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John and Martin Quinn are organic farmers in Co - Leaving Cert Business - Question 8 - 2009
Question 8
John and Martin Quinn are organic farmers in Co. Wicklow. They supply organic vegetables and meat to local shops, restaurants and butchers. Their business is expandi... show full transcript
Worked Solution & Example Answer:John and Martin Quinn are organic farmers in Co - Leaving Cert Business - Question 8 - 2009
Step 1
Explain what is meant by 'Channels of Distribution'.
Answer
Channels of Distribution refer to the pathways through which products pass from producers to consumers. This includes various intermediaries such as wholesalers, agents, and retailers who facilitate the movement of goods. For John and Martin Quinn, the channel may involve direct selling to local shops, restaurants, and butchers.
Step 2
Step 3
Outline four factors that John and Martin would take into account in setting a suitable price for their products.
Answer
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Production Costs: All production, research, and development costs must be calculated to ensure profitability.
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Market Demand: Understanding the level of demand for organic products is crucial; higher demand may allow for higher prices.
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Competitor Pricing: They need to monitor competitors' prices to remain competitive in the market.
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Perceived Value: The perceived value of organic vs. non-organic products can impact pricing strategy, where organic products may command a premium.
Step 4
Describe two methods to improve their Credit Control system.
Answer
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Checking Creditworthiness: John and Martin should regularly assess the creditworthiness of their customers to prevent extending credit to risky clients.
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Incentives for Prompt Payment: Implementing discounts or other incentives for customers who pay within the credit terms can encourage timely payments.
Step 5
Outline two benefits of preparing a Cash Flow Forecast.
Answer
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Financial Planning: A Cash Flow Forecast helps predict cash inflows and outflows, enabling better financial planning and resource allocation.
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Decision Making: It serves as a tool for decision-making as it highlights periods of cash surplus or shortfall, assisting in strategic planning.
Step 6
Identify two matters that might be included in the Payments section of the Cash Flow Forecast.
Answer
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Operating Expenses: This may include wages, utilities, and other recurring costs associated with running the business.
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Loan Repayments: Any scheduled loan repayments will also need to be included to ensure that cash flow remains positive.