Business (AS & A Level) · May / June 2023 · Paper 23 · Question 1

Fretter’s Music (FM) FM is a private limited company based in country Z. FM manufactures a range of musical instruments, such as guitars and keyboards, for the consumer market. FM uses batch production to produce its range of instruments. However, FM is in the process of changing to mass customisation. FM’s customers are all in country Z and include musicians and students. It sells through its own chain of retail stores. FM’s marketing mix has been successful; sales increased by 45% in the last two years. The changes in the production process and the increase in sales have put pressure on employees to maintain quality and speed of production. FM employs 108 people. The Human Resource Manager, Kylie, is concerned about the high labour turnover. Kylie has produced Table 1.1, which shows reasons why employees left in 2022. Table 1.1 Reasons why employees left FM in 2022 Reason for leaving Number of employees who left Better job in another industry 4 Higher pay at a competitor 6 Lack of promotion opportunities at FM 5 Unhappy with the work environment 3 Retirement 6 FM’s directors would like to grow the business and plan to enter international markets. FM’s brand is not well-known internationally and they will have to compete against established musical instrument businesses. FM will have to change its supply chain and increase production. 5 10 15 20

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