Motivation (AQA AS Business): Exam Questions

Colbeck Toys Ltd

Colbeck’s is a UK based toy distributor. It has around 100 warehouse staff who unload, sort and pack toys into boxes to be sold onto retailers. These employees are on zero hours’ contracts and worry as this means they are not guaranteed work each week. Labour productivity at the warehouse is low.

In the business head office there are 20 employees. All of these staff are well qualified and experienced. They are highly paid. However, staff feedback shows nearly all these staff feel demotivated.

The business has been owned by the Colbeck family since its establishment 100 years ago. Chris Colbeck, 65, is the current chief executive and his daughter, also a director, is expected to take over when he retires. The family has always prided itself on investing for the future. Chris is fiercely protective of the business. He has a tell style of management which is often commented on by the head office employees.

The business has strong profit figures in the growing market that it operates in; however it has poor levels of cash as lots of it is tied up in the inventory.

Chris has a plan to expand Colbeck’s which requires £20 million. He has approached a bank for a loan. Based on its forecasted profit figures the business can currently pay the expected monthly repayments of the new loan. However, last year Colbeck’s took out another sizeable loan and experts are predicting interest rates may rise.

Chris has recently had an investment offer from a venture capitalist, Mark Newton. Mark has a strong record of increasing short term profits but often at the expense of employees’ jobs. Mark has offered £20 million for a 51% share of Colbeck’s. Chris estimates if the business became a public limited company its market capitalisation would be £30 million.

Richer Sounds

Richer Sounds is a highly successful hi-fi, home cinema and TV retail specialist based in the UK. It sells through its 53 stores and online. It has won several awards for its high level of sales and for its levels of customer service. Its sales are influenced by the external environment; for example, demand is said to be income elastic. Trading conditions have been difficult in recent years as consumers have been uncertain about their jobs and incomes. The increased use of digital technology in marketing and its impact on the way customers search for information and shop is a serious threat to Richer Sounds’ growth. It faces competition from rivals such as Amazon and Argos who offer a much wider range of products and are investing heavily in their online operations.

Richer Sounds’ mission is ‘Experience Better’. Staff aim to beat its competitors by providing customers with superior:

• knowledge and expertise

• products and pricing

• customer service.

The company recruits employees based on their natural friendliness and their passion for its products. Staff are trained regularly to keep them up to date with new products. The company is committed to providing employees with secure, well-paid jobs and a stimulating working environment. Employees receive an excellent salary, good career opportunities and a number of additional benefits linked to customer satisfaction such as free massages and facials. The company’s suggestion scheme offers a cash bonus of at least £5 for each idea and incentives for the best ones. It has been remarkably successful, producing on average 20 suggestions a year from each employee.

Richer Sounds has a low price strategy. If a customer finds any product cheaper elsewhere for up to seven days after purchase, Richer Sounds will charge £100 less. To enable it to pursue this approach Richer Sounds deliberately chooses ‘out of the way’ locations for its shops; this means its rents are lower than its competitors. It has spent nearly 40 years building relationships with suppliers, meaning it can negotiate lower prices and pass these savings on to customers.