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MK Pty Ltd is a successful chain of frozen yoghurt stores with low gearing - HSC - SSCE Business Studies - Question 22 - 2013 - Paper 1
Question 22
MK Pty Ltd is a successful chain of frozen yoghurt stores with low gearing. The owners are planning to take over a smaller chain which has poor human resource manage... show full transcript
Worked Solution & Example Answer:MK Pty Ltd is a successful chain of frozen yoghurt stores with low gearing - HSC - SSCE Business Studies - Question 22 - 2013 - Paper 1
Step 1
Outline TWO indicators MK Pty Ltd could use to assess the effectiveness of human resource management after the takeover.
Answer
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Staff Turnover: MK Pty Ltd could use staff turnover as an indicator of human resource effectiveness. A high turnover rate may suggest dissatisfaction among employees and indicate potential issues in human resource practices. Reducing this rate post-takeover can demonstrate improved employee satisfaction and retention strategies.
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Absenteeism: Another key indicator is absenteeism, which refers to the average number of employee absences. A high rate of absenteeism may signal low morale or other problems related to human resource management. Monitoring this can help assess workers' satisfaction and overall management effectiveness.
Step 2
Discuss ONE source of finance to fund the takeover.
Answer
A suitable source of finance for the takeover could be long-term debt financing. This involves obtaining loans or issuing bonds that need to be paid back over an extended period, which allows MK Pty Ltd to fund the acquisition without immediately impacting cash flow significantly. While this option carries the risk of increased debt, it can be advantageous as it allows the company to leverage its existing operations for growth. Proper planning and analysis are essential to ensure that anticipated increases in revenue can cover the debt repayments.