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Using your knowledge of business, assess the importance to GSA of improving its productivity. - Edexcel - GCSE Business - Question 10 - 2017 - Paper 1
Question 10
Using your knowledge of business, assess the importance to GSA of improving its productivity.
Worked Solution & Example Answer:Using your knowledge of business, assess the importance to GSA of improving its productivity. - Edexcel - GCSE Business - Question 10 - 2017 - Paper 1
Step 1
Reasons why improved productivity may be important:
Answer
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Will reduce costs: Improving productivity often leads to lower production costs per unit, which can increase profit margins. This can be particularly beneficial for GSA if they can produce more (or better quality) output for the same or lower costs.
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Leads to a higher profit per unit: With improved productivity, GSA can potentially increase their prices or maintain current prices while reducing costs, leading to higher profit per unit.
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Could provide scope to lower prices: By reducing production costs, GSA can offer lower prices to consumers, which may improve market share and attract more customers.
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Will allow for more retained profit to fund new products: Higher productivity can free up capital that can be reinvested into research and development for new products, helping GSA to innovate and remain competitive.
Step 2
Possible sources of balance:
Answer
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GSA have little competition: If GSA operates in an environment with minimal competition, productivity improvements may hold less significance if they can charge higher prices based on low market pressure.
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The part of the market targeted has a willingness to pay high prices: If GSA targets a market segment that prioritizes quality over price, improving productivity may not be as critical as maintaining product quality or brand reputation.
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Other factors may be more important: Elements like branding, product quality, and effective promotion can significantly impact GSA's overall success, sometimes outweighing the advantages gained from improved productivity.