OCR Business Studies F297 2016 - VGL Case Study

Hi everyone,

Has anyone seen the pre-release case study for this year for the OCR a level in Business Studies? If so what do you think of it?

Thanks Guys!

Hi everyone,

Has anyone seen the pre-release case study for this year for the OCR a level in Business Studies? If so what do you think of it?

Thanks Guys!

Although it may seem quite a stupid question but can anyone tell me who VGL's customers are? thanks

I think their customers are businesses who want waste collected. Not sure if that's right though!

I'm thinking the questions that come up will be on whether to diversify into textiles, recommending strategies to improve liquidity, how a rise in interest rates will affect VGL, how their stakeholders will view VGL's attempts to improve its ethical reputation. They're what my teacher has said anyway, but there could be ones related to achieving objectives.

Hope this helps!

thanks!! i still find the case study quite confusing to be honest. i think the customers are businesses and local authorities who want waste collected and then there's businesses who buy their commodities... so they have customers for both waste collection and their commodities?

Is that including the spot markets? I think so. But VGL is also a customer which means just a little bit more unnecessary complication

Definitely left revision too late for this haha. the case study states that VGL's materials are commodities but then it says they sell on spot markets? can someone clear this up for me

It seems textile diversification is an almost definite to come up so does anyone have notes on the positives and negatives of VGL doing it OR the impact on stakeholders if they did?

It seems textile diversification is an almost definite to come up so does anyone have notes on the positives and negatives of VGL doing it OR the impact on stakeholders if they did?

Although it may seem quite a stupid question but can anyone tell me who VGL's customers are? thanks

Definitely left revision too late for this haha. the case study states that VGL's materials are commodities but then it says they sell on spot markets? can someone clear this up for me

what impact would a diversification into the textiles market have on the stakeholders of vgl?

Government:
Is a way of expansion so vgl would be paying more tax
since more jobs will be provided, it should reduce unemployment, leading to more positive thinking about vgl and its activities - better reputation
has quite a few local authority/government contracts so might be an opportunity for a new contract, depending on how good their service is and their reputation

local community:
Provides more jobs in the local community which should help reduce unemployment levels
diversification would cost money which may make it harder for the employees to find time doing their charitable community initiatives - environment may suffer slightly as the excess profit, that would be spent on the community initiatives, would be spent on extra costs e.g. Recruitment, training etc.

Suppliers:
Demand for new machinery and equipment will increase for suppliers within the textile industry
should increase their revenue, meaning that vgl may not need such long trade credit periods
suppliers, within the waste services industry that vgl currently provides, may face smaller orders etc. From vgl since they will be separating their income into both waste and textiles, and won't have enough money to contribute the same amount of orders for waste at the same time.

Employees:
Can gain new skills.
Increases job variety (one of herzberg's hygiene factors)
employees using textiles machinery should receive greater pay - financial incentive
could create conflict between staff due to differences in pay
would need extra training
is a large change in a business that may not be appreciated by everyone, leading to possible some workers leaving, increasing the labour turnover rate and associated costs related to recruitment & training - needs to be implemented effectively to prevent reduced workforce effectiveness e.g. Absenteeism

shareholders:
Should help to achieve objective of raising revenue by 6%, allowing vgl to make a greater profit, which should result in higher dividends. This should also raise share value and therefore the worth of the business.
May be faced with lower dividends in the short term, although the high dividends they've had in the past should make up for this.
Risks overtrading because of bad liquidity, which would reduce profits

financiers / lenders
having rising profitability should mean they can pay off an debts faster, although costs would rise through diversification
their interest cover has doubled between 2014 and 2015 meaning that they should be able to borrow a loan more easily since there is a lower risk involved
their bad liquidity may put off banks from lending them money because bad cash flow is one of the main reasons for a business going bankrupt

customers:
Would increase the range of services available to customers - can find a service that will suit a greater variety of customers, thus increasing the customer base
may have to pay higher prices for textiles services as it is more of a niche market (price inelastic)
price for the waste services they currently offer should remain low because of competitors, even though vgl will have to raise higher revenue, so may have to charge higher prices later to cover costs.

Sorry it's so long! Hope it helps a bit. Not sure whether all of the information is appropriate, but for this question you'd probably have to make a judgement on which stakeholder will be impacted the most. You could even make a judgement saying something along the lines of whether they should diversify because of how much the stakeholders will be affected, and because of how much this will influence business success,

have you seen the APT pack? it has all the predicted questions