Resource Management | Edexcel A Level Business Exam Questions & Answers 2015 [PDF]

1

4 marks

Read the following extracts (E to H) (opens in a new tab) before answering

Using the data in Extract F, explain one implication of the level of capacity utilisation for the soft drinks manufacturer A, compared to B. You are advised to show your working

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10

4 marks

Read extracts A to H before answering questions

Extract E
PulseTech plc
PulseTech plc is a UK-based public limited company that designs and sells wearable technology products, including fitness trackers and smart health monitors. Its products are sold online and through electronics retailers in the UK, Europe and North America.
PulseTech’s strategy focuses on innovation and data analytics. Its products allow users to track physical activity, sleep patterns and heart rate. The business invests heavily in research and development (R&D) to differentiate its products and maintain a competitive advantage.

Extract F
PulseTech plc – selected financial information (2023)
PulseTech’s directors are under pressure from shareholders to improve profitability, following a slowdown in revenue growth during 2023.

Extract G
Production capacity and outsourcing
PulseTech currently assembles its products at a factory in Eastern Europe. The factory is operating at 92% capacity utilisation.
Demand forecasts suggest that sales could increase by up to 30% over the next two years if PulseTech launches a new health-monitoring device. To meet this demand, PulseTech is considering two options:
Expanding its existing factory
Outsourcing production to a specialist electronics manufacturer in Asia
Outsourcing would reduce PulseTech’s control over production but could lower unit costs.

Extract H
The global wearable technology market
The global wearable technology market has grown rapidly over the past decade. The market was valued at $61.3bn in 2020 and is forecast to reach $150.6bn by 2030, representing strong long-term growth.
Growth is driven by increased health awareness, advances in sensor technology and the integration of wearable devices with smartphones and health apps.
However, the market is characterised by:
Rapid technological change
Short product life cycles
High levels of research and development spending
PulseTech’s senior managers must decide how best to position the business to benefit from future market growth.

Explain one reason why operating at high capacity utilisation may create problems for PulseTech plc.

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3

12 marks

Read extracts A to D before answering the question

Extract A
Aurelia Kitchens Ltd
Aurelia Kitchens Ltd is a privately owned UK manufacturer of premium fitted kitchens. The business designs, manufactures and installs kitchens for domestic customers across the UK. Aurelia positions itself as a high-quality brand, competing on design, durability and customer service rather than low prices.
Aurelia Kitchens Ltd was founded in 2008 by two former furniture designers. The business operates from a single manufacturing site in the West Midlands and employs 165 people. Aurelia sells its kitchens through a network of 12 UK showrooms, all owned by the business.
Demand for fitted kitchens increased during 2020 and 2021, as more people invested in home improvements. Aurelia experienced strong sales growth during this period and expanded its workforce by recruiting additional skilled production workers and installation teams.
Aurelia’s management team believes that long-term growth will depend on improving productivity at its factory and making strategic investment decisions to support future demand.

Extract B
Employment and productivity at Aurelia Kitchens Ltd
Aurelia’s managers are reviewing labour productivity and unit costs. Some experienced workers have raised concerns that recent recruitment has reduced average skill levels on the factory floor, increasing the need for supervision and training.

Extract C
Investment options under consideration
Aurelia is considering investing in new computer-controlled cutting and assembly machinery. The machinery would automate several stages of the production process and reduce reliance on manual labour.
The proposed investment would cost £2.4 million and is expected to last five years, with no residual value. Forecast cash inflows from the investment are shown below.
Aurelia’s management uses a discount rate of 9% when appraising investment projects.

Extract D
Growth strategy
Aurelia’s sales director has suggested expanding into the European market, beginning with Ireland and the Netherlands. This would involve exporting kitchens manufactured in the UK and working with local installation partners.
However, some directors favour focusing on the UK market and increasing capacity at the existing factory. They argue that exporting would increase complexity, currency risk and delivery times, potentially damaging Aurelia’s reputation for customer service.
The directors must decide which growth strategy is most suitable for Aurelia over the next five years.

Assess the likely impact of recruiting additional production workers on Aurelia Kitchens Ltd's operations.

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4

12 marks

Read extracts A to D before answering questions

Extract A
UK chocolate and sugar confectionery market data (2020-2024)
The UK market has grown in value from £5.24bn (2020) to £6.78bn (2024), but volume sales fell from 620 million kg to 590 million kg. Value growth reflects price rises, not increased demand. Average price per kg rose 36% since 2020, driven by commodity inflation and supply chain disruptions in 2022-23.
Volume decline was most pronounced in sugar confectionery due to health concerns. Premium and dark chocolate outperformed milk chocolate.
Source: adapted from Kantar Worldpanel UK Confectionery Report 2024

Extract B
Mondelez to close Cadbury factory in Ireland with loss of 400 jobs
Mondelez International will close its Cadbury facility in Rathmore, Ireland, with 400 job losses. The 50-year-old factory produces Cadbury Dairy Milk bars and seasonal products for UK and Irish markets.
The company cited changing consumer preferences, overcapacity in its European network, and efficiency needs. Production will consolidate into larger Birmingham and Poland facilities where Mondelez has invested in automation.
"This was an incredibly difficult decision," said a Mondelez spokesperson. "We must adapt our manufacturing footprint to remain competitive." Unions and politicians criticised the closure.
Industry experts note this reflects broader rationalisation. Similar Nestlé and Mars closures across Europe show companies seeking economies of scale while responding to declining volumes in mature markets.
Source: adapted from BBC News, The Irish Times, Food Manufacture (January 2025)

Extract C
The rise of functional and better-for-you confectionery
Consumer preferences are shifting towards products with functional benefits or health credentials. Research shows 42% of UK consumers seek reduced-sugar confectionery, while 38% want products fortified with vitamins or protein.
Major brands have launched lower-sugar variants using alternative sweeteners or reduced portions. Start-ups offer protein-enriched chocolate, sugar-free sweets, and vegan chocolate made with oat or coconut alternatives.
These products command 30-50% price premiums. However, taste remains the primary purchase driver, and reformulated products must deliver on flavour.
Mintel predicts functional and better-for-you products will reach 15-18% of the UK market by 2028, up from 8% in 2024. Success requires balancing health credentials with taste while managing costs.
Source: adapted from Mintel UK Confectionery Market Report 2024

Extract D
UK sugar tax extended to confectionery sector
The UK government announced plans to extend sugar taxation beyond soft drinks to include confectionery, targeting childhood obesity. The proposed levy, effective April 2027, will apply to chocolate, sugar confectionery, and sweet biscuits containing over 5g sugar per 100g.
Products will be categorised into two bands:
Band 1: 5-10g sugar per 100g - 18p levy per 100g
Band 2: Over 10g sugar per 100g - 24p levy per 100g
The government estimates the tax could raise £500m annually for children's health programmes. Public health organisations welcomed the move, citing links between sugar consumption and obesity, diabetes, and dental problems.
The confectionery industry strongly criticised the proposals. The Food and Drink Federation warns the levy will disproportionately impact smaller manufacturers lacking reformulation resources. Major manufacturers will likely pass costs to consumers through higher prices, potentially reducing demand and causing job losses.
Retailers are concerned about administrative burdens and sales impact. Trade unions fear job losses if the tax leads to factory closures or overseas production shifts.
Source: adapted from UK Government press release, The Guardian, Food Manufacture (December 2024)

Using the information in Extract B and your knowledge of business, assess the likely impact on Mondelez of investing in automation at its Birmingham and Poland manufacturing facilities

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5

10 marks

Read extracts E to H before answering questions

Extract E
Company profile: Sweetcraft Ltd
Sweetcraft Ltd is a family-owned business based in Burnley, Lancashire, specialising in traditional boiled sweets, toffee, and fudge. Founded in 1992, the company employs 72 people and generates annual revenue of approximately £9.8 million.
Operating from a single site, Sweetcraft sells through independent retailers, farm shops, garden centres, tourist attractions, and its website. The business has built a reputation for high-quality, handcrafted products using traditional recipes, priced 40-60% above mass-market equivalents.
The core customer base consists of older consumers valuing traditional British confectionery. The company has developed a growing gift range, with seasonal assortments popular for Christmas and Easter.
Co-founders Sarah and Michael Chen remain hands-on in operations. Sweetcraft faces rising ingredient costs, competition from larger manufacturers, and difficulties attracting younger consumers.

Extract F
Financial performance 2022-2024
Additional data (2024)
Non-current assets: £3.2m
Current assets: £1.8m
Current liabilities: £1.4m
Long-term loans: £1.5m
Rising cost of sales (sugar, glucose syrup, butter, packaging) increased from 60% to 65% of revenue
Competitive pressures and retailer price sensitivity limited price increases.
Operating expenses rose due to higher energy costs, wage inflation, and digital marketing investment.
Source: adapted from Sweetcraft Ltd financial statements

Extract G
Operations and workforce challenges
Sweetcraft's factory operates at 68% capacity, producing around 780 tonnes annually using traditional batch production with semi-automated packaging. Production is highly seasonal, peaking before Christmas and Easter. During peaks, the factory runs extended shifts with up to 20 temporary workers. Outside peaks, underutilisation causes fixed cost inefficiencies.
Labour turnover averaged 24% in 2024, above the industry average of 15%. Employees leave for higher-paid positions in nearby distribution centres. The workforce is aging - 45% of production employees are over 50 - and the company struggles to attract younger workers.
Sarah Chen commented: "We're competing with logistics operators offering higher wages. Our traditional sweet-making roles require specialist skills that are increasingly rare. Training takes time and impacts productivity."

Extract H
Strategic options
Sweetcraft's management has identified two growth strategies:
Management is divided. Some argue contract manufacturing offers lower-risk capacity utilisation, while others believe protecting the Sweetcraft brand and pursuing direct sales creates greater long-term value.
Source: adapted from strategic planning documents

Assess the usefulness of capacity utilisation data for Sweetcraft Ltd when making operational decisions.

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Resource Management (Edexcel A Level Business): Exam Questions