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MK Pty Ltd is a successful chain of frozen yoghurt stores with low gearing - HSC - SSCE Business Studies - Question 22 - 2013 - Paper 1
Question 22
MK Pty Ltd is a successful chain of frozen yoghurt stores with low gearing. The owners are planning to take over a smaller chain which has poor human resource manage... show full transcript
Worked Solution & Example Answer:MK Pty Ltd is a successful chain of frozen yoghurt stores with low gearing - HSC - SSCE Business Studies - Question 22 - 2013 - Paper 1
Step 1
Outline TWO indicators MK Pty Ltd could use to assess the effectiveness of human resource management after the takeover.
Answer
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Staff Turnover: MK Pty Ltd can use staff turnover rates to gauge effectiveness. A reduction in turnover may indicate improved worker satisfaction and effective human resource strategies, while a high turnover rate may signal dissatisfaction.
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Absenteeism: Absenteeism metrics can serve as an indicator; high absenteeism rates typically reflect poor employee satisfaction and ineffective human resource management practices.
Step 2
Discuss ONE source of finance to fund the takeover.
Answer
A viable source of finance for the takeover is debt financing. This approach allows MK Pty Ltd to borrow funds, which can be paid back over time. Given their low gearing, this strategy aligns with their goal of expansion without significantly diluting ownership through equity financing. However, the company needs to ensure that the increased risk from debt does not outweigh the potential for growth and repayment capacity.