Business (AS & A Level) · May / June 2021 · Paper 22 · Question 2

Lakeland Oysters (LO) Lakeland Oysters (LO) is a private limited company in country G that was started by the Dar family in 2010. LO farms oysters in a lake that is owned by the business. Oysters are a type of shellfish. The business employs six people from the local town. LO has two markets for its oysters (see Table 2.1). Table 2.1: Market and financial data for LO, 2020 Market Description Sales Revenue Profit margin Industrial Restaurants ordering from LO’s website 80 000 oysters $100 000 15% Consumer Customers visiting the farm 50 000 oysters $150 000 25% LO believes that corporate social responsibility and its triple bottom line are important. There has been a recent news article on the internet about oyster farming (see Fig. 2.1). Oyster farming can be good for the environment Oyster farming can have a beneficial impact on the water by removing harmful pollutants. Oyster farms also benefit the local community by turning lakes into pleasant areas for the public. The government is considering giving grants to encourage oyster farming in country G. Fig. 2.1: Extract from a recent news article about oyster farming The directors of LO would like to expand the business by purchasing a second location. The business has two options (see Table 2.2). Table 2.2: Data about a potential second location for LO Location A Location B Current use An oyster farm A fishing lake Distance from LO’s current location 100 km 5 km Potential output per year 100 000 oysters 150 000 oysters Purchase price $250 000 $300 000 Start-up costs $20 000 $100 000 Operating costs $150 000 per year $200 000 per year 5 10 15 20 25

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