1
1
BFF makes a range of computer screens that it sells to other manufacturers. The Managing Director has been
looking at BFF’s income statement. She is worried about the effects of an increase in the cost of materials.
She said: ‘Changes in technology have improved our production methods. BFF needs to remain competitive
as imports of computer screens are increasing.’ The Managing Director has to decide whether BFF should
increase its prices.
Do you think BFF should increase its prices? Justify your answer.
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[6]
[Total: 6]
2
2
BBT makes a range of breakfast cereals. One of BBT’s objectives is to act in an ethical way with all of its
stakeholders. The Marketing Director has been looking at BBT’s marketing strategy for some of its products.
BBT uses competitive pricing. She thinks that product A, one of its popular brands, is in the decline stage
of the product life cycle. She cannot decide what to do with product A.
Information about BBT’s products
Product A
Product B
Product C
Revenue 2016
$500 000
$360 000
$120 000
% Change in revenue
compared to 2015
-40%
+30%
+50%
Years in market
10
5
2
Identify and explain one advantage and one disadvantage to BBT of using competitive pricing.
Advantage:................................................................................................................................................
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Explanation:.............................................................................................................................................
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Disadvantage:...........................................................................................................................................
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Explanation:.............................................................................................................................................
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[6]
[Total: 6]
3
3
Cheung owns a small retail shop in the city centre selling fashion clothing for children. As it is a competitive
market, Cheung knows market research is important. Cheung is worried about the effect of an increase in
shop rent on his costs. Cheung said: ‘I will have to pay this higher rent as it is a good location. I need to
increase revenue or reduce other costs.’ Cheung buys all his supplies from a wholesaler located in a nearby
town. He is thinking of buying directly from a clothing manufacturer in another country.
Identify and explain two ways Cheung could increase revenue.
Way 1:.......................................................................................................................................................
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Explanation:.............................................................................................................................................
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Way 2:.......................................................................................................................................................
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Explanation:.............................................................................................................................................
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[6]
[Total: 6]
0
