Move Well (MW) MW is a business that organises the transportation of people's possessions when they move from one house or apartment to another. One of MW's corporate objectives is to achieve internal growth. MW has expanded rapidly from a local business to a national business. It now has locations in many major cities in country Q. Local success was built on customer recommendations. National success is a result of carefully targeted advertising and effective use of social media. The growth of the business has put pressure on MW's cash flow. MW receives payment from customers one week after the house move is completed, which is, on average, one month after the house move was booked. MW's costs include rent, vehicle maintenance, fuel, local taxes, wages and advertising. Following some successful years, there has been a large decline in MW's sales. This is due mainly to fewer people moving home in country Q. Each city location made a loss last year. The Managing Director, John, has noticed that the housing market is growing in some other countries. He thinks there is an opportunity for a new location in country P. [Table 2.1] shows the forecast costs and revenue for the new location in country P in year one. [Table 2.1]: Forecast costs and revenue for the new location in country P in year one | | ($000) | |---|---| | Revenue | 110 | | Direct costs | 50 | | Indirect costs | 20 | Effie, the Operations Manager, would prefer to achieve cost savings rather than expand into another country. She thinks a lot of time is wasted due to uncoordinated information systems which are not kept up to date. MW currently keeps its customer records on paper. It also has three separate computer-based systems. [Table 2.2] shows details of the computer systems. [Table 2.2]: MW's computer systems | Computer system | Process | |---|---| | A | Tracks vehicles used on each home move | | B | Records employee pay and other HR data | | C | Produces accounts and other management information |

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2022). The mark or mark type is shown in brackets.

1. [1] The (long term) goals of a company
2. [1] Give focus and direction to the business
3. [1] Expansion of a firm/business
4. [1] From within – organic (using its own funds to reinvest in itself and increase capital)
5. [1] By means of opening new branches, shops, factories (contrasts with external growth like takeovers/mergers)
6. [1] Correct formula: Profit margin = (Profit / Sales Revenue) × 100
7. [1] Correct calculation of profit: Revenue - (Direct costs + Indirect costs) = 110 - (50 + 20) = 40 ($000)
8. [1] Correct final answer: (40 / 110) × 100 = 36.36% (allow 36, 36.3, 36.4)
9. [1] Identification of a method (e.g., take a deposit at time of booking / reduce costs / seek bank overdraft)
10. [1] Explanation of the method (e.g., a deposit improves immediate cash inflow)
11. [1] Application to MW context (e.g., addresses the issue of receiving payment one week after move completed, one month after booking)
12. [1] Knowledge and understanding: Information - keep up-to-date
13. [1] Knowledge and understanding: Time saved
14. [1] Knowledge and understanding: Increase cash flow
15. [1] Knowledge and understanding: Reduce costs
16. [1] Knowledge and understanding: Increase quality
17. [1] Knowledge and understanding: Increase efficiency
18. [1] Knowledge and understanding: Ease of access to information
19. [1] Application: Wants to achieve internal growth
20. [1] Application: Many locations in country Q
21. [1] Application: Successful business
22. [1] Application: Growth affecting cash flow
23. [1] Application: Current system uncoordinated
24. [1] Application: Use paper customer records
25. [1] Application: 3 different computer-based systems
26. [1] Application: Records not kept up to date
27. [1] Application: Need to improve cash flow
28. [1] Analysis: Information - keep up-to-date, easier to co-ordinate
29. [1] Analysis: Time saved - quickly find the correct information
30. [1] Analysis: Increase cash flow – Decrease the time between booking and receiving revenue
31. [1] Analysis: Reduce costs – improve profit/help fund expansion
32. [1] Knowledge and understanding: Language barriers
33. [1] Knowledge and understanding: Costs
34. [1] Knowledge and understanding: Opportunities
35. [1] Knowledge and understanding: Competition
36. [1] Knowledge and understanding: Available resources
37. [1] Knowledge and understanding: Infrastructure
38. [1] Knowledge and understanding: Communication
39. [1] Application: Growth in housing demand in other countries (P)
40. [1] Application: Business successful in the past
41. [1] Application: Decline in sales in country Q
42. [1] Application: Fewer people moving in country Q
43. [1] Application: Each city location made a loss last year
44. [1] Application: Requires good transport infrastructure
45. [1] Application: Tracking vehicles requires a good communication system
46. [1] Analysis: Expensive to set up operations in another country, can MW afford it?
47. [1] Analysis: Might be a competitive market so hard to break into
48. [1] Analysis: Might be legal barriers such as licence requirements
49. [1] Analysis: Will require employees in the new country adding to expense
50. [1] Analysis: Important to consider culture of new country – will it be a good fit for MW?
51. [1] Evaluation: Inefficient operation – should they expand internationally if own business inefficient
52. [1] Evaluation: Will need to spend a lot on infrastructure in another country, can they afford it if made losses last year
53. [1] Evaluation: Inefficient systems could be a major issue when trying to coordinate internationally
54. [1] Evaluation: But declining market in country Q (is a driver for change)
55. [1] Evaluation: Need to research carefully before making a decision
56. [1] Evaluation: Will take a long time to establish