BACCALAUREATE INTERNATIONAL INTERNACIONAL
BUSINESS AND MANAGEMENT
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–3– 1. (a) Explain what is meant by the phrase strong cash flow position.
N04/370/S(2)M+ [2 marks]
A strong cash flow position occurs when the balance between inflows and outflows of cash is favourable and enables the business to meet its daily cash needs without cash problems. [2 marks] A full explanation of the strong cash flow is evident. [1 mark] Some explanation of the strong cash flow is evident. (b) Explain two potential advantages for Bcool of aiming their product at a specific group such as “the 15-25 year old market”. Answers might include risk spreading (since it is a new market) increase product portfolio; more options for profit easier to identify and select celebrities for promotion easier to identify appropriate media for advertising less “waste” in advertising effort. For example a good response will argue that this new market segment could offer opportunities for greater profits because demographic changes could increase the market size in the 15-25 year old market and that having a clear definition of your target group will provide opportunities to ensure that the marketing mix is tailored to this market segment (young, internationally minded). [3 to 4 marks] Identifies two advantages and offers a good explanation of two advantages in relation to the case study. [1 to 2 marks] Identifies at least one advantage and offers an explanation. [4 marks]
Analyse three factors that could allow Bcool to set its prices “10-15 % higher than its closest rivals”.
Relevant factors include reputation of Superscent/Bcool (and ensuring this reputation is maintained) target market is able to pay premium prices product position is exclusive and differentiated from rivals using promotions to sustain demand any other relevant factor. For example a candidate has achieved a high level of attainment if he/she argues that consumers may expect to pay a premium price because this is consistent with the image and distribution outlets of the organization. The higher price is entirely consistent with the reputation and position of the organization. [5 to 6 marks] Three suitable factors have been identified and analysed and linked to the case. [3 to 4 marks] At least two factors have been identified but development/analysis is limited. There should be some reference to the case. [1 to 2 marks] Candidate identifies at least one factor(s) but there may be no attempt to analyse or apply it to the case. (d) Discuss the potential advantages and disadvantages of selling “Bcool through its (Superscent’s) existing network of retail outlets”. Potential advantages include avoids costs associated with setting up new outlets staff already have experience selling cosmetics existing outlets may be in appropriate locations known to existing customers. Potential disadvantages include may dilute the image of the outlets as “exclusive outlets” outlets may be in a “second best” location (since the locations were originally chosen for a different segment) staff skills may not transfer between market segments. A high level of attainment has been achieved if the candidate argues (for example) that setting up new outlets would involve considerable financial costs. In addition training existing staff to introduce the new range should be straightforward because this is a related market. However, the new market segment may be inconsistent with the decor of the existing outlets or there may be a “clash” in terms of customers...