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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: Enhancing productivity can help GSA lower operational costs, which means that resources are utilized more efficiently.
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Leads to higher profit per unit: As productivity improves, each unit produced costs less, potentially leading to higher profit margins if selling prices remain the same.
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Could provide scope to lower prices: Improved productivity may offer GSA the ability to lower product prices, making them more competitive in the market.
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Will allow for more retained profit to fund new products: Higher productivity could free up resources and profits that GSA can reinvest into developing new products or enhancing existing ones.
Step 2
Possible sources of balance:
Answer
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GSA has little competition: If GSA operates in a market with minimal competition, high productivity might not be as crucial as the quality of products or branding.
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Targeted customer base willing to pay high prices: If GSA's customers are less price-sensitive, improvements in productivity might have a reduced impact on their purchasing decisions.
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Other factors could be more important: Elements such as promotion, product quality, and customer service might play larger roles than productivity in influencing sales and profitability.