SuperToys Ltd, a large retail chain with 45 shops throughout Ireland, had sales of €100 million in 2011 - Leaving Cert Business - Question C - 2012
Question C
SuperToys Ltd, a large retail chain with 45 shops throughout Ireland, had sales of €100 million in 2011. It has just commissioned a firm to design and manufacture a ... show full transcript
Worked Solution & Example Answer:SuperToys Ltd, a large retail chain with 45 shops throughout Ireland, had sales of €100 million in 2011 - Leaving Cert Business - Question C - 2012
Step 1
Ambition and the desire to build an empire
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Answer
The owners or managers of SuperToys Ltd may be driven by ambition to expand the company. This desire can lead them to pursue growth opportunities, which may enhance their reputation and place in the market.
Step 2
Diversification
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By launching a new range of soft toys, SuperToys Ltd can spread its risk and reduce dependency on its current product lines. This diversification allows the company to cater to different segments of the market, thereby potentially increasing their revenue.
Step 3
Protecting essential stock of supplies
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Integrating their supply chain can ensure that SuperToys Ltd secures essential stocks. This strategy may reduce costs and the risks associated with supply chain disruptions.
Step 4
Economies of scale
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As SuperToys Ltd expands, it may benefit from lower costs per unit through bulk purchasing, leading to higher profit margins. With increased production, the company can negotiate better deals with suppliers.
Step 5
Entering new markets
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Opening a shop in the UK represents a strategic move into a new market. This expansion can create additional revenue streams and reduce reliance on the Irish market.
Step 6
Competitive advantage
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By merging with or acquiring competitors, SuperToys Ltd could enhance its market position. This strategy can eliminate threats and leverage additional resources to foster growth.
Step 7
Market demand for baby products
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The market for baby toys is robust and resistant to economic downturns. By introducing new products, SuperToys Ltd may position itself to capitalize on this consistent demand.
Step 8
Profitability/financial strength
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Strong financial performance enables SuperToys Ltd to invest in growth initiatives. This financial foundation supports their expansion efforts into new markets and product lines.
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