Sania Rahman 11B

MAY 2014 STANDARD LEVEL P2 Q3

A) Advantage: It’s capital intensive therefore it makes less mistakes.

Disadvantage: It’s produced in large batches therefore risk is high of failing
B) The American company may face a corporate culture clash when entering the South African
market as they may have a different way of marketing and advertising than the American market.
Workers in South Africa may have a different way of manufacturing pottery than American
workers, so they may not be able to adapt to each other’s work preferences.
C) Penetration pricing is setting a relatively low price to help establish a new product in the
industry this is usually done to gain brand recognition in a market. American prices are selling their
products at very low prices due to mass marketing, this can help them establish their place in the
South African market and also help them gain brand recognition. Therefore, if customers want
pottery at low prices they will buy from these American manufacturers. Additionally, another
purpose could be increase their market share quickly in the new market. If American
manufacturers price their products comparatively low, then customers will usually opt for these
American brands. With the help of low prices, American manufacturers can increase the demand
for their African-looking pottery and eventually increase market share.
D) Intrinsic motivation occurs when people engage in an activity out of their own desire, workers
in KP are intrinsically motivated as they have developed great pride in their company and in their
work according to the case study. Also, intrinsic factors include hobbies or interest therefore it is
very unlikely that workers at KP are extrinsically motivated because KP does not pay its workers
high wages. Workers at KP are intrinsically motivated as they take their time to produce beautiful
quality and they have high interest in their jobs which shows the they care about their interest
more than they care about other factors such as tangible or intangible incentives e.g: wages,
salaries, recognition and praise).
By contrast, extrinsic motivation occurs when people participate in an activity because of the
benefits and rewards associated with doing so. This can be applicable to the workers in the
American company as it offers good wages with fringe payments, however the potter is not hand-
made, and the job does not require creativity. This means that the workers are extrinsically
motivated as they do not have an interest for their job, but they are interested in the incentives
offered such as good pay. Lastly, the American company is highly automated which means that
the workers do not have to do a task which requires much interest or creativity.
E) The American company is a multinational company which is a large corporation with
operations in two or more countries and headquarters in its original country. If the American
company opens a factor in Johannesburg, there could be a number of advantages and
disadvantages.
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An advantage of opening a factory in Johannesburg could be the tax revenue collected by the
government in South Africa. Since a lot of customers will purchase pottery made by the American
company due to low prices, profits and revenues are likely to increase. Each company has to pay
a percentage of their profits to governments as part of corporation taxes therefore higher profits
will result in higher tax revenues for the South African government. Higher tax revenue can mean
that the government is able to spend on different parts of the economy such as education,
healthcare and military services. Moreover, the American company will provide a variety of choice
to the consumers as they will be able to choose between different brands including different
qualities and prices. Since the American brand has lower prices this means that consumers will
have to spend only a small percentage of their income on pottery and will have a higher purchasing
power for other goods and services. Additionally, the American company opened a highly
automated factory in Johannesburg which shows that the arrival of the company is bringing new
technology to the country which can lead to a more developed economy with a higher percentage
of people working in the tertiary or quaternary sector. This can encourage domestic firms to start
performing research and development in order to create better quality goods and services
resulting in the development of the economy. Lastly, the arrival of the American company can lead
to a balance of payments as more products such as pottery will be exported from Johannesburg
to different countries. This will result in a surplus due to higher exports.

On the the hand, the arrival of the American brand may lead to higher environments degradation
as it is a highly automated factor therefore it will use more energy and fossil fuels in the production
of pottery. This may lead to climate change. In addition, it is very likely that domestic firms such
as KP will go out of business as their sales have already started to decline and they are loosing
customers to the American brand due to lower prices. This can lead to lower employment as they
may have to make workers redundant due to lower revenue which can in turn lead to a lower
living standard in Johannesburg as a a lot of people won’t have the ability to purchase basic goods
and services. Moreover, KP’s unique selling point based upon traditional African designs may
vanish since the American company is mass producing. Lastly, all profits of the American company
will be sent back to America therefore it will not be recirculated in the South African economy
which will not benefit the people living there.
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MAY 2016 STANDARD LEVEL PAPER 2 Q5

A) Market segmentation is the process of dividing the market into subgroups based on
defined attributes therefore each segment has specific needs and preferences. This allows
a business to target a segment with the appropriate marketing mix.
B) Focus groups involve forming small groups to gain insight into the attitudes and behaviour
of consumers. Therefore, an advantage of focus groups are detailed information received
by the participants as detailed questions can be asked and participants are more likely to
engage in discussions. Feedback that is received from the focus groups is specific to the
business needs. Hence, JJ’s focus groups would have received feedback containing the
comfort required by passengers therefore their proposal was created to launch a more
luxurious service. However, focus group participants often have to be paid for their time
and input. These expenses can raise the overall costs of market research. This can decrease
the amount of money that is available to spend on other types of market research such as
market analysis using resources that are expensive. JJ will have to pay the participants
meaning they have less money available for JJplus.
C)
The new service: JJplus can be a
form of Diversification as it is a
high-risk growth strategy that
involves selling new products in
new markets. JJ is selling first-
class-only services to their
consumers, it is targeted at two
different market segments:
vacationers seeking luxury travel
at a lower price than the first-
class tickets offered by
competitors and business flyers.
This is the first time JJ is entering a new market therefore it can be considered as Diversification.
Additionally, JJ is targeting non-European destinations such as New York, Brazil, Russia, India and
China.

D) JustJet (JJ) is a leading European airline. It operates low-price flights across Europe
branded as JustJet. It only offers an economy service and charges for on-board meals and
drinks. However it is planning to launch a new service called JJplus with only first-class
flights flying to non-European destinations only. JustJet has strong brand awareness in
Europe and is very profitable.
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JJ should launch as its prices will be slightly lower than other first-class airlines so JJ will be
able to attract vacationers seeking luxury travel at a lower price than competitors.
Therefore, these lower prices will increase demand for their product and JJ will be able to
spend almost 90% of seats on each flight in order to break even. Business flyers will also
be attracted to these lower prices in order to save money of the business if they are
working in smaller corporations. Additionally, since JJ is entering new non-europeans
markets it is likely that they have the leverage to set prices according to their demand
making them the market leaders. JJplus is considered as diversification making the risks
and prices high which can either lead to a profit or a loss. Since it’s brand image and
financial strength is well known amongst consumers it is likely that they make a profit.

On the other hand, JJ is known for it’s “no frills” image which may I’ve luxury travellers and
business flyers the wrong image. Since the company is well-known for being affordable it’s
new JJplus service may throw people off by giving it the wrong image. Also, since the prices
are lower than competitors, consumers may lead to believe that the quality of their
services is not as good as other airlines so they may choose not to travel with JJplus as low
prices sometimes give negative connotations in regards to quality. Moreover, JJ’s limited
market research may result in failure. JJ has only used focus group which involve a limited
amount of consumers only therefore not representing the tastes and preferences of the
entire market. Since JJ has only used one kind of market research it may be difficult to find
out what they actually want rather. Focus groups can sometimes be regarded as biased as
well as people tend to stick to majority views rather than speaking out their own opinions
therefore only using focus groups is a drawback as JJ may not get the image of the entire
market.

To conclude, JJ’s priorities include making profit as the “no frills” economy market has
saturated therefore they are looking for additional services they can use to increase their
revenue. If JJ goes ahead with the JJplus service it is very unlikely that they will be able to
sell 90% of the seats in all flights especially during non-peak seasons as it is a very low
boundary. Additionally, stakeholders such as employees may be negatively affected as if
the service does not succeed workers may be made redundant going JJ a bad brand
reputation. JJ should not expand to JJplus as their low prices give off a negative brand
image, and their is limited knowledge of the new market they are entering: non-European
destinations. Therefore, JJplus is more likely to fail than succeed.
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NOV 2015 STANDARD LEVEL PAPER 2 Q4

A) Promotional mix is the combination of promotional techniques that communicate

benefits from a product. There are 4 elements that contribute to the promotion of
a good/service: advertising, public relations, sales promotions and personal selling
B) OneWorld can use sales promotions which are temporary ways to boost sales and
attract new buyers. Saes promotions such as buy one get one free on tickets to
some of their events may help attract new customers and form a brand reputation.
Other methods such as money-offs or competitions held for consumers can help
attract attention to their brand to help get more people to spend on their tickets
so they don’t have to rely on the public sector. Moreover, OneWorld can use
sponsorships which involve a business providing financial funds and resources to
support an event or another organization in return for publicity. OneWorld can get
various businesses to sponsor their events such as CocaCola to sell their drinks at
their events in order to increase the sales of their tickets s well as brand image.
C) Mission Statement: To inspire moments of unity and diversity to spark optimism
and celebrate all communities by building respect for everyone.
D) OneWorld’s vision statements is “In our multicultural society today, all religious
and ethnic communities will know and respect one another”. The role of a vision
statement is to provides a sense of direction, guide decision- making. With the help
of a vision statement, stakeholders in a company are constantly reminded the goal
of the company and where it wants to be in the future therefore it keeps them
working efficiently and productively. Additionally, it reminds consumers what the
company stands for and what it supports, its goals and aims. A mission statement
often motivates workers to work more efficiently. In order to achieve the
company’s aims and to exceed their expectations. OneWorld’s mission ad vision
statement will remind its workers that it is a non-profit organisation and it will
inspire them to come up with more events and festivals in order to support all
cultures and communities.
E) OneWorld is an artistic and cultural centre in the UK, it organises events, meetings
and exhibitions in order to achieve its vision statement. However, there are
external factors as a part of PESTLE which are affecting its growth.

The political change is very important to OneWorld as approximately one third of its
income is generated from funding from the public sector. However, funding from the
public sector may disappear after the next government elections: one major political party
has announced funding cuts towards artistic and cultural centres. Therefore if the political
party is elected then one third of OneWorlds income will disappear leaving very little
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finance for events and programs. OneWorld may have to ask for loans from the bank in
order to survive. This can result in a less politically stable environment which can also result
in lower sales and a less amount of people organising their events. Additionally, workers
would not want to work with OneWorld due to lower wages.

Technological changes are also quite important due to growing number of technologically
aware population and major industries providing communications technology. With
increasing use of social media and e-commerce a lot of people may prefer buying tickets
online so OneWorld should have a website where customers are able to purchase tickets
online and also have a preview of shows. A website will be important as a lot of customers
like to view the place they would like to go to therefore adding pictures and videos to their
previous events may be helpful as it can attract customers and create a strong customer
base. It can also encourage customers to give donations through the website rather than
coming events and offices to make donations.

Lastly, economic factors make a great impact on sales and revenues of organisations.
According to the case study, following the global economic downturn beginning in 2008,
contributions have reduced. Due to decreasing economic growth, purchasing power of
people is decreasing significantly therefore they are unable to spend a large proportion of
their income on events and exhibitions. Wages are increasing which leads to increase in
the average cost of production of goods and services which can lead to redundancy which
means a lot of the population may be unemployed. This would mean that OneWorld would
have to decrease its prices in order for more people to buy tickets or make contributions.