Operational Performance (AQA AS Business): Exam Questions

Napara plc

Napara plc is a large mass market manufacturer of cars. Currently it produces four models of cars. Napara plc’s reputation had previously been for reliability. This reputation has declined in recent years. Napara plc carried out some market research. This research highlighted that customers want:

• reliable cars

• cars supplied without waiting times.

Table 3 Operational data for 2021

The employees in the Napara plc factory are highly skilled but have low motivation. There is high trade union membership amongst the employees. The union members took industrial action last year when they felt management bought incorrect safety equipment that put employees at risk. The action caused negative news headlines. The employees distrust management as a result. None of Napara plc’s management have experience working on the production line. Employees worry their jobs are not being done safely and efficiently. This distrust has led to poor employee performance.

In 2023, the business has made the decision to move into the rapidly growing and highly profitable electric car market. Two of the company’s current models will be replaced with electric models. The move would require the high-end skills of many of the workers. However, some jobs may be lost.

Customers in the electric car market:

• expect high-quality cars

• are very concerned with the ethics of the brand

• are willing to pay high prices.

Napara plc knows the market for these cars is rapidly changing. Napara plc’s shareholders want the company to launch its first electric car as quickly as possible. The business is considering involving employees in the planning for the new production line.

Fit Gym plc

Eamon is Chief Executive of a large gym chain called Fit Gym plc. Eamon established the business in 2008, aged 30. He is passionate about people getting fit and providing a great gym experience for customers. Eamon has £45 million in personal savings.

Eamon’s personal objectives are to:

• continue to develop the premium image of Fit Gym

• work within the fitness industry for at least the next decade.

The market for gym membership is growing rapidly. Fit Gym operates premium gyms based in city centres; they are open 8 am to 6 pm every day of the week. Fit Gym’s target market is city workers, who work at offices near the gym. Its busiest hours tend to be around the start and finish of the office working day.

Fit Gym’s customers are not price sensitive but expect to have easy access to the equipment. In recent weeks, capacity has been a problem as customers have complained about growing queues to use the gym equipment at busy times. Compared to rival gyms, Fit Gym has double the level of staffing to maintain a high level of customer service. Most staff are paid by the hour; the hourly pay is high for the industry.

Fit Gym became a public limited company in 2016. It has 100 million shares issued. Eamon retained 10% ownership. The current share price is 50p.

Table 2 Data comparing Fit Gym to competitors in 2020

Eamon has consistently argued for high levels of investment in staff, premium facilities and top-quality equipment; this has led to low dividends. Most of the other shareholders now want to cut costs to improve profitability. The shareholders have asked Eamon to cut staffing levels and sell off less profitable gyms. They want Eamon to relocate many of the remaining gyms to cheaper sites. They also want increases in dividends and have threatened to replace Eamon as Chief Executive if this does not happen.

Meanwhile, a highly profitable American gym chain is considering expanding into the UK market. It has a reputation for buying out rival chains and cutting costs.