Business

UNIT 7: Business Decision Making

Pearson Set Assignment Brief
Outcomes for submission
Learners must complete this set assignment using word processing and
presentation software.
Learners must submit their own, independent work as detailed in the set
assignment.

Instructions to Learners
Read the Set Assignment Information and Set Assignment carefully.
You will be asked to carry out specific activities using the information
provided. You will be given a specific time period to complete the
assignment.
At all times you must work independently and must not share your work
with other learners.
Set Assignment Information

Scenario

You are working as an assistant in a small business advisory service. Bodhi, the owner of a
local catering business, has asked for advice on two possible options for the future. Bodhi
has provided you with some information about his business, the market and the two
different options that he is considering.

The Business

Bodhi is a qualified chef who currently runs a fast-food meals and delivery service from
his home. The business prides itself on selling authentic local food. Bodhi cooks to order
with locally produced ingredients and the meals are delivered by local delivery drivers.
Bodhi wants to change the business operation to cooking and selling street food from
his own business premises.

The aims and objectives of the business are:

• to increase brand awareness

• to break even at the end of the first year.

Market trends

Street food is sold on the street or in public places, usually from a mobile food truck or
a café. It is often cooked in front of customers and is eaten immediately. It is a simple,
convenient and affordable way of eating. Dishes such as tapas, bao buns, pierogi, dim
sum, fish balls and falafel are popular examples of street food.

Street food is common in many people’s diets. Demand is high as it is eaten by

billions of people across the world daily and its popularity continues to grow. Street
food allows
people to enjoy good food without the formality and cost of restaurant dining. It is eaten
by workers on their lunch breaks and by locals and visitors looking for a cheap and
easy meal at lunchtime and in the evening.

Changes in lifestyle in many countries mean that more people want to eat out than ever
before. Recent surveys show that lunch is the meal most commonly eaten outside of the
home. Many of these lunchtime consumers are office workers who eat at their desks or
at low-priced restaurants. This has created a competitive market at lunchtime, with many
customers demanding a lunch in thirty minutes or less.

Travel guides, food journalism and television shows highlight the popularity of street
food across the world, and there has also been an increase in the sale of cookery books
that show how to create authentic street food dishes at home. Street food festivals are
becoming more common, and awards are being given to the best vendors. These are
all raising the profile of the street food industry.
Option 1 – Buying an existing street food café in the city with a partner

Bodhi has seen a street food café for sale in in the city. It is an established business with
an existing customer base. The purchase price includes all refrigeration and cooking
equipment, but Bodhi would have to purchase new signs and outdoor seating.

The café is located in a busy street close to a train station. It is in a pedestrianised area
with room for outdoor dining and is surrounded by a variety of places to eat and
drink. It is a very popular destination for local residents, students, commuters and
visitors at lunchtime and in the evening.

Bodhi has $50 000 to invest, and has invited a business partner to also invest a further
$50 000. The partners would need to find an additional source of finance for the balance
of the start-up costs.

Start-up costs

Purchase of fully equipped café $160 000

New signs and outdoor seating $3 000

Initial marketing $1 000

Running costs year one

Cost of sales 30% of sales revenue

Expenses (wages, drawings and other costs) 55% of sales revenue

Other information year one

Predicted weekly sales volumes 210 meals

Average selling price each meal $11

Weekly fixed costs $1 000

Variable costs each meal $5.50

Option 2 – Buying a mobile food truck to sell street food to office workers

Alternatively, Bodhi could purchase a mobile food truck. He has seen a gap in the market
for supplying lunches to office workers. He plans to rent a space close to a large office
building for the truck to trade from. Bodhi would sell lunches daily.

Before the business could start to trade the truck would need to be fitted with
the correct refrigeration, cooking and safety equipment. Bodhi would also have
to purchase some outdoor seating. The purchase of the truck and installation of
equipment would take one month.

Bodhi has $50 000 to invest and would need to find an additional source of finance
for the balance of the start-up costs. Bodhi plans to own and run this business alone.

Start-up costs

Purchase of mobile food truck $60 000

Equipment and outdoor seating $15 000

Initial marketing $500

Running costs year one

Cost of sales 33% of sales revenue

Expenses (drawings and other costs) 50% of sales revenue

Other information for year one

Predicted weekly sales volumes 140 lunches

Average selling price each lunch $7.50

Weekly fixed costs $495

Variable costs each lunch $3.75

 Set Assignment

Activity 1 – An electronic business report and presentation with speaker notes

Using the information provided produce a formal report for Bodhi that recommends
which business option to choose. This report must have a logical structure and use
appropriate business terminology throughout. Your report must be supported by a set of
presentation slides with speaker notes. This presentation must be concise, accurate and
well laid out.

The report

Your detailed report must examine the two options Bodhi is considering for the business.

It must be set within the context of the aims and objectives of the business and make
reference to the scenario throughout.

Your report must include a rationale that shows:

• the different factors in the internal and external business environments that
influence each option, and the relative importance of these factors

• possible risks for each option, and reasonable alternative approaches that could
be taken

• the implications of human, physical and financial resources on the operation of

each option

• the influence of legislation and regulation on each option

• the use of financial forecasts and ratio analysis to predict the performance of each
option (and the relative importance of this data)

• a supported conclusion that recommends which option Bodhi should choose.

The presentation
Your slides and speaker notes should present your business analysis and recommendation
to Bodhi, giving clear, supported reasons for choosing one business option rather than
the other.

This activity covers learning aims A, B, C and D. A.P1,

A.P2, A.M1, A.D1
B.P3, B.P4, B.M2, B.D2

C.P6, C.M3, CD.D3

D.P7, D.P8, D.M4