4. (a)
Discuss how the objectives of Extra Mozarella are likely to have changed from 1960 to 2000.
Comment
The objectives are likely to change from: survival
building a reputation
to control
and growth and then status.
(And then back to control as the organizations experienced problems.)
[4 to 5 marks]
– 10 – N02/370/S(2)M+
The answer discusses how and why the objectives are likely to change as the organization
grows. They are relevant to Extra Mozarella and appropriate to the time period.
[2 to 3 marks]
The answer describes how some of the objectives have changed over time and they are
relevant. Reference to the case study may be limited.
[1 mark]
A limited and general response.
(b) Explain why organizations often have cash flow problems, especially in the first year of
business.
for example:
start up costs
low customer base
poor credit terms
few sources of finance, etc. low sales
The above are especially true in the first year of business.
[3 to 4 marks]
[4 marks]
Explains the problems of a business in the first year of operation and why these are likely to
cause cash flow problems. There should be reference to the case study.
[1 to 2 marks]
The answer explains some cash flow problems. There may be limited reference to the first
year of the business and case study.
[5 marks]
funding control entrepreneurship Franchisees provide funds when they join and when they pay royalties. Gearing can thus be
kept at a relatively lower level. Expansion without a huge injection of capital.
the franchisor still has the ability to control the direction the business takes via the franchise
agreement i.e. franchiser does not run each business.
owners are more motivated
– 11 – N02/370/S(2)M+
(c) Assess the potential benefits for Vitella of expanding Extra
Mozarella via the franchise system. [6 marks]
Comment
Potential benefits to Vitella include:
Franchise and franchisor have an incentive to make the business a success. This can help
generate ideas.
[5 to 6 marks]
The answer assesses the main potential benefits of expanding via a franchise system. The
reference to the case study is appropriate.
[3 to 4 marks]
The answer shows an understanding of the relative importance of some benefits of the
franchise arrangement. There is some reference to the case study.
[1 to 2 marks]
The answer describes some benefits of expanding via the franchise system. The number of
benefits may be limited and lack relevance and reference to the case study.
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(d) Explain how an understanding of product portfolio technique (for
example Ansoff Matrix and Boston Matrix) could help Extra
Mozarella to overcome the problems they are experiencing. [5 marks]
Comment
For example, the existence of too many “Problem Children” and excessive New Product
Development seems apparent (lines 8-11). Recognition of this could encourage
rationalisation and avoid excessive NPD in the future.
High scoring candidates will identify the appropriate segments.
[4 to 5 marks]
Market growth
Ansoff Matrix
Boston Matrix
The answer explains how product portfolio technique could help overcome problems with
reference and appropriateness to Extra Mozarella. At the upper end there may be application.
[2 to 3 marks]
The answer attempts to explain how product portfolio technique could help overcome
problems. Reference and appropriateness to Extra Mozarella may be limited.
[1 mark]
A limited and general response.
2. (a)
Draw and label a product life cycle for Fit and Well from launch in
1980 to the mid 1990s. [3 marks]
– 6 – N03/370/S(2)M+
Sales
1980
maturity
1995 time
[3 marks]
Diagram and labelling is correct and consistent with the product life cycle for Fit and Well –
note that sales growth has declined – but this does not mean that sales have declined.
[1 to 2 marks]
Attempts to draw a suitable diagram, but labelling may not all be correct or inconsistent with
Fit and Well.
(b) Explain three factors that could account for the decline in sales growth in the mid 1990s.
Factors include:
level of competition
age structure of the population change in state of the economy change in tastes
[3 marks]
The question requires the above to be explained – so, for example “level of competition” may
have increased because new entrants recognised that the market is profitable – or (for
example) trade barriers have been reduced.
[3 marks]
Explains three relevant factors in detail. Reference is made to Fit and Well.
[1 to 2 marks]
Explains some relevant factors, though the explanation may lack detail. Reference to Fit and
Well may be limited.
N.B. A list gains a maximum of [1 mark] for a list of factors only.
growth
introduction
– 7 – N03/370/S(2)M+
(c) Design an appropriate marketing strategy for Fit and Well which will
enable it to be repositioned as a glucose energy drink for active and
busy people. [6 marks]
Suggestions include:
Price:
consistent with perception
Promotion:
sponsors major sports events
advertisements to feature sports
personality
Packaging: easy to
Product – examples could include:
drink Bottles:
new ingredient
varioussizes
Physical evidence –
Place – examples could include: examples could
sports centres supermarkets
include:
service stations
Fit and Well carrier
bag
[4 to 6 marks]
A detailed strategy is produced which is consistent with repositioning Fit and Well and
considers at least four elements of the marketing mix. Any examples given are suitable and
relevant to Fit and Well.
[2 to 3 marks]
A strategy is presented which may lack coherence and detail and/or suggestions are not
supported with convincing arguments. Relevance to Fit and Well is limited but some of the
Ps are used.
[1 mark]
A limited and general response.
(d) Use product portfolio techniques such as Ansoff’s Matrix and Boston Consulting Group
Matrix to:
1. (i) identify growth strategies and
2. (ii) analyse the existing product range.
A good answer will recognise that (for example):
1. (i) the directors have chosen market expansion, and that this is a less risky option
than, for example, diversification.
2. (ii) the company should consider abandoning any products that fit into the dog
category (Yogi Milk) and refocus energy on potential rising stars (Fresh and Fruity) –
or protecting cash cows (Fit and Well). Problem child (Grubble Tea) may need
resources to fend off competitors.
[6 to 8 marks]
A suitable application of product portfolio techniques is used to identify the growth strategies
available and to analyse the existing product range. The analysis is detailed and relevant.
[3 to 5 marks]
Uses product portfolio techniques to identify growth strategies available to Fit and Well. The
product range is also analysed, though the analysis may be limited. At the lower end of the
range product portfolio techniques may be limited.
[1 to 2 marks]
A limited and general response.