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Live the Adventure Ltd is deciding whether to expand its existing operations or to offer winter activity holidays in Europe in order to grow - Edexcel - A-Level Business - Question 1 - 2019 - Paper 3
Question 1
Live the Adventure Ltd is deciding whether to expand its existing operations or to offer winter activity holidays in Europe in order to grow. Use the data in Extrac... show full transcript
Worked Solution & Example Answer:Live the Adventure Ltd is deciding whether to expand its existing operations or to offer winter activity holidays in Europe in order to grow - Edexcel - A-Level Business - Question 1 - 2019 - Paper 3
Step 1
Calculate the values of A and B
Answer
To find the values of A and B, we need to calculate the 4 Quarter Moving Average for 2016 Q4 and 2017 Q2 using the quarterly totals from the previous quarters. For 2016 Q4, the total sales for the past four quarters are 590 (2016 Q1) + 570 (2016 Q2) + 550 (2016 Q3) + 530 (2016 Q4) = 2240. Thus, A = 2240 / 4 = 560.
For 2017 Q2, the total for the previous four quarters is 630 (2017 Q1) + 610 (2016 Q4) + 590 (2016 Q3) + 570 (2016 Q2) = 2400. Thus, B = 2400 / 4 = 600.
Step 2
Calculate the values of C and D
Answer
For the 8 Period Total for 2016 Q4, we sum the quarterly totals for each quarter in 2016:
- 530 (Q1) + 550 (Q2) + 570 (Q3) + 590 (Q4) = 2240.
Thus, C = 2240.
For the 8 Period Total for 2017 Q2, we sum the quarterly totals from 2017 back to the most relevant quarters:
- 610 (Q1) + 590 (Q4) + 570 (Q3) + 550 (Q2) + 530 (Q1) + 510 (Q4) = 3310.
Thus, D = 3310.
Step 3
Evaluate growth options
Answer
Live the Adventure Ltd should evaluate the option to expand into winter activity holidays in Europe. Given that the data indicates consistent growth in quarterly sales, expanding into a market with a higher demand, such as winter activities, could diversify revenue.
Additionally, winter activity holidays would allow the company to mitigate revenue losses during the summer months, addressing seasonal variances. However, this option should be balanced against the need for adequate resources and staff training, as the company has limited experience in this area.
Alternatively, improving existing operations could consolidate resources and improve efficiency, which is crucial given the competitive environment. Investing in staff well-being and retention may yield long-term benefits, ultimately enhancing service quality.