins..
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firebus154
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yeah it's supposed to be a mark a minute, right?
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sloth1
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(Original post by firebus154)
yeah it's supposed to be a mark a minute, right?
Is it?! I got told to just spend half an hour on every question. Then again my teacher is the biggest waste of time and doesn't even understand the exam.
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AndSparkles
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(Original post by firebus154)
yeah it's supposed to be a mark a minute, right?
Erm.. but isn't there 90 marks and 120 minutes?
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hannahsl
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My writing gets so messy by the end of the exam! I tend to try and hurry up the first few questions so i have more time for the last one
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AndSparkles
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(Original post by hannahsl)
My writing gets so messy by the end of the exam! I tend to try and hurry up the first few questions so i have more time for the last one
I find my hand aches as I get towards the middle of a question, and then it just goes to pot from there!
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