Paper 1 case study- HL

Section A- answer 2 questions 20

Section B- Compulsory 20

Section C- Compulsory 20

Total marks- 60
 Section A
Answer any two questions

1a) Describe two features of a partnership. (4marks)

1b) Discuss the impact of multinational fishing companies on an organization like PST.(6marks)

2a) Define the term labour turnover.(2marks)

2b) Outline 2 benefits of a low labour turnover.(2marks)
2c) Discuss the impact of outsourcing some of its business functions on PST. (6marks)

3a) Explain the factors influencing pricing strategies of PST. (4marks)

3b) Examine the leadership style displayed by Tapio. (6marks)
 Compulsory Section

Section B

PST is thinking about replacing some of its old trawlers . The company is short of capital and is
thinking of possible sources of finance they can use to buy the trawler. Pekka feels they should
be using their own capital and Fabio is of the opinion that they should seek external help. The
average bank lending rate in Finland is 0.25%.An ethical private investor is quite keen on
investing in the company for a 20 % stake. The investor has experience in the industry and will
be able to guide the family in the areas of finance and marketing. PST is facing huge
competition from foreign fishing companies since they have well equipped technology and are
able to get better catches.The company has identified a supplier for the trawler. The details of
the investment are as follows-

Year Returns

0 (350000)$

1 100000

2 75000

3 150000

4 100000

5 50000

The trawler intended to be purchased would increase the efficiency of their catches due to a
better inbuilt technology. However the company would have to incur additional cost of training
their employees.

4a) Define the term induction training. (2marks)

4b) Calculate payback period and ARR of the proposed investment in the trawler.(4marks)
4c) Examine any 2 sources of finance they should consider in purchasing the trawler. (6marks)
4d) Recommend using part 4b , information from the case and additional information in section
B whether they should invest in this trawler.(8marks)
 Section C
Compulsory section

Both Pekka and Tabio intend to diversify. They are considering the following options.

Option 1-
PST will open its own fish shops.PST will have to identify suitable locations for the shops.The
rental rates of property are given in​ (appendice 1)​ below.The family would also have to obtain a
loan to fund such an investment. The other option is converting itself into a public limited
company.The company would also have to invest in website creation and promoting its
brand.The company would have to hire skilled people to design a marketing plan and work on
the marketing strategy of the company.There are many such players in the market of retail
offering fishes at lower prices.Tabio feels that the family should continue with extracting and
selling of fish .Recently there has been growing trend in Finland that fish are bought from
supermarkets and fish shops in big malls. The market for ordering fish online is also expected to
grow.

Option 2
The family also has the option of acting as a consultant to smaller companies.This would require
just a small office space and a website for the client companies to register. Companies wanting
to receive advice from PST would have to register with an initial sum of 1000$. The services
provided by PST would range from advising on type of trawlers to be hired, legal advice on
understanding quota agreements, dealing with the crew and the kind of training required. The
condition for registration is that the company is an ethical one and has not been guilty of any
ethical failure. ​PST has also signed an international pact committed to reduce overfishing
and promoting sustainability within the industry. (appendice 3)​ Due to the existing brand
name of PST many smaller companies registered with them . Some of these companies were
however found guilty of mistreating their employees and violating quota norms. Tabio feels PST
requires a very highly skilled team of legal advisors to pursue this option.

Using the existing information in the case, additional information in appendice 1, 2 and
3,Recommend whether PST should choose option 1 or 2.(20 marks)
Appendix 1

https://www.statista.com/statistics/530133/office-real-estate-prime-rent-helsinki-finland-europe/

Appendice 2
K Group’s Retail Stores Offer Biggest Selection of Sustainable Fish Products
in Finland
Finland’s K Group now sells seafood certified by the Marine Stewardship
Council (MSC) and the Aquaculture Stewardship Council (ASC) in five types
of retail stores, all located in Helsinki.
The MSC and ASC labels indicate that the seafood has been caught without
endangering fish stocks or farmed with minimal impact to wild stocks, and
is traceable from the sea to the fish counter. K Group’s certified fish
counters also enable the stores to also sell unpackaged certified fish
products.
Appendice 3

Nine of world's biggest fishing firms sign up

to protect oceans
Nine of the world’s biggest fishing companies have signed up to protect the
world’s oceans, pledging to help stamp out illegal activities, including the use of
slave labour, and prevent ​overfishing​.
The companies said: “We will also work towards full traceability and
transparency throughout our supply chains. We also pledge to work actively
together with governments to improve existing regulations for fisheries, for
aquaculture, and for the ocean.”
“We [will] make efficient use of aquaculture and use fish feed resources from
sustainably harvested stocks. We will actively use and apply existing certification
standards and prevent harmful discharges and habitat destruction. We call on the
whole industry to do the same.”

https://www.theguardian.com/environment/2017/jun/09/nine-of-worlds-bigge
st-fishing-firms-sign-up-to-protect-oceans