Business (AS & A Level) · Oct / Nov 2023 · Paper 21 · Question 1

Plasshape (PS) PS manufactures plastic packaging for industrial markets (B2B). Its customers include food manufacturers and cosmetics firms. PS has 500 employees in each of two countries with a similar factory in each country. Employee payment methods and non‑financial motivators vary in each factory. In country Z, PS uses time‑based payment methods, offers employee development and uses many non‑financial motivators. In country V, PS uses piece rate payment methods, but there are fewer opportunities for employee development and non‑financial motivators are not used. Some employees are demanding equal pay and opportunities for employee development in both PS factories. Technology is changing rapidly in the packaging industry. PS’s research and development (R&D) team has developed an environmentally friendly type of food packaging. However, this costs more to make and it will need investment in new machinery. This unique new packaging product is expected to increase added value. Table 1.1 shows a summary of PS’s financial data if it does not launch the new packaging product. Table 1.1 PS’s financial data if it does not launch the new packaging product $m Revenue 40 Direct costs 26 Indirect costs 6 If PS launches the new packaging product, Isha, the Finance Manager, forecasts the following changes: • revenue increases by 30% • direct costs increase by $6m • indirect costs increase by $1m. 5 10 15 20 25

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