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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: By improving productivity, GSA can produce goods or services more efficiently, thus lowering overall operational costs.
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Leads to a higher profit per unit: Increased productivity allows GSA to maximize output, resulting in higher profits as the cost of production is spread over more units.
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Could provide scope to lower prices: Higher efficiency enables GSA to reduce prices, potentially attracting more customers and increasing market share.
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Will allow for more retained profit to fund new products: Enhanced productivity generates additional profits which can be reinvested to develop new products or improve existing ones.
Step 2
Possible sources of balance:
Answer
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GSA has little competition: If GSA operates in a niche market with few competitors, the urgency to improve productivity may be less pressing.
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The part of the market targeted has a willingness to pay high prices: Even with lower productivity, GSA may sustain profits if its targeted customer base values the product highly and is willing to pay premium prices.
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Other factors may be more important: Factors such as promotion, product quality, and branding might outweigh productivity improvements in terms of impact on the company's overall success.