Business growth and integration

Text 1 _{Adapted from uk.linkedin.com/company/lidl-gb and www.google.com/search?q=how+many+new+stores+did+lidl+open+in+the+uk+in+2023&rlz=1C1GCEO_. Item removed due to third party copyright restrictions.} Lidl Ltd

Explain one purpose of planning business activity.

Explain three advantages for Lidl of operating as a private limited company.

Analyse on e likely reason why Lidl expands by using organic growth.

Other than pay, identify two financial methods of motivation.

Evaluate whether Lidl should continue to pay employees a higher wage rate than competitors.

Two vets agree to combine their practices and operate as one business.

This is an example of a:

A diversification

B horizontal takeover

C merger

D vertical takeover

Text 1

Nina’s Knitting Supplies

Nina runs a successful business selling knitting wool and sewing products. She opened her first shop 15 years ago. The business has grown organically and now sells products from 10 shops and a website. Nina uses market segmentation to target customers. Nina employs 80 people. She works hard to meet the shared objectives of her employees, as well as external stakeholder groups such as customers, suppliers, lenders and the local community.

Nina produces a weekly update that is sent by email to all employees every Friday. The updates contain information about the future development of the business, plus other stories of interest to employees. Recent stories include congratulating an employee on the birth of a child and the charity fundraising activities of one shop.

Nina plans to develop the business further over the next five years, especially as knitting is becoming an increasingly popular pastime. This has led to more competitors entering the market.

Explain one way that a business can segment its market.

Explain how the objectives of three external stakeholder groups can be satisfied by Nina’s Knitting Supplies.

Analyse one likely reason why Nina sends a weekly update to her employees.

Identify two methods of external growth that a business could use.

Evaluate whether or not Nina’s Knitting Supplies should continue to grow organically.

Identify one likely objective of an employee.

Analyse two disadvantages for Shinz Ltd of operating as a private limited company.

Tom is considering whether to use competitor pricing or price skimming for the new ‘resin polish’ service.

Analyse one advantage for Shinz Ltd of using each pricing method.

Competitor pricing

Price skimming

Recommend which of the two pricing methods Shinz Ltd should use. Give reasons for your answer.

* Evaluate, with reference to the data in Text 3, whether Shinz Ltd should merge with

Littlelong Motors Ltd.

Eve is a restaurant owner. She has successfully used social media to attract a lot of new customers to eat in her restaurant.

This is an example of:

A diversification

B invention

C organic growth

D skimming

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Text 2

Greggs

Greggs is a modern ‘food-on-the-go’ retail brand. It specialises in selling sandwiches, cakes, pastries and pies. Most of these are made by Greggs, using raw materials such as flour, meat and yeast. The company opened its first bakery 80 years ago and has since grown significantly. It currently has 20 000 employees. Greggs’ aim is to become the customer’s favourite for ‘food-on-the-go’ in the UK. This sector is growing quickly and is forecast to be worth £23.4 billion by 2024 (up from £18.5 billion in 2019).

According to The Vegan Society, the number of people in the UK choosing a vegan diet has increased during recent years (see Fig. 1).

The number of vegans in the UK

Using the market data, Greggs responded to this change by launching vegan sausage rolls in January 2019. The publicity generated helped Greggs’ total sales to increase by 9.6% in its next seven weeks of trading. Following this success the business launched other products, including vegan doughnuts and vegan steak bakes, based on consumer demand.

Managers at Greggs constantly monitor changes in consumer tastes. Similarly, they keep up-to-date with changes in employment law. Greggs’ managers also take pride in the business being named one of the happiest places to work in the UK. Greggs offers many ways of working, including part-time roles.

Explain one way that employment law may affect Greggs’ employment of workers.

Other than the government, explain one external stakeholder’s influence on Greggs.

Explain the purpose of planning business activity for Greggs’ managers.

Part-time is one way of working.

State two other ways of working.

Analyse one benefit for Greggs of using market data to create new products.

The managers of Greggs are considering two options for business growth.

Analyse one benefit for Greggs of business growth using each of the following methods.

Merger with a flour producer

Takeover of a rival ‘food-on-the-go’ retail brand

Recommend which of the two methods of business growth Greggs should use. Give reasons for your answer.