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XYZ Ltd has been sourcing, packaging and marketing frozen vegetables in NSW for the past 20 years - HSC - SSCE Business Studies - Question 26 - 2010 - Paper 1
Question 26
XYZ Ltd has been sourcing, packaging and marketing frozen vegetables in NSW for the past 20 years. Until recently XYZ Ltd has had 20% market share and its eight dome... show full transcript
Worked Solution & Example Answer:XYZ Ltd has been sourcing, packaging and marketing frozen vegetables in NSW for the past 20 years - HSC - SSCE Business Studies - Question 26 - 2010 - Paper 1
Step 1
Outline TWO external influences that could have been sources of change in this business.
Answer
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Economic Factors: Economic downturns or fluctuations in the market can influence consumer spending behavior, leading to reduced demand for frozen vegetables. A rise in commodity prices may also increase operational costs, affecting profitability.
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Regulatory Changes: Changes in food safety regulations and packaging laws can impact production processes. Compliance with new regulations may require significant adjustments in operations, resulting in increased costs and potential supply chain disruptions.
Step 2
Discuss ONE product strategy that the business could use to achieve its marketing objective.
Answer
XYZ Ltd could adopt a differentiation strategy focused on offering high-quality, organic frozen vegetables. By emphasizing superior product quality and nutritional benefits, XYZ Ltd can attract health-conscious consumers and create a strong brand identity. Enhancing marketing efforts through transparent sourcing information and improved packaging design can help in regaining market share.
Step 3
Propose and justify ONE effective cash flow management strategy and ONE effective profitability management strategy to solve the problems of XYZ Ltd.
Answer
For cash flow management, XYZ Ltd should implement a robust accounts receivable management strategy. This could involve offering discounts for early payments or tightening credit terms, ensuring faster collection of receivables. Such measures can improve cash flow and stabilize operational finances.
In terms of profitability management, XYZ Ltd should consider optimizing its product line by eliminating underperforming products and focusing on best sellers. This streamlining can reduce costs associated with low-demand items and enhance overall profitability by reallocating resources to high-margin products.