Kingland Office Supplies operates in a large NSW city in a highly competitive market. A paid manager is responsible for the day-to-day running of the business. The owners are concerned about the low profitability of the business. Investigations by the owners indicate the following problems: - customers find the product mix unappealing - poor management of cash flow. - poor accounts receivable turnover compared to similar businesses. The manager has also identified low prices offered by larger competitors as a cause of the low profitability. You have been employed as a consultant by the owners. Write a report to the owners recommending marketing and financial management strategies to improve the performance of the business.

Kingland Office Supplies operates in a large NSW city in a highly competitive market - HSC - SSCE Business Studies - Question 26 - 2013 - Paper 1

Question 26

Kingland Office Supplies operates in a large NSW city in a highly competitive market. A paid manager is responsible for the day-to-day running of the business. The ... show full transcript

Worked Solution & Example Answer:Kingland Office Supplies operates in a large NSW city in a highly competitive market - HSC - SSCE Business Studies - Question 26 - 2013 - Paper 1

Step 1

Recommend marketing strategies to address the business problems identified in the hypothetical situation.

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Answer

Marketing Strategies to Address Business Problems

1. Analyze Customer Preferences

Understanding what customers value in the product mix is crucial. Conduct surveys or focus groups to gather insights on customer preferences and adjust the product offerings accordingly.

2. Diversify Product Mix

Based on feedback, create a more appealing and diverse product mix that caters to different customer segments. This may include introducing new products or bundling existing ones to enhance perceived value.

3. Implement Promotions and Advertising

Engage in targeted marketing campaigns using social media, email marketing, and local advertising to promote the unique aspects of the product mix. Special promotions can attract attention and increase foot traffic.

4. Enhance Customer Experience

Invest in training staff to improve customer service. A positive shopping experience can lead to repeat business and increased customer loyalty.

5. Leverage Online Presence

Establish a strong online presence through a user-friendly website and social media channels. Offering an online store can attract more customers and facilitate easier browsing of the product selection.

Step 2

Recommend financial management strategies to address the business problems identified in the hypothetical situation.

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Answer

Financial Management Strategies to Enhance Business Performance

1. Improve Cash Flow Management

Develop a budget that closely tracks cash flow. Regularly review it to identify any discrepancies between projected and actual figures, making adjustments where necessary.

2. Optimize Accounts Receivable Turnover

Implement stricter credit policies and swift invoicing processes to improve cash collection on accounts receivable. Consider offering discounts for early payments to entice customers to settle invoices more quickly.

3. Cost Control

Conduct a thorough analysis of operating costs. Identify areas where expenses can be reduced without compromising the quality of products or services. This may involve renegotiating contracts with suppliers or reducing overhead costs.

4. Pricing Strategy

Evaluate pricing strategies in comparison with competitors. While it is essential to remain competitive, avoid a price war that can further erode profit margins. Instead, focus on value-based pricing where customers perceive the product as being worth its price.

5. Regular Financial Review

Schedule regular financial reviews to assess profitability and make informed decisions. This will allow the owners to respond quickly to any financial issues that may arise, ensuring the long-term viability of the business.