A-level BUSINESS Paper 3 Business 3. PREDICTOR QUESTIONS. HIGHLY EXAMINABLE

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Balanced Scorecard The company’s use of Kaplan and Norton’s Balanced Scorecard has been credited with contributing to its success. The performance of every business division is assessed from fo... ur perspectives (see Appendix D). This has allowed the business to avoid short-termism in its approach to decision-making. A new boss Martin Smith retired at the end of 2019. He has been replaced by Elaine Filer, Sunport PLC’s former Chief Finance Officer. Elaine has a reputation as a leader who makes decisions herself and then tells managers what to do. She is expected to drive through a strategic change focused on increasing profit margins throughout the business. Her view is that personal care is the most successful division in Europe. Elaine wants every division in the business to achieve an operating profit margin of 12%. This should help to please a small group of unhappy shareholders who are concerned that the company’s returns could be higher if the senior managers prioritised profit over other social responsibilities. A strategy for the future Although the company is not expected to abandon its socially responsible approach, Elaine has announced her intention to introduce cost reduction measures including: • centralising decision-making at Head Office, which would remove some duplicated activities, such as the selection of suppliers • changing to cheaper suppliers • reducing spending on initiatives designed to improve the company’s environmental performance, including abandoning the company’s current aim of only using recyclable materials in its packaging. 30 35 40 45 Appendix A Sunport PLC selected financial results 2016 2017 2018 2019 Sales turnover (£bn) 48 51 52 54 Operating profit (£bn) 4.6 4.5 4.8 5.1 Average operating profit margin of major rivals in 2019 = 12%4 IB/G/Jun20/7132/3 Appendix B Sunport PLC market research data on food buying in various regions (2020) Three most important issues for food shoppers PLC’s Index food of Sunport prices First Second Third (Europe = 100) Europe Taste Recyclable packaging Value for money 100 North America Branding Speed of preparation Taste 118 Rest of the world Value for money Taste Branding 84 Appendix C Quotes from a recent article on the global food industry in a business magazine ‘food manufacturers who have centralised manufacturing facilities have found any economies of scale in production are cancelled out by increased transport costs’ ‘transporting food products long distances is very expensive as products can be bulky, fragile, perishable or require refrigeration’ Appendix D Selected data for Sunport PLC – European region, 2019 Perspective Measure Household cleaning Personal care Food Financial Operating profit margin (%) 9.7 12.2 8.8 Learning and growth Staff retention (%) 88 74 76 % of employees who are proud to work for Sunport PLC 90 65 85 Internal processes % of recyclable materials used in packaging 100 55 85 New products in development 12 10 12 Customers % of customers who would recommend Sunport PLC products to a friend 90 80 75 [Show More]

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