F292 2014 Case study Analysis- All About the Baby(AAB)- Possible Questions

This is a short analysis of the case study All About the Baby(AAB) for June 2014- with some possible questions that could possibly come up based on previous years question- the questions are analysed in points that you should expand on during the exam!

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OCR Business Studies F292- Case Study All About the Baby(AAB) 2014

Case study Review:
Operations points:

Just in Time/Stock control

Just in time could work for the warehouse to the stores, but maybe not for the
manufacturers to the warehouse from the far east.
Good if there is a good…

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Cost of sales up by 12.7%
o Increasing material costs (see other notes regarding logistics etc)
Gross profit ­ down by 0.2%
o Not doing so well compared to previous year
Overheads/Expenses
o Up by 13.8%
Operating profit ­ down by 111.7%
Liquidity
o Currently £10 million Net Current Assets…

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Loss Leader Strategy ­ Sell some products below cost (at a loss) in order to attract customers for
others. Possibly the cheaper mattresses, or some of the other products?

Penetration pricing for New Mattress (or at least an introductory price)

Which products from the list need to be removed?



Possible…

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o Distance they travel
o AAB have a complicated process in developing their product, which takes time and
money to transport between locations. It seems inefficient to send products to the
UK to be repackaged when they could be packaged prior to sending. This has caused
AAB to have significant…

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What strategy to take?
o Psychological?
o Cost plus?
o Premium
Price Elasticity
Demand for product
Price charged ­ reasonable? Monopoly for that product

Place

Always in stock
Improve delivery (logistics)
Only location in which product is sold

Promotion

Advertising on the line
Brand loyalty ­ trademark product
Brand awareness…

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Price increases (or decreases ­ depending on Elasticity of demand)
Costs: Reduce ­ Overheads or Direct costs

Sales:
Spend money on promotion ­ increase overheads in order to sell more (needs to be
effective advertising).
Brand awareness ­ loyalty system
Promotional deals ­ free items/nappies/support/vouchers
Product availability / distribution ­…

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Having so much to be incharge of hinders ability to do normal day to day activities
Possibly having large span of control
Could have delegated to managers below him to relieve the task
Could have split the Logistics & IT role to enable future IT/Logistics development and
expansion (Val Hainey…

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Boston matrix
Market growth
Market share
Extension strategies
Costs of developing/maintaining products
Profitability of the product
Objectives of the business




Q6) Discuss the implications to AAB Ltd of having large quantities of
stock on their balance sheet.
Stock may become obsolete, and therefore will need to be sold below cost,…

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Having 32% of assets tied up in stock (compared to 29% last year) ­ can sell quickly and use
to pay their short term debts (currently have 10,211 more current assets than current
liabilities) ­ assuming stock is moving well.
More stock = more knowledge required about the stock, meaning…

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Staying Private (not owing anything to banks)
o To sustain this growth, will they need to open up to new investors, or need to
borrow larger sums of money? Can they support it privately still?
Leasing ­ each store is going to cost them more money, is this sustainable while…

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