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Table 2 contains information about Mind Candy’s performance in 2013 - Edexcel - GCSE Business - Question 5 - 2019 - Paper 1
Question 5
Table 2 contains information about Mind Candy’s performance in 2013. Sales revenue £30 560 692 Gross profit £22 190 385 Other operating expenses and interest £25... show full transcript
Worked Solution & Example Answer:Table 2 contains information about Mind Candy’s performance in 2013 - Edexcel - GCSE Business - Question 5 - 2019 - Paper 1
Step 1
Step 2
Using the information in Table 2, calculate, to 2 decimal places, Mind Candy’s gross profit margin.
Answer
The gross profit margin can be calculated using the following formula:
ext{Gross Profit Margin} = rac{ ext{Gross Profit}}{ ext{Sales Revenue}} imes 100 ext{\%}Substituting in the given values:
ext{Gross Profit Margin} = rac{£22,190,385}{£30,560,692} imes 100 ext{\%} \\ ext{Gross Profit Margin} = 72.55\% ext{ (to two decimal places)}Thus, Mind Candy’s gross profit margin is 72.55%.
Step 3
Analyse the impact on Mind Candy of changing its main business objective to survival.
Answer
Changing the main business objective from growth to survival has significant implications for Mind Candy.
Firstly, prioritizing survival means focusing on maintaining cash flow and minimizing costs. This could involve cutting down on expenditures such as marketing and development for new products, which may stall innovation and limit future growth opportunities.
Additionally, resources might be redirected towards stabilizing existing products and ensuring customer retention. This could enhance customer loyalty but might also limit the company's ability to expand into new markets or demographics.
Moreover, adopting a survival focus may lead to a more conservative approach in decision-making, reducing risk-taking behavior. While this could help in sustaining operations in the short term, it might prevent Mind Candy from capitalizing on potential opportunities that could lead to recovery and growth.
In conclusion, while shifting to a survival objective can help Mind Candy stabilize its financial situation, it may hinder long-term growth and product development.