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Beautiful Buds plc is a company which grows plants that are sold to garden centres throughout the UK - OCR - GCSE Business - Question 18 - 2019 - Paper 1
Question 18
Beautiful Buds plc is a company which grows plants that are sold to garden centres throughout the UK. Beautiful Buds plc has a new Managing Director who has proposed... show full transcript
Worked Solution & Example Answer:Beautiful Buds plc is a company which grows plants that are sold to garden centres throughout the UK - OCR - GCSE Business - Question 18 - 2019 - Paper 1
Step 1
Analyse two benefits for Beautiful Buds plc of growing externally.
Answer
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Increased Market Share: By merging with Green Gardens plc, Beautiful Buds plc can significantly increase its market share. This vertical integration allows the company to have access to a broader range of customers, thereby enhancing sales and potentially leading to higher revenues. It can leverage Green Gardens' established presence in the market, allowing Beautiful Buds to promote its plants more effectively to a wider audience.
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Cost Savings and Efficiency: The merger can result in operational efficiencies, such as reduced costs in sourcing and distribution. Combining resources may allow Beautiful Buds to streamline its operations, reduce overheads, and eliminate redundancies, ultimately leading to increased profitability.
Step 2
Identify one way that Beautiful Buds plc could have grown organically.
Answer
Beautiful Buds plc could have grown organically by expanding its product line to include more diverse plant varieties or gardening products. This strategy would not only attract a broader customer base but would also enhance brand loyalty among existing customers, as they would have a greater range of options available.
Step 3
Analyse the impact on two stakeholder groups of the proposed vertical merger between Beautiful Buds plc and Green Gardens plc.
Answer
Stakeholder Group 1: Employees
The merger may lead to job losses due to restructuring; however, it could also offer new opportunities for employees involved in the newly formed organization. Some employees may experience increased job security due to the larger scale of operations.
Stakeholder Group 2: Customers
Customers may benefit from a wider range of plants and products available as a result of the merger. They could enjoy improved services and potentially better prices due to the economies of scale achieved through the merger.
Step 4
Discuss, with reference to the data in Text 3, whether Beautiful Buds plc should go ahead with the plan to change its organisational structure.
Answer
Beautiful Buds plc should consider the proposed change to its organisational structure to improve efficiency and competitiveness in the market. The estimated redundancy costs of £200,000 must be weighed against the potential long-term benefits of a more streamlined and responsive structure. The analysis suggests that eliminating unnecessary layers of management can foster quicker decision-making and increase overall productivity.
While there are immediate costs associated with restructuring, the potential for enhanced operational effectiveness and financial performance in the long run could justify the investment. However, careful attention must be paid to employee morale, as substantial restructuring risks creating uncertainty among staff.