Business studies help plsWatch
Gnaw Chocolate is a company that was founded 10 years ago by Matt and Teri Clarke. Based in Norfolk, the business produces high quality chocolate bars, including some with unusual flavours, such as banoffee pie and lemon meringue. It prides itself on the use of high quality ingredients and is committed to using cocoa from suppliers in West Africa and Brazil, which pay cocoa farmers a fair price.
Despite competition in the market, Gnaw Chocolate proved a huge success with its chocolate bars being sold in over 700 outlets around the UK within 3 years of its launch. Matt and Teri, eager to grow the business, subsequently launched a drinking chocolate range. Such was the demand for their products, they decided to investigate overseas markets and were delighted to find out that quality British products were in high demand in markets around the globe.
Matt and Teri want to expand the business further and are considering the different methods of growth available to the company. Matt feels organic, overseas expansion is the most effective way for Gnaw to meets its growth plans. However, a takeover opportunity has recently become available which has interested Teri. Thompson’s Chocolates is an established manufacturer of chocolate and has a network of shops across the UK, which Teri believes could be rebranded as Gnaw outlets.
To date, expansion of Gnaw Chocolate has always been financed through retained profit and loan capital and, as the only shareholders of the business, Matt and Teri are keen to keep control. As a result, they are reluctant to float the business on the stock market to raise the finance necessary to fund a possible takeover.
1. Outline one drawback to Gnaw Chocolate of organic growth (2)
2. Analyse the benefit to Gnaw Chocolate of growth through developing new products (6)
• When a business expands it's operations rather than using takeovers and mergers
• Slow growth since Gnaw will have to expand on its own and without the use of a takeover or merger whereas the shareholders (Matt and Teri in this case) may prefer more rapid growth of revenues and profits
2) 2 marks for defining "new product development" and then 2 marks for 1 benefit and finally 2 marks for another benefit (stated and well explained)
• this is the process of introducing a new product into the market
• Wide variety of goods and services for customers to choose from which will also help Matt and Teri expand their product portfolio
• Increase in revenue since there will be greater sales due to an introduction of several new products
*** I have just given short explanations so you'll have to explain it all in context (so according to the extract / article - not a general explanation) ***