Business (AS & A Level) · Oct / Nov 2024 · Paper 21 · Question 2

Coffee Company Local (CCL) CCL is a family business in country Y. It manufactures and sells coffee powder, which is used to make coffee drinks. To make coffee powder CCL transforms coffee beans purchased from primary sector businesses into a fine powder. To make the powder, CCL roasts the beans, then grinds them into large pieces. Hot water is added to these large pieces, which transforms them into a liquid. When this liquid is cool, it is frozen and broken into tiny pieces that form the coffee powder. The coffee powder is then put in jars. CCL uses product differentiation when selling the jars of coffee, as shown in Table 2.1. Table 2.1 CCL’s coffee products Product Description Boston matrix analysis Forecast proportion of total revenue (2024) A CCL’s own brand Cash cow 29% B A national supermarket’s own label product Question mark 30% C Quality product sold in a niche market Question mark 15% D Non-branded product sold to wholesalers Cash cow 26% In 2023 CCL’s total revenue was $10 million. Total revenue is forecast to increase by 10% in 2024. The owners are concerned about CCL’s long-term future, given the position of each product within the Boston Matrix. The market for coffee products in country Y is forecast to grow by 25% over the next five years. CCL would like to increase the added value of its coffee products to benefit from the forecast market growth. 5 10 15 20

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