Skandvig Terra PLC

Case Study Link: May 2023 BM Case Study P1

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Teacher RK

Business timeline of Skandvig Terra PLC (SVT)

Organisational Chart
Stakeholders
Internal Stakeholders
External Stakeholder
Definitions (Alphabetized)
Tools and Theories (for 10 markers & 20 Markers):
SWOT Analysis:
ANSOFF Matrix
STEEPLE Analysis
PESTLE Analysis (STEEPLE)
BCG Matrix (Market growth rate VS Relative market share)
Stakeholder Mapping for SVT (HL)
Lewin’s Force-Field(s)
TBL (Triple Bottom Line)
Fish Bone Diagram
Motivational Theories
1. Taylor’s theory
2. Adams’ theory of equity
3. Herzberg’s Theory
4. Pink’s theory
Sample Questions
Unit 1: Introduction: Business Organisation & Environment
Unit 2: Human Resource Management
Unit 3: Finance & Accounts
Unit 4: Marketing
Unit 5: Operations Management
Other Possible Questions

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Business timeline of Skandvig Terra PLC (SVT)
Before 1980 - Company founded
1980 - Expanded into other business sector (desalination and household water treatment products) (line 7)
2005 to 2010 - Consumer Products Division made consistently increasing contributions to overall profits. Share
price rose by 65% and annual profits doubled. Firm increased dividends (line 87)
2010 onwards - Takeover of small water filter manufacturers in both Europe and the USA (line 91)
2015 - Sales in desalination division boosted by 300% (only smaller desalination plants) (line 45)
2015 - Takeover of H4 PLC (Rival Engineering Company) (line 49)
2015 - Modernization programme and reorganisation of operations at H4 PLC (line 56)
2016 - Programmes complete at H4 PLC and employees set to work (line 73)
2018 - Board of directors approve a substantial 5 year marketing budget (line 93)
2019 - Jayne Dees goes to Sudan to teach English and gets an idea, overlooking their conditions to get
freshwater. Discusses with the team to make low-cost, easily transportable water purifiers for use in countries
where access to potable water is limited. (line 106)
2020 - SVT launched a competition, aimed at inventors and entrepreneurs, to develop a water purifier that met
strict criteria in terms of cost, usability and longevity. (line 117)
January 2021 - Winner announced (James Azuki) with a design named WF15 for the competition to build
water purifiers. (line 120)
2022 - SVT’s Engineering Division began production of the WF15 (line 126)
2022 - The smallest of the former H4 factories manufactured SVT’s first wind turbine (line 77)
2023 - Full order book for wind turbines at the H4 Factories. (line 80)

Organisational Chart

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Stakeholders
1. External - Customers
2. External - People affected by CSR
3. External - WF15 creator
4. External - Government Entities (ministry of water and irrigation, and others)
5. External- NGOs & Charities.
6. Internal - Employees at SVT
7. Internal - Shareholders of SVT
8. Internal - Directors of SVT (Yannick, Ariadne, Jayne) lll

Internal Stakeholders
1. Yannick Pedersen
· Director of the FreshWater Division (line 17)
· Situational leadership (line 19-20)
· Fast thinker (in response to shortages of potable water due to climate change, he was able to find
alternative sources of potable water (line 15-18)
· Had clashes with Ariadne regarding the water treatment plant update delays (line 24-26)

2. Ariadne Johansen
· Director of the Engineering Division (line 22)
· Autocratic leadership, leading to delayed tasks involving the Fresh Water Division (water
treatment plants update) due to having different priorities (line 23, 24-26)

3. Jayne Dees
· Director (line 106)
· Proposed for SVT to develop low-cost water purifiers (line 112)
· Made her own research which is to operate water purifiers using solar power (line 113-115)
· Spent three months teaching English in village schools in Sudan in 2019 (line 106-107)

4. SVT Employees
a. Newly hired employees for Engineering Division
· 300 vacancies filled for highly skilled and specialised employees that can work well in team
environment (line 65 -68)
· Went through induction training including a visit to SVT’s factory in Norway (line 71)

b. Old employees
· After 10 years of employment under SVT, employees are offered 3 months paid leave to join the
Outreach Program in LEDCs || (line 99)
· Employees taught in schools, dug wells, repaired infrastructure and provided training to local
people (line 101)
· Travel expenses, accommodation cost and salaries covered by SVT (line 100)
· 6000 employees took part (line 103)

c. Employees that join SVT following acquisition of H4

· Work three eight-hour shifts per day
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 · Given one-time incentive for agreeing to the new flexible-working contract

5. SVT’s Marketing Department

· Used to investigate the spending patterns of low-income families in LEDCs and their access to media.
(line 134-135)

6. SVT’s Human Resource Department

· Met resistance following takeover of H4 since long-serving employees from H4 resist the changes
made by SVT, essentially an organisational culture clash (line 59)
· Since a quarter of H4 employees decided to resign, SVT’s HR organised recruitment to fill 300
vacancies (line 66).
· Chose carefully where to advertise the vacancies and all vacancies were filled within 3 months =
efficient (line 69-70)

7. Board Member
· Impressed by Jayne’s idea regarding water purifiers needing to be operated by solar power, be simple
to use, inexpensive and long-lasting (10 years) because it fitted well with SVT’s vision statement.
(line 114-115)
· Have not agreed on the pricing strategy of WF15 (line 127)

8. Directors
· Several believed that WF15 should be a not-for-profit operation, a minority felt that SVT should go
further and subsidise the product to make it affordable to as many people as possible. (line 127-129)
· Two directors are against subsidising the WF15, believing that it will negatively impact SVT’s overall
profitability. (line 129-130)

External Stakeholder
1. Rival Engineering Company, H4 PLC
· Manufactures steam and gas turbines in four factories in UK (line 50)
· Originally family-owned business (line 51)
· Complete takeover by SVT’s Engineering Division in 2015 (line 49-50)

Before takeover:
· work 5 days per week from 8 to 5; ~27% of total week (line 52)
· competitive salaries (line 53)
· no financial/ non-financial rewards/bonus offered (no other methods of motivation offered)
(line 54)

After takeover:
· factories operate 24 hours every day (line 58)
· employees work 8 hours per day (three eight-hour shifts) (line 58)
· employees receive one-time incentive payments (line 60)
· employees agree to new shift pattern every 6 months (line 62)

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 · employees who do not want to sign contract under SVT were offered generous payments to
leave (line 63)

2. Geng PLC
· Major water supplier in UK (line 32-33)
· Acquired by SVT Fresh Water Division (line 32)

3. NGOs/Charities
· Identify projects (line 104)
· Work together with SVT to make best use of SVT employees (line 104-105)

4. Customers (Sudanese People)

· People in less economically developed countries (LEDCs) (line 97)
· Poor people that could not afford potable water and water purifiers (line 108-109)

5. James Azuki, WF15 Creator

· An university student from Tanzania (line 120-121)
· Won the competition held by SVT in search for low-cost, easily transportable water purifiers (line
120)
· His design, WF15, won the competition and SVT agreed to retain its name. (line 122)

6. World Health Organization

· Set up guidelines for potable water (line 124-125)

Definitions (Alphabetized)
1. Above-the-line promotion (television, newspapers, magazines): a form of promotion that is undertaken by a
business by paying for communication with consumers, e.g. advertising

2. Acquisition: A takeover (or acquisition) occurs when a company buys a controlling interest in another firm, i.e..
it buys enough shares in the target business to hold a majority stake. (usually more than 50%)Acquisitions are
hostile.

3. Aquifer: Natural, underground water storages

4. below-the-line promotion (social media, sales promotions): promotion that is not a directly paid-for means of
communication but based on short-term incentives to purchase, e.g. sales promotion techniques

5. Board of Directors (BOD: elected by shareholders to make strategic future-focused decisions on their behalf.
Directors are elected because of their skills and expertise and because shareholders do not necessarily want to get
involved in the daily running/decision making of the company.

6. Brand Leader: To become the brand with the highest recognition and largest market share in the market. A brand
leader is a product or brand that is recognized as the most popular or dominant within a specific market or
industry. It is often the first brand that comes to mind when consumers think of a particular product category and
has a strong reputation and customer loyalty. A brand leader typically has a large market share and is often
imitated by competitors.

7. Business

8. Business Sectors (line 8): Businesses can be classified according to the stage of production that they are engaged
in

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 Primary Sector: Resource Extraction (Mining, Forging etc.) Gaining raw materials

Secondary Sector: Manufacturing products

Tertiary Sector: Service

Quaternary Sector: information technology, research, and development, as well as consulting services and
education."

9. Capital Productivity/Productivity Rate: This measures how efficiently an organisation’s fixed assets are used
to generate output for the business.

10. Change: Refers to the modification or transformation in the way business is conducted as a response to internal
factors or external influences. It arises when internal and/or external factors that influence the operations of a
business do not stay the same.

11. Charities: A charity is a non-profit organisation that uses donations and funding to support a specific cause or
mission. Charities can take various forms, including foundations, religious organisations, and community
organisations. The main purpose of a charity is to serve the public good and provide assistance to those in need,
rather than to make a profit for shareholders or owners.

12. Company → Public limited company (PLC): It is an incorporated business with limited liability and is
owned by shareholders, where shares are traded on the stock exchange.

13. Constructs

14. Consumer: The end-users of a product. This contrasts with customers who are the buyers of the product.

15. Contribution: Contribution per Unit = Selling Price per Unit - Variable Cost per Unit

16. Corporate Social Responsibility (CSR): It’s the conscientious consideration of ethical and environmental
practices related to business activity. A business that adopts CSR acts morally towards its various stakeholder
groups and the well-being of society as a whole.

17. Demand: refers to the total amount of a good or service purchased at a particular price, in a given time period.

18. Desalination: A process of removing salts and minerals from seawater to make it suitable for drinking or
irrigation.

19. Director: A person responsible for managing and leading a division or department.

20. Distribution

21. Distribution Channel: The channel of distribution refers to the means used to get a product to the consumer.

22. Dividends: The distribution of a company's profit, to its shareholders, who get a certain percentage of the profit
of the company, if the company allows this, according to their percentage ownership.

23. Division (2.2): A part of a company that operates as a separate unit with its own management and employees.

24. : refer to lower average costs of production as a firm operates on a larger scale due to gains in productive
efficiency. Essentially, the spreading of fixed costs across a large number of units. EOS can be:

Internal EOS: purchasing, operational, marketing, transportation, managerial, finance. Internal measure
a company's efficiency of production and occur because of factors controlled by its management team.

External EOS: pool of skilled labour, good infrastructure, growing market no. of buyers), technological
advancements. External happen because of larger changes within the industry, so when the industry grows, the
average costs of business drop

25. Employees

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 26. Employment: Refers to the number of people of the working age who are in the workforce.

27. Expanded

28. External environment

29. External Growth: External growth (or inorganic growth) occurs when a business grows by collaborating with,
buying up or merging with another firm. Main types include
Mergers and Acquisition
Joint ventures
Strategic alliances
Franchises
30. Factories

31. Family-owned Business

32. Flexible-Working Contract: A flexible working contract is an employment agreement that allows for a more
flexible arrangement of working hours and/or location, as opposed to a traditional 9-to-5, in-office setup.

33. Founding: This refers to the date of the official establishment or creation of a business organisation. The owners
are called the founders or co-founders.

34. Horizontal Integration (line 32-33): a business acquires another business in the same step in the chain of
production (i.e. they have the same business activity). It increases market share and .

35. Human Resources Department: Department focused on dealing with issues regarding employees such as hiring
and organisation. Their task is to work out business's needs for employees, given goals for strategic development.

36. Incentive Payment: A payment to the employees to stimulate greater output

37. Income Stream (3.7): A source of revenue for a company.

38. Induction Training: Induction is training done to new recruits to familiarise them with the firm's policies as to
decrease the time needed to be familiar, which impacts productivity.

39. Innovation technologies

40. Internal Growth: Internal growth (also known as organic growth) occurs when a business grows using its own
capabilities and resources to increase the scale of its operations and sales revenue.

41. Labour Turnover: Labour turnover measures the number of workers who leave a firm as a percentage of the
workforce, per year. It is often used to gauge the level of motivation in an organisation.

42. Leadership: Leadership is the process of influencing and inspiring others to achieve organisational goals.

Situational Leadership: Situational leadership is a leadership style that is not based on any single
dominant approach. In essence, it is about using the right leadership style for the right situation.

Autocratic Leadership: An autocratic leader is one who makes all the decisions and prefers not to
delegate any responsibility. Instead, the autocratic leader (or the authoritarian) simply tells subordinates what to
do."

43. Lean Production (HL ONLY): Producing goods in a manner that reduces waste output and time

44. Less-economically developed countries (LEDC): are countries with low levels of economic development and a
low standard of living for their citizens. These countries typically have a weak industrial base, low per capita
income, high levels of poverty, and a lack of basic infrastructure and social services. LEDCs are often located in
less developed regions of the world, such as Africa, Asia, and Latin America.

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 45. Manufactures: This refers to the process of combining and transforming raw materials and/or components into
final goods, ready for sale to customers. SVT's Engineering Division produces water treatment equipment and
power turbines.

46. Market Research: Market Research is designed to discover and gather the opinions, beliefs and preferences of
the thinking pattern and buying habits of customers.

47. Market Share: measures the value of a firm's sales revenues as a percentage of the total sales revenue in the
industry. Market share can be calculated in volume (quantity) or value (monetary value).

48. Market: A place or system where goods and services are bought and sold.

49. Marketing Budget: How much money a business allocates to spend on marketing purposes.

50. Marketing Department

51. Mission Statement: A declaration of the underlying purpose of an organisation’s existence and its core values.
This statement is updated more frequently than a vision statement.

52. Modernisation Programme

53. Monopoly: A market structure characterised by a single seller of a product that faces no competition from other
firms and it has substantial market power and is the price maker of the product in that region.

54. Motivation: The managerial process/aspect where intrinsic and extrinsic factors are used to increase employees’
satisfaction as to reflect on improving their productivity.

Financial methods of Motivation

Non-financial methods of Motivation

55. Narrow Span of Control: A narrow span of control means that there are fewer subordinates who are accountable
to a manager. It is therefore easier to communicate and the decision making process doesn't take time.

56. Non-governmental organisations (NGOs): type of non-profit organisation that operates independently from any
government. NGOs are established to serve a specific social cause or address a particular issue, and they may
focus on areas such as human rights, poverty alleviation, environmental protection, or disaster relief. They are
funded through donations, grants, and other forms of support, rather than by government agencies.

57. One-Time Incentive Pay: A bonus or a form of compensation for employees in exchange for going above and
beyond their normal duties

58. Operates

59. Operational Authority: refers to the power given to an individual or a group within an organisation to make
decisions and take action related to the day-to-day operations of the business. This authority allows the
individuals or group to manage and direct the resources of the organisation to achieve the desired goals and
Objectives.

60. Order Book (Line 80): An order book shows the buy and sell prices in real-time (constantly being updated)

61. Organization by product: refers to structuring a workforce according to the goods or services produced or sold.
Each department focuses on a different product within the organisation's overall product portfolio

62. Outreach program: An outreach program is an initiative or effort by an organisation to reach out to and engage
with a specific target audience or community.

63. PLC: A business organisation owned by shareholders with limited liability. The shares are traded on a public
stock exchange.

64. Potable Water: Water that is safe for human consumption.

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 65. Pricing Strategy: Pricing strategies are the methods and procedures companies employ to determine the rates
they charge for their goods and services.
Pricing strategies include:
Cost-plus pricing
Price discrimination
Skimming pricing
Penetration pricing
Loss leading pricing
Predatory pricing (illegal do not use)
Psychological pricing

66. Product: A broad term that refers to any physical or non physical item that is purchased by either commercial or
private customers.

67. Product Capacity (Capacity):

68. Product Portfolio: all products produced by the firm with different product lines and ranges.

Product Line: Group of connected products marketed under a single brand name by the same company.

Product Range: Refers to the different models of the product line."

69. Productivity per Employee: The output of a company divided by the number of employees.

70. Productivity: Refers to the level of efficiency in the production process. The more productive resources are, the
more output they generate.

Productivity per Employee: The output of a company divided by the number of employees.

Capital Productivity: This measures how efficiently an organisation’s fixed assets are used to generate
output for the business."

71. Quality management (HL ONLY): A set of methods used to ensure and improve quality as well as ensure
reliability.

72. Recruitment: is the process by which the HR department identifies its needs and vacancies to be filled, and
begins the processes of finding most suitable candidates until the contract has been signed.

73. Redundancy: when a job is no longer required so the employee doing this job becomes redundant through no
fault of their own.

74. Regional Monopoly: Where a business controls 80% or more of market share and has barriers of entry (such as
special licensing from the government, or a high startup cost).

75. Reorganization of operations

76. Reservoir: A large tank or basin used for storing water or other liquids.

77. Salaries

78. Sales revenue: refers to the income of a business derived from the purchase of its goods and/or services from
customers. It is calculated by multiplying the selling price of the product by the quantity sold.

79. : Involves the collection of second hand data and information that already exists. Secondary research is a cheaper
and faster method of data collection.

80. Share Price: The value of the share of a company.

81. Skill Shortage

82. Social Media

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 83. Source: To acquire a product or resource from a specific place.

84. Specialised Employees

85. Stakeholders

86. Store: To keep a product or resource in a safe place for later use.

87. Subsidise - Governmental grants given to businesses which allows them to purchase raw materials at a cheaper
rate.

88. Supplies: This refers to the good or service that an organisation is willing and able to produce, usually for
commercial gain. In general, the higher the price the greater the quantity supplied as the business can earn higher
profit margins.

89. Tactical Authority: refers to the power given to an individual or group within an organisation to make decisions
and take action related to the implementation of the organisation's strategy. This authority is focused on the
intermediate-term goals of the organisation, typically spanning several months to a few years.

90. Takeover: When a company buys a controlling interest in another firm, i.e.. it buys enough shares in the target
business to hold a majority stake.

Friendly takeover: occurs with the consent of the target company's management and board of directors.
The acquiring company and the target company work together to negotiate a deal that is mutually beneficial to
both parties.

Hostile takeover: Occurs when the acquiring company attempts to take over the target company without
the consent of its management and board of directors. The acquiring company may make a public offer to the
target company's shareholders to purchase their shares, or may attempt to gain control of the target company
through other means, such as a proxy fight."

91. Team

92. Team environment

93. Transport: To move a product or resource from one place to another.

94. Treat: To purify or process a product or resource.

95. Unit costs

96. Vacancies: exists when a job position becomes available, often due to resignations or growth of an organization.

97. Vertical Integration (line 8-9): occurs when a business grows by acquiring other businesses in earlier or later
stages in the chain of production. It is divided into backwards vertical integration and forward vertical integration.

98. Vision Statement (1.3): A statement that defines an organisation's goals and aspirations. Outlines the long term
aspirations of a business and what it aims to achieve, usually vague , qualitative and inspiring; forms the
foundation for the objectives of a business, including its core values and sense of direction, essentially guiding
decision-making and setting the tone of how managers and employees behave

99. voluntary Redundancy Payments

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Tools and Theories (for 10 markers & 20 Markers):
● Motivational Theory
● Fishbone (effects of leadership style)
● Triple Bottom Line (economical, sustainable, social obligations of SVT)
● Stakeholder mapping (HL)
● Forcefield (HL)
● Investment Appraisal
● Balance Sheet & Profit/Loss Account
● CSR
● SWOT
● ANSOFF
● BCG Matrix
● STEEPLE/PESTLE - political (expanding to other countries, bureaucracy)
● Product life cycle
● Fishbone diagram
(Guys please add more tools and theories from the list above, so that we can refer to it later. I have added a
few. If the tool is discussed below, please tick it off of the list. As of now, we need fishbone to be added asap. If
anyone has a diagram or can make one, please put it up here. Thanks)

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SWOT Analysis:
SWOT analysis is a simple yet very useful decision-making tool-bg. SWOT is an acronym for Strengths,
Weaknesses, Opportunities, and Threats. It can be used to assess the current situation of a business organization.
SWOT analysis considers both internal factors (strengths and weaknesses) and external factors (opportunities
and threats) that are relevant to the organization under investigation
Strengths
1. Vision statement remained unchanged since
the creation of the business (line 2)
2. Diversified in over 20 countries (line 5)
3. Regional monopoly (line 7)
4. Diversified business sectors (line 8)
5. Wide range of products offered (): strong
product portfolio (line 10-14)
6. Organised into four divisions with effective
decision-making authority at the division level
(line 10-14)
7. Each division is headed by a director with
operational and tactical authority (line 15)
8. Strong financial performance and stability
9. Acquisition of Geng PLC allowing rapid
growth (line 31-33)
10. Two income streams from desalination plants
around the world (line 37)
11. 15% market share of the world desalination
capacity (line 38)
12. Adaptable business allowing for quick changes
to be made.
13. Effective modernization program and re-
organization leading to (line 56-57)
14. Improvement in labour productivity it →
unit costs have fallen (line 75)
15. Consumer market share price rising by 65%
(line 97-98; 88)
16. Labour turnover is below average (line 76)
17. SVT has a strong sense of CSR (its Outreach
Programme and the WF15 product) which
strengthen its brand image (line 96-100)
18. SVT could have achieved these types of :
Purchasing (buying in bulks) (line )
Technical (at higher capacity level unit costs
decreases) (line )
Financial () (line)
Marketing Managerial (line)
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Weaknesses
1. Dependence on a single market
2. Because of flexible working practices,
high employee turnover in the engineering
division. (lines 63-64)
3. Consumer Products (division) are not
suitable in countries that have problems
with access to potable water (i.e. LEDCs)
(home water filters do not remove bacteria
or viruses) (Line 83-86)
4. Internal conflict with two directors of
different departments. (line 129)
5. Clashes between leadership styles of
different division directors (lines 24-26)
6. Resistance from long-serving employees
during the modernization program (lines
58-60)
7. Dependence on water treatment
equipment and machinery for its water
supply business.
8. Lack of experienced employees
9. Lack of communication
10. Stakeholder conflict
11.. CSR may cause a decrease in profits
12. High set up cost and training cost
13. Lack of distribution channels in LEDCs
for their new WF15 (line 133)
14. The board of directors cannot agree on a
pricing strategy for WF15.(lines 126-131)
Opportunities
1. Market Growth Possibilities due to External
factors (Desalination Market doubling in the
next 10 years) (line 40)
2. Introduction of low cost solar tech in LEDC’s
(Line 114 & 123)
3. Growth potential in the global water
desalination market (lines 39-40)
4. Expansion into new countries for its
desalination business
5. Broadening its product range through
acquisitions
6. Countries’ demand for wind turbines is
expected to grow making the engineering
division more profitable. (line 80-81)
7. Takeover of rival engineering company can
broaden SVT’s product range
8. may be achieved due to modernization
programme (line 56-57)
9. Demand for desalinated water
10. Managerial EOS, hiring someone experienced
to organise distribution (Line 132-133)
11. Takeover small firms in the US and Europe.
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Threats
1. Economic downturns
2. Competition from new entrants in the
water supply and desalination market
3. Political and regulatory issues in different
countries
4. Climate change is affecting water sources
and demand for potable water.
5. There may be a change in government
regulations
6. Short supply of experienced employees
availability
7. The desalination market may not grow as
rapidly as projected, which can eventually
lead to loss of capital and employees.
ANSOFF Matrix
The Ansoff matrix is an analytical tool that helps managers choose and devise various product and market
growth strategies.
Existing product New product

Market Penetration Product development

Existing · SVT currently supplies potable water
market to over one million people in Norway
and to millions of households in over
20 other countries. (line 4)
· SVT builds and operates water
treatment plants to purify the water
and is responsible for maintaining the
regional water supply networks in
these countries. (line 5)
· SVT advertised to hire “highly skilled
and specialised” employees to fill in
the place of the 300 vacancies left by
the redundancies (line 65-70)
· To broaden its product range, SVT
completed a takeover of a rival
engineering company, H4 PLC, in
2015 (same market UK). H4
manufactures steam and gas turbines
in four factories (line 49)
· In 2022 they made their first Wind
Turbines (line 77 - 80)

New Market Development Diversification

market
● was carried through to investigate · SVT expanded into other business
LEDC markets sectors, including desalination and
● The expansion for desalination is household water treatment products
another possibility (line 40) (line 8)
● Acquisition of Geng PLC allowed · WF15 (new product) production for
SVT to operate in a new market (UK) LEDCs (new market).
while providing the same product
(potable water) (line 32)
● Acquiring small manufacturers in
Europe and USA to sell the water
filters (existing product) in these new
markets (line 91)

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STEEPLE Analysis
STEEPLE is an acronym for the Social, Technological, Economic, Environmental, Political, Legal and Ethical
opportunities and threats of the external business environment. These factors, unlike internal ones, affect all
businesses yet are beyond the control of any individual organisation. STEEPLE analysis is central to
business strategy, such as assessing the feasibility of an overseas investment project.
● SVT has a vision statement of "Making the world a safer place" and has been able to
supply potable water to over 1 million people in Norway and millions of households in
20 other countries. Its regional monopoly in each country where it operates shows its
strong market position.
● SVT displays a consistent commitment to improving its outreach in LEDCs, providing
employees with a paid career break to attend workshops and do community service
abroad. Also, the WF15 has been planned to help LEDCs access drinking water.
● SVT has shown corporate social responsibility in their outreach program as part of the
company’s commitment to helping people in LEDC’s.
● This helps SVT to satisfy any external pressure and build their brand image, as well as
it acts as motivation for their internal stakeholder group, employees.
● One director, Jayne Dees, recommended to the board that SVT become actively
Social involved in developing low-cost, easily transportable water purifiers for countries
where access to potable water is limited.
● They are not discriminative
● Deals with multiple ethnicities due to operating worldwide
● Lower-income individuals in LEDCs don’t have TV (affects marketing techniques
that SVT would choose)
● Access to media, television set ownership, and newspaper/magazine purchasing may
create some marketing barriers for SVT in LEDCs. However, there may be
opportunities for social media marketing due to the high social media usage in these
countries (lines 134 – 140).
● Teaching LEDC communities English (Like Jayne went to Sudan to teach children
English)

● SVT is involved in the production of potable water, desalination, water treatment

equipment, power turbines, and home water filters, indicating its technological
advancements in the water industry.
● Delayed machinery for updating water treatment plants can be a threat
Technological ● Due to the undeveloped technology SVT’s home filters do not remove bacteria and
viruses from filtered water
● They research and develop new technologies to develop their product portfolio
● SVT treatment plants can become obsolete because of technological capabilities
improving- Yannick wants to improve machinery, while Anadre doesn't.

● The global water desalination growth market is expected to double in the next 10 years,
presenting the opportunities for SVT's Desalination Division.
● High demand for cruise holidays
● The company has also achieved through modernization and reorganization of its
Economic operations, which can improve its financial performance.
● Increased demand for wind turbines. (can also be ethical as wind turbines lead to lesser
pollution levels)
● Possibility of subsidies and grants

15
 ● SVT's leadership styles of the directors of different divisions vary, with some employees
perceiving a more autocratic approach in the Engineering Division.
● The company's HR department faced resistance from employees during the
modernization and reorganisation of the operations of a rival engineering company, but
offered incentives to those who agreed to sign a flexible-working contract or generous
payments to those who left.
Ethical ● SVT has also set up its Outreach Programme as part of the company’s commitment to
helping people in less economically developed countries. The programme offers these
countries free skilled labor provided by SVT employees. SVT has shown corporate
social responsibility in their outreach program as part of the company’s commitment
to helping people in LEDC’s. This helps SVT to satisfy any external pressure and
build their brand image, as well as it acts as motivation for their internal stakeholder
group, employees.

● SVT operates in multiple countries, potentially exposed to different political and

Political regulatory environments.
● The company's regional monopoly in each country could be subject to political
influence..

● SVT's operations and acquisitions may be subject to national and international laws and
regulations related to water supply and treatment, desalination, and other business
sectors.
● (labour laws and how it will affect SVT’s recruitment?)
Legal ● Due to the fact that the SVT filters don’t filter out bacteria and viruses from the water,
such filters won’t be allowed by the governments of several highly economically
developed nations to avoid any future health conflicts.
● Regulations to stop producing waste in desalination plants

● SVT's role in purifying water and maintaining regional water supply networks highlights
its concern for environmental sustainability. The company is committed to sustainable
operations and has a vision of “Making the world a safer place”.
● The demand for wind turbines is expected to grow each year. (It can also be political)
Environmental ● Climate change can lead to decreased water levels in rivers and wells
● If the factories are not environmentally considerate the business would be hypocrites
to their vision statement
● The business SVT is already an environmental business that heavily relies on the
environment specifically water

16
PESTLE Analysis (STEEPLE)
Political ● SVT operates in multiple countries and therefore is subject to the regulations and
policies of each country it operates in.
● The company operates in a monopoly position in each country which could lead to
government intervention.
● The demand for desalination is increasing globally and is subject to government
support for the growth of this industry.

Economic ● The demand for potable water is increasing globally and presents an opportunity for
the Fresh Water Division.
● The market for desalination is rapidly growing and presents an opportunity for the
Desalination Division.
● The Engineering Division is subject to competition from other manufacturing
companies and cost control pressures.

Social ● The company’s vision “Making the world a safer place” reflects its commitment to
social responsibility.
● The company is a major supplier of potable water to over one million people and
millions of households.
● The different leadership styles of the divisional directors could affect employee
motivation and performance.

Technological ● The company is involved in the desalination and water treatment industries, both of
which are subject to technological advancements and innovation.
● The Engineering Division is involved in the manufacture of equipment for water
treatment and power turbines, which could be subject to technological
advancements.

Legal ● The company operates in multiple countries, each with its own legal requirements
and regulations.
● The company’s monopoly position in each country could be subject to antitrust
legislation.

Environmental ● SVT operates in the water treatment and desalination industries, which have an
impact on the environment.
● The company is committed to sustainable operations and has a vision of “Making
the world a safer place”.

17
BCG Matrix (Market growth rate VS Relative market share)

?
+
Consumer Product Division

Desalination Division

Engineering Division
Market Growth Rate

Fresh Water Division

+ Cash Generation/Market Share -

1. Cash Cow - Fresh Water Division: This division is the largest supplier of potable water to nearly 200
million people around the world and has a regional monopoly in each country in which it operates. It
generates a high market share and a steady cash flow for the company, making it a cash cow.
2. Stars - Desalination Division: The desalination division of SVT operates in 19 out of 120 countries
and provides 15% of the world's desalination capacity, and the market for desalination is growing
rapidly. Therefore, this division is a star as it has a high market growth rate and a high market share.
3. Question marks - Consumer Products Division:This division manufactures home water filters, which
are not the primary business of the company. This division has consistently increased their
contribution to SVT’s overall profits. They are increasing their market share through internal and
external growth strategies, such as takeovers on smaller water filter manufacturers in Europe and the
United States of America. They are aiming to become the brand leader in this market.The consumer
products division has low market share and high growth potential, making it a question mark.
4. Question mark transitioning to Star- Engineering Division: The Engineering Division of SVT is
one of the industry leaders in productivity per employee. They are big enough to complete a
takeover on a rival engineering company, H4 PLC, therefore the market share cannot be small and
implies that it is large, but also does not directly state that it is large. They also have achieved and
have cut costs of employment, becoming more efficient and increasing their profit margin. There is
also a large demand for wind turbines which is expected to keep growing each year, meaning there is
high growth potential. Due to these reasons it can be implied that they have high market share and
high growth potential, making it a star..

18
Stakeholder Mapping for SVT (HL)
High Interest Low Interest

High ● Employees: SVT has a large workforce,
Power and they are critical to the success of the
company. They are likely to be highly
interested in the company's operations,
policies, and decisions.
● Shareholders: SVT is a publicly traded
company, and shareholders have a
significant financial stake in the
company's success. They are likely to
be highly interested in the company's
financial performance and future growth
prospects.
● Governments and Regulatory Bodies:
SVT operates in multiple countries, and
the company's operations are subject to
government regulations. Governments
and regulatory bodies may have a
significant impact on the company's
operations, but they may not be highly
interested in SVT's day-to-day
operations.

Low ● Local Communities: SVT provides
Power potable water to millions of people
worldwide, and these communities are
highly dependent on the company for
their daily needs. They may be highly
interested in the quality and reliability
of SVT's water supply.
● Suppliers and Vendors: SVT relies on
suppliers and vendors for raw materials
and equipment, but these stakeholders
may not have a significant impact on the
company's operations or decisions.

Stakeholder Concern Power

Customers Clean and reliable water supply High

People affected by CSR Environmental and social impact of SVT's activities High

WF15 creator Successful implementation of WF15 Low

Government Entities Compliance with regulations and policies High

Competitors/Rival Businesses Impact on market competition Low

NGOs & Charities SVT's contribution to social and environmental causes Low

Employees at SVT Job security and fair working conditions Medium

Shareholders of SVT Return on investment High

Directors of SVT (Yannick, Ariadne) Business growth and profitability High

19
Suppliers High
SVT currently supplies potable water to over one
million people

20
Lewin’s Force-Field(s)
The Lewin’s Force-Field is a decision-making tool that looks at helping or hindering forces towards a plan. It
is generally used as a tool for facilitating communication and participation of groups. The nature of the point
system (scale of 1 to 5) is somewhat arbitrary, thus there is a lot of uncertainty and error associated with this
tool; it should not be used for making final decisions.

Forces for change (Driving Subsidization Forces against (Restraining forces)

Forces) of the WF-15

Non-financial drive for Shareholder ROI(Return on investment)

employees as they believe the is decreased, leading to less shareholder
company is socially minded. interest and loyalty. (4)
(3)

Shareholders who are socially Lesser profitability may decrease

minded are more likely to
invest as SVT is more socially
sustainable. Reputation as a
socially sustainable business is
made. (2)
propensity for future growth by
removing retained profits; opportunity
cost. (3)

SVT’s reputation and good-will Reputation as a socially responsible

is retained, which may
contribute to contingency
planning efforts. Boycotts and
pressure group influence will
be less likely in the event of a
crisis. (2)
company may cause organisational
conflict during future mergers or joint
ventures. Additionally, may cause
conflict with previous H4 employees, as
a previously family owned business
which is resistant to change. (1)

Total: 7 Total: 8

21
TBL (Triple Bottom Line)
The Triple Bottom Line (TBL) is a framework that evaluates a company's performance based on three metrics:
social, environmental, and economical performance.

Social Performance:

SVT's case study highlights the importance of their Corporate Social Responsibility (CSR) program.
Through the WF15 initiative, SVT has demonstrated a commitment to improving access to clean water for
people in need. This social initiative has not only had a positive impact on the communities they serve but
also on SVT's reputation as a socially responsible organisation. Additionally, SVT has created job
opportunities for local people, which is contributing to the social development of the community.

Ecological Performance:

SVT's core business involves water treatment, which has a direct impact on the environment. The case study
highlights that SVT is using innovative technologies that aim to reduce the environmental impact of their
operations. SVT's water treatment systems are designed to be energy-efficient, and they use eco-friendly
chemicals, which reduce pollution.

Economical Performance:

SVT is a profitable organisation, and the case study highlights its successful growth in recent years. The
company's revenue has increased steadily, and its profits have allowed it to invest in research and development
to improve its technologies continually. SVT's CSR initiatives and sustainable business practices have also
contributed to its financial performance by enhancing its reputation and attracting socially responsible investors.

Overall, SVT's TBL report highlights its commitment to balancing social, environmental, and financial
performance. The company's CSR initiatives, sustainable business practices, and innovative technologies are
contributing to its success in all three areas. By focusing on the TBL, SVT is not only a profitable organisation
but also a socially responsible and environmentally sustainable company.

Fish Bone Diagram

22
This tool is used to determine the origin of a problem, or 'the causes of the causes' behind a problem. It is a
visual tool that is particularly useful in brainstorming in a group setting. Once a problem is diagnosed, the
fishbone diagram can lead to further discussions and suggestions that can help to evaluate potential solutions.

Motivational Theories
1. Taylor’s theory

Time and piece rate - Money is the main motivator.

Before SVT took over H4 PLC, H4 PLC was:

23
 ● Operating 5 days per week
● Allowing a single shift from 8 a.m. to 5 p.m.
● Providing employees with competitive salaries (similar to those offered by rival businesses)

Benefits Limitations

Autocratic leadership style leads to Disregarding any non-financial rewards

high productivity and more control

Boosts worker’s morale since they’re Employees carry out boring repetitive tasks (no
paid like others clear career path if they’re doing the same thing
then there’ll be no improvement)

Workers paid based on their results H4 PLC could also afford to lay off workers as
(differentiated piecework) productivity levels increased.

As a result of money gained workers Dissatisfied workers will start to leave: high
are encouraged to work hard and labour turnover (WORK, LIFE, BALANCE)
maximise their productivity.

2. Adams’ theory of equity

People seek fair balance between their outputs and inputs

After the acquisition:

● SVT wanted H4 PLC factories to operate 24 hours a day.

● Working all week days with three 8-hours shifts per day.
● Long- serving employees were against this change and resisted it, asking for equity and to be fairly
treated like others.
● SVT offered a one-time incentive payment to employees who agreed on a new flexible working contract
with a new shift pattern every 6 months.
● Significant exodus (mass departure) of employees

Benefits Limitations

Employees are motivated to gain Work motivation is disrupted.

justice

Would allow SVT to concentrate If no change happens, employees will start to leave
more on its employees and listen to (high labour turnover)
their needs

24
 Combines both financial and non- Subjective: what counts as fair to the employer may
financial rewards not be the same as what is fair to employees.

Job satisfaction if directors are Can’t work in the autocratic leadership style of
listening to employee Ariadne Johansen who will only focus on doing the
work rather than listening to employees.

3. Herzberg’s Theory

Salary (hygiene factor): SVT offered their employees very competitive salaries that rivalled other businesses,
and they haven’t had a shortage of salaries for their employees. This lowered the employee’s dissatisfaction,
hence lowering turnover.

Job enlargement (motivator): SVT applied job enlargement in their business such as the Trip to teach young
kids in LEDCs for 3 months after 10 years of employment. This motivated workers to continue working in the
business in order to reach this trip and achieve CSR goals.

The case study said that SVT didn’t utilise other financial and non-financial ways of motivation other than
those.

Hygiene factors - factors that don’t affect motivation but if they are not present, they may demotivate the
workforce

Eg : Good Bathroom

Working conditions: Since employees would spend a huge time working due to their long shifts; they must
work in good conditions in order to lower their dissatisfaction

Motivators - factors that help staff gain job satisfaction

Recognition: giving a sense of recognition from the business to the employee would make them feel more
wanted and important rather than just workers or robots, hence giving them recognition would help in
motivating them.

Advancement: promote workers for their achievement and loyalty.

Job enlargement:

● Variety in employee’s work

● Giving them more and various goals to achieve

Work itself: since the employees would work for many hours, the job they’re doing would lose meaning hence
resulting in less motivation. So, giving a sense of purpose to the employee’s work would help motivate them.

Achievement: working for many hours employees would also lose their sense of achievement, which would
result in less motivation. Hence giving them a sense of achievement by giving small rewards to the employees
would result in a higher sense of achievement which would motivate them

25
Job empowerment: Wouldn’t be possible due to the autocratic leadership style present in the engineering
department. It can mean that their is an organization culture of power with a centralized decition making.

Benefits Limitations

It would remove any dissatisfaction and It ignores external factors such as how
motivate workers to continue working for competitors treat their employees which might
the business = lower turnover rate lead to dissatisfactions.

Higher motivation would lead higher Motivation methods can be subjective, which
efficiency means that not all employees can be satisfied or
motivated through Herzberg's methods

4. Pink’s theory

Benefits Limitations

It invokes creativity and Innovation
Like in SVT, Pink's theory is more modern and
those who are older are already used to the carrot
and stick technique, so it might not work on
everyone and they will lose like how SVT lost their
older workers.

It creates a self-belonging since it is an internal
source of motivation, so they make more effort in
their work rather than the bare minimum
Some people might not even be interested in the
job in the first place and are there for money as the
only goal. In that case motivation internally might
not be what motivates them, instead they will
prefer financial rewards

It can build greater trust between the employer and There may be a lack of direction in the work done,
the employee, and within teams. Furthermore, it hence struggle to achieve business objectives and
can create loyalty towards the company = less staff fit into tight time schedules.
turnover.

Analysis of Company
SVT currently supplies potable water to over one million people in Norway and to millions of households in
over 20 other countries.
SVT is a public multinational limited company (PLC MNC).

26
SVT is organised into four divisions based on product.
Fresh Water Division - supplies potable water CASH COW
● to nearly 200 million people around the world
● has increased in size through both internal and external growth strategies
● acquisition of Geng PLC, a major water supplier (UK)
Desalination Division - constructs and operates desalination plants STAR
● The division provides 15% of the world’s desalination capacity (fast growing market that will double in
10 years)
● SVT currently operates desalination plants in 19 of the 120 countries that use such plants
● Smaller desalination plants - increase in the demand for cruise holidays (last 20 years) boosted sales of
these plants by 300% since 2015.
Engineering Division -manufactures water treatment equipment and power turbines
● completed a takeover of a rival engineering company, H4 PLC, in 2015 (broaden product range)
· H4’s board of directors had been reluctant to embrace change
· employees were paid competitive salaries
· company never made use of any other financial or non-financial methods of motivation
● SVT undertook a modernization programme and reorganisation of the operations of H4’s UK factories,
achieving

Changes:
Factories operate 24hr high capacity utilisation, every day, with three eight-hour shifts per day (resistance from
HR)

To overcome resistance - SVT offered a one-time incentive payment - (inc. accepting a new shift pattern every
six months)
Employees who did not want to sign were offered payments to leave (voluntary redundancy)

Quarter of the employees (average age of 61) turned down the flexible-working contract and left the company,
because they are skilled and well experienced labour, which might negatively affect H4. As a result of this
significant exodus of former employees from H4, SVT’s HR department organised an external recruitment to
fill the 300 vacancies that were created.

Consumer Products Division - manufactures home water filters (lines 83)

Each division is headed by a director with operational and tactical authority
Yannick has a situational leadership style.
Ariadne’s (engineering division) has an autocratic leadership style.

Yannick has clashed with Ariadne - he feels that the machinery needed to update water treatment plants has
been delayed due to Ariadne's having different priorities.

Possible solution to distribute WF15 could be outsourcing.

Sample Questions
From each unit, add more if you think it will help.

Unit 1: Introduction: Business Organisation & Environment

1. State 2 internal and 2 external stakeholders of SVT [4]
27
 - Internal stakeholders are individuals whose interest in a company comes through a direct
relationship. In the context of this case, the internal stakeholders are employees and directors of
SVT (such as Yannick Pedersen).
- External stakeholders are individuals who do not directly work with a company but are affected
by the actions and businesses of the business. An example of external stakeholders in this case
are customers, and the WF15 creators.

2. Describe the difference between acquisition and merger [4]

- Acquisition is when a business takes control over another business. It is a form of external
growth. In this case, the Fresh Water Division took control of a company called Geng PLC. A
merger on the other side is when two or more different businesses become one entity.

3. Examine the impact of the external environment on the functioning of SVT [10]
- The external environment has a significant impact on the functioning of SVT. The company's
operations, revenue, and profits are influenced by a range of external factors, including political,
economic, social, technological, legal, and environmental factors.
- One of the main external factors that affect SVT is climate change. The shortage of potable water
in some countries, caused by climate change, has resulted in increased demand for water
treatment plants and desalination plants. To respond to this demand, SVT has had to find
alternative sources of potable water and invest in desalination plants. SVT's Fresh Water
Division, which supplies potable water, has had to expand in size to meet the growing demand
for clean water in various countries around the world.
- Another external factor that has impacted SVT is market competition. With the increasing
demand for water treatment and desalination plants, the competition in the market has also
increased. SVT has responded to this challenge by acquiring other companies, such as Geng PLC
in the United Kingdom, and by expanding its product range to include household water treatment
products.
- Moreover, technological advancements have impacted SVT's operations, particularly in the
Engineering Division. The acquisition of H4 PLC and its modernization program has enabled
SVT to expand its product range and achieve . The division manufactures equipment and
machinery for SVT's water treatment plants, and the modernization program has allowed it to
operate 24/7 and increase productivity.
- In conclusion, the external environment has a significant impact on the functioning of SVT, and
the company has responded by adapting its strategies to meet the challenges and opportunities
presented by external factors. From climate change to market competition and technological
advancements, SVT has had to innovate and expand to continue to achieve its vision of "making
the world a safer place."

4. Prepare a SWOT for SVT. [6]

- Strengths:
● Long-standing reputation as a reliable and trustworthy supplier of potable water.
● Strong market position with regional monopolies in each country where it operates.
● Diversified product portfolio across four divisions, with a focus on water treatment and related
equipment.

28
 ● Strong leadership and decision-making capabilities within each division, enabling quick
responses to changes in the external environment.
- Weaknesses:
● Dependence on regional monopolies for revenue and market share.
● Limited geographical , with a majority of revenue coming from Norway and a few other
countries.
● Potential for conflict between different divisions and directors with different leadership styles.
● Limited innovation and investment in emerging technologies compared to some competitors.
- Opportunities:
● Growing global demand for potable water and water treatment solutions.
● Increasing market for desalination, with potential to expand into new markets and increase
revenue.
● Growing demand for household water treatment products, with potential for expansion into new
markets.
● Opportunity to invest in emerging technologies to enhance efficiency and productivity.
- Threats:
● Increased competition in the water treatment and desalination industries, with the entry of new
players and potential pricing pressure.
● Regulatory risks and political instability in some of the countries where SVT operates.
● Dependence on natural resources and vulnerability to climate change and environmental risks.
● Potential for supply chain disruptions and volatility in raw material prices.

5. Discuss the difference in the manner in which a non-profit organisation functions as compared to a
profitable one.[6]
- Goals: Non-profit organisations have a mission to benefit the public or a particular cause, while
for-profit organisations focus on generating profits for shareholders or owners. NPOs' objectives
can include social or environmental causes, education, healthcare, or other charitable purposes,
and their activities are geared towards achieving these goals.
- Revenue: NPOs rely on donations, grants, and fundraising to support their activities and
programs, while for-profit organisations generate revenue from the sale of goods or services they
offer. This difference in the revenue stream means that non-profit organisations are more
accountable to their donors and funding agencies, as opposed to for-profit entities, which are
accountable to their shareholders or owners.
- Organisational Structure: NPOs have a different organisational structure from for-profit
organisations. NPOs typically have a board of directors or trustees, who are responsible for
making decisions that align with the organisation's mission and goals. Additionally, NPOs often
rely on volunteers to carry out their programs and activities, whereas for-profit organisations
usually have paid staff members who are responsible for carrying out the operations.
6. In the context of SVT, outline the meaning of growth [2]
- Growth is the expansion of SVT as an organisation due to an increase in the size of its operations
such as the recent acquisition of Geng PLC and the expansion into new markets by launching
new products such as low-cost, easily transportable water purifiers. Growth can be measured in
numerous ways, such as an increase in SVT profits, market share or the number of employees.
7. Describe any 2 stakeholder conflicts being experienced by SVT. [4]
- One stakeholder conflict experienced by SVT could be with local governments or communities
in countries where they operate, who may feel that SVT's regional monopoly limits their choices
and bargaining power. This could lead to tension and conflict, particularly if SVT raises prices or
fails to meet local expectations regarding water quality or service provision.

29
 - Another stakeholder conflict could be within the Engineering Division of SVT, where there may
be disagreements between employees and management regarding changes to working patterns or
conditions, such as the shift to a 24-hour, three-shift system. This conflict could result in low
morale, high turnover rates, and even industrial action, which could negatively impact the
division's productivity and profitability.
8. Examine the usefulness of a vision statement to SVT [6]
- A vision statement is an important tool for an organisation to communicate its long-term
aspirations and goals to its stakeholders. For SVT, its vision statement "Making the world a safer
place" has been in place since its founding and serves as a guiding principle for the company's
operations.
- The vision statement is useful to SVT in several ways. First, it provides a sense of purpose and
direction for the company, which can help to align the efforts of its employees towards achieving
its goals. This is particularly important for a company like SVT, which operates in a critical
industry where the provision of safe and clean water is essential to public health and safety.
- Second, the vision statement can serve as a source of inspiration and motivation for employees.
It can help to create a shared sense of purpose and identity among employees, which can lead to
higher levels of engagement, productivity, and job satisfaction.
- Third, the vision statement can be used to communicate SVT's values and priorities to its
stakeholders. This can help to build trust and credibility with customers, investors, and other
stakeholders who share the company's commitment to making the world a safer place.
9. Distinguish between a vision and a mission statement. [4]
- A vision statement outlines the aspirations and goals of an organisation, describing what it wants
to achieve in the future. It provides a clear and compelling image of the future state that the
organisation aims to create.
- On the other hand, a mission statement outlines the purpose and core values of an organisation,
describing what it does and why it exists. It defines the company's primary objectives and guides
decision-making by providing a framework for strategic planning and resource allocation.
10. With reference to SVT, distinguish between external and internal growth [4]
- External growth refers to the expansion of a company's business activities through mergers,
acquisitions, or strategic partnerships with other companies. SVT has expanded externally by
acquiring other companies in the water treatment and desalination industries, such as Geng PLC
and H4 PLC.
- Internal growth, on the other hand, refers to the expansion of a company's business activities
through the development and expansion of its existing operations. SVT has achieved internal
growth by increasing the size and capacity of its Fresh Water and Desalination Divisions, as well
as by expanding the product range of its Engineering and Consumer Products Divisions through
research and development.
11. Explain one method of internal and one method of external growth that SVT used [6]
- One method of internal growth that SVT used was expanding its product range through the
creation of new divisions. SVT initially specialised in producing and delivering potable water in
Norway, but in the 1980s, it expanded into other business sectors, including desalination and
household water treatment products, by acquiring other companies. SVT also created four new
divisions based on product: The Fresh Water Division, The Desalination Division, The
Engineering Division, and The Consumer Products Division. This allowed SVT to diversify its
product offerings and increase its revenue streams without relying on external acquisitions.
- One method of external growth that SVT used was through acquiring other companies. SVT has
grown through both internal and external growth strategies. Its most recent acquisition was Geng
PLC, a major water supplier in the United Kingdom (UK). Acquisitions allow SVT to rapidly
expand its business and customer base, as well as to acquire expertise and resources that may not
be available in-house. This strategy has helped SVT to expand its operations globally, supplying
potable water to millions of households in over 20 countries, and becoming one of the industry
leaders in productivity per employee.

30
 12. Using the Ansoff matrix examine the growth strategies being considered by SVT. [8]
- Market Penetration - This strategy involves increasing market share in existing markets with
existing products. SVT has already achieved a regional monopoly in each country it operates,
and the Fresh Water Division supplies potable water to nearly 200 million people around the
world. To increase market penetration, SVT can focus on expanding its operations in the existing
countries and targeting new areas within those countries to increase the number of people it
serves. SVT has also acquired Geng PLC, a major water supplier in the United Kingdom, to
expand its operations.
- Market Development - This strategy involves introducing existing products to new markets. SVT
already supplies water treatment plants to over 20 countries. To expand further, SVT can identify
new countries with high demand for water treatment plants and enter those markets.
Additionally, SVT can focus on building more desalination plants in countries with limited
freshwater resources.
- Product Development - This strategy involves introducing new products to existing markets.
SVT's Engineering Division manufactures water treatment equipment and power turbines. To
pursue this strategy, SVT can invest in developing new and innovative water treatment
equipment and machinery that can improve the efficiency of its operations. Additionally, the
Consumer Products Division can focus on developing new household water filters with
improved technology.
- - This strategy involves introducing new products to new markets. SVT has already diversified
into the desalination and household water treatment product sectors. To further diversify, SVT
can consider expanding into related industries such as renewable energy, wastewater treatment,
or infrastructure development.
13. Examine the implications of acquiring a UK-based company Geng PLC a water supply company.[6]
- The acquisition of Geng PLC, a major water supplier in the United Kingdom, by Skandvig Terra
PLC (SVT) has several implications. First, it increases SVT's market share in the UK's water
supply industry, which can lead to increased revenue and profitability. Second, SVT can
leverage Geng PLC's existing infrastructure, knowledge, and expertise to expand its operations
in the UK and improve its service offerings. Third, the acquisition may lead to job losses in Geng
PLC or changes in employment contracts, which can have implications for employee morale and
public relations. Fourth, the acquisition may attract regulatory scrutiny, particularly in terms of
potential monopoly and antitrust issues, which may require divestitures or other measures to
ensure fair competition. Finally, the acquisition may require significant investment in integrating
Geng PLC's operations into SVT's existing infrastructure and management, which can be costly
and time-consuming.
14. Examine the implications of taking over H4 PLC, a rival engineering company. [6]
- The takeover of H4 PLC by Skandvig Terra PLC (SVT) has several implications. First, SVT has
expanded its product range to include steam and gas turbines, which are used to produce
electricity. This acquisition provides SVT with a new income stream, as well as the ability to
manufacture and supply its own turbines for use in its water treatment plants.
- Second, the takeover enabled SVT to achieve by modernising H4's operations and integrating
them into SVT's existing operations. This allowed SVT to improve efficiency, reduce costs, and
increase productivity, which could ultimately result in higher profits.
- Third, the modernization program required a change in the shift patterns of H4's employees,
which was met with resistance from some long-serving employees. SVT offered incentives for
employees to sign new flexible-working contracts, but a significant number of employees chose
to leave the company instead. This could result in a loss of experience and expertise, as well as
potential disruption to operations in the short-term.

31
 - Fourth, SVT faced challenges in filling the 300 vacancies that were created as a result of the
exodus of former H4 employees. Highly skilled and specialized employees were in short supply
in the UK, which could have implications for future recruitment and retention of talent.
15. analyse the implications of SVT being a multinational corporation.[6]
- SVT being a multinational corporation has several implications. On the one hand, it allows the
company to diversify its business portfolio, access new markets, and benefit from . On the other
hand, being multinational also exposes the company to a variety of risks, such as currency
fluctuations, political instability, and regulatory differences between countries.
- One advantage of being a multinational corporation is the ability to access new markets. For
example, SVT's expansion into other countries has allowed the company to supply potable water
to millions of households and diversify its revenue streams. Moreover, being multinational
allows SVT to benefit from by centralizing certain functions, such as research and development,
production, and marketing, which can lead to cost savings.
- However, being multinational also exposes the company to several risks, such as currency
fluctuations, political instability, and regulatory differences between countries. For example, if
the currency of a country where SVT operates devalues, the company's revenues will decrease.
Similarly, political instability in a country could lead to a disruption in SVT's operations and a
loss of revenue. Finally, regulatory differences between countries can create challenges for SVT
in terms of compliance and adapting to local laws.
- In conclusion, while being a multinational corporation has several advantages, such as and , it
also exposes the company to risks. SVT needs to carefully manage these risks to ensure its long-
term success.

16. With reference to Jayne, discuss the qualities that an intrapreneur must have.[4]
- Jayne, the director of the Consumer Products Division, is an example of an intrapreneur within
Skandvig Terra PLC. An intrapreneur is someone who operates within an existing organisation
and brings a spirit of entrepreneurship to their work.
- To be a successful intrapreneur, one must possess several key qualities. Jayne, for example, has
demonstrated the following qualities:
- Creativity and innovation - She has developed a new home water filter product that has resulted
in significant revenue growth for the Consumer Products Division. She has also developed a
sustainable packaging initiative that has reduced the division's carbon footprint.
- Risk-taking - Jayne took a risk by investing in the development of the new home water filter
product. She also advocated for the sustainable packaging initiative, despite potential resistance
from other stakeholders.
17. Evaluate SVT’s outreach programme.[8]
- SVT's Outreach Programme is an initiative that aims to benefit society by offering free skilled
labour to less economically developed countries (LEDCs). It is a long-term commitment that
offers SVT employees a chance to participate in the program after ten years of continuous
employment. This CSR initiative by SVT has several strengths and weaknesses, which are as
follows:
- Strengths:
32
 ● SVT's Outreach Programme has helped several LEDCs by offering skilled labor
to various projects such as teaching in schools, repairing infrastructure, and
providing training to local people.
● The program offers a three-month paid career break to SVT employees, which
can help employees develop new skills, gain new perspectives, and increase their
job satisfaction.
● The initiative has a positive impact on the company's reputation, as it is seen as a
socially responsible company that cares about society.
- Weaknesses:
● The program only offers skilled labour, which may not be the most effective
solution for the problems faced by LEDCs. Other solutions such as providing
funding, resources, or developing local businesses may be more effective.
● The program is limited to SVT employees who have completed ten years of
continuous employment, which may exclude employees who have valuable skills
or experiences that could benefit the program.
● The program may create a dependency on foreign aid, which may hinder the
development of local businesses and economies in LEDCs.
18. Examine the scope of a PPP model (not for profit) for an organisation like SVT for the new product
WF15. [6]
- A PPP model, or Public-Private Partnership model, is a type of collaboration between the public
and private sectors to achieve a common goal, usually a public service or infrastructure project.
However, in the case of a not-for-profit organisation like SVT, the scope of a PPP model for the
new product WF15 may differ from a for-profit organisation.
- The following are some potential scopes of a PPP model for SVT and WF15:
- Collaboration with government agencies: SVT could partner with government agencies to
develop and distribute WF15 to low-income or underserved communities, as a public service.
The government agency could provide funding or other resources to help SVT achieve this goal.
- Partnership with other non-profit organisations: SVT could partner with other non-profit
organisations that share similar values and mission to help distribute WF15 to communities that
could benefit from it.
- Collaborating with private sector companies: Even though SVT is a not-for-profit organisation, it
could still partner with private sector companies to develop WF15. The private sector company
could provide resources and expertise to help SVT develop and distribute WF15.
- Fundraising and grants: SVT could also use a PPP model to raise funds and apply for grants to
help fund the development and distribution of WF15. SVT could partner with foundations and
other philanthropic organisations to raise funds and apply for grants.
- Crowdfunding: SVT could also use a crowdfunding model to develop and distribute WF15.
Crowdfunding allows individuals to contribute small amounts of money to help fund a project.
This could help SVT reach a wider audience and raise funds more quickly.
- Overall, the scope of a PPP model for SVT and WF15 would involve collaborations and
partnerships with government agencies, other non-profit organisations, private sector companies,
and fundraising and grant opportunities. The focus would be on providing WF15 to communities
that could benefit from it, rather than generating profits for SVT.
19. State two features of a family-owned business as a form of business ownership (line 51). [2]
- Family control: Family-owned businesses are controlled by a family or a small group of families
who have ownership and management control. This means that the business decisions are often
made by family members or close relatives.

33
 - Long-term focus: Family-owned businesses are often focused on long-term success and
sustainability, rather than short-term gains. This is because the family has a vested interest in
ensuring the success of the business for future generations, and may prioritise reinvesting profits
back into the business instead of taking them out as dividends.
20. Identify two features of non-governmental organisations (NGOs) (line 104). [2]
- Non-profit: NGOs are typically non-profit organisations that do not distribute profits to owners
or shareholders, but instead use their resources to pursue specific social or environmental
objectives. They are often focused on advocacy, education, and/or service delivery to address
societal issues.
- Independent: NGOs are independent of government control and are typically run by a board of
directors or trustees who are responsible for setting organisational strategy and ensuring that the
organisation's activities align with its mission and values. This independence allows NGOs to
operate flexibly and respond quickly to changing circumstances.
21. Identify two features of charities (line 104). [2]
- Charities are organisations that are tax-exempt under the law because they are dedicated to
charitable purposes that provide a public benefit. This means that charities are exempt from
paying taxes on any income or donations that they receive. This tax-exempt status is granted by
the government in recognition of the public benefit provided by charities.
- One way that charities are able to raise funds is through donations from the public. Charities
often rely on the generosity of individuals and businesses to support their activities. They may
use various fundraising methods, such as direct mail, online donations, fundraising events, and
corporate sponsorships, to raise funds from the public.
22. Explain two advantages and one disadvantage for SVT to be a PLC (line 1). [6]
- Advantages:
- Increased access to capital: As a PLC, SVT can raise large amounts of capital by issuing shares
to the public. This provides the company with greater financial resources to invest in its
operations, expand its business, and fund research and development activities.
- Limited liability: Shareholders of a PLC have limited liability, which means that their personal
assets are protected if the company faces financial difficulties. This makes investing in SVT
more attractive to potential shareholders, as they can invest without the risk of losing more than
the value of their investment.
- Disadvantage:
- Increased regulatory requirements: As a publicly traded company, SVT is subject to various
regulatory requirements, such as those related to financial reporting, disclosure of information,
and corporate governance. Compliance with these regulations can be time-consuming and
expensive, which can increase the company's administrative costs and reduce profitability.
23. Distinguish between STV’s aims (line 93) and objectives (line 74). [4]
- In the context of the given text, the aims of Skandvig Terra PLC (STV) refer to the long-term
goals or the overall vision of the company, as stated in its vision statement: "Making the world a
safer place". Aims are broad and aspirational and may not be measurable.
- On the other hand, the objectives of STV are specific, measurable, achievable, relevant, and
time-bound targets that the company sets to achieve its aims. For example, the objective of the
Fresh Water Division is to supply potable water to nearly 200 million people around the world.
Objectives are more focused and help the company to track its progress towards achieving its
long-term goals or aims.

34
 24. Describe how SVT's Outreach Programme in LEDCs helps to fulfil its corporate social responsibility
(CSR) (lines 95 - 115). [4]
- The SVT's Outreach Programme in LEDCs helps to fulfil its corporate social responsibility
(CSR) in several ways. Firstly, the programme aims to provide access to education and
healthcare to underprivileged communities, which aligns with SVT's CSR goals of promoting
social and economic development. For example, the programme has set up schools in remote
areas of Africa, providing education to children who would otherwise have no access to it. This
helps to promote literacy and knowledge, which are important for economic growth and
sustainable development.
- Secondly, the programme also focuses on promoting sustainable development through the use of
renewable energy sources. This aligns with SVT's CSR goals of reducing environmental impact
and promoting sustainable business practices. For instance, the programme has installed solar
panels in several villages in Sudan, providing access to clean and sustainable energy. This helps
to reduce the dependence on fossil fuels and promotes sustainable development.
25. Explain the importance of corporate social responsibility (CSR) for SVT. [6]
- Corporate social responsibility (CSR) is becoming increasingly important for companies like
SVT, as it allows them to demonstrate their commitment to social and environmental issues
beyond their core business activities. This is particularly important given the heightened
awareness of the impact that companies have on the environment, society, and the economy.
- In terms of the text, SVT's CSR initiatives are important for several reasons. Firstly, they help to
improve the company's reputation and enhance its brand image. By engaging in socially
responsible activities, SVT can demonstrate that it is a company that cares about more than just
profit, and is committed to making a positive contribution to society.
- Secondly, CSR initiatives can help to attract and retain talent. Employees are increasingly
looking for employers who share their values and are committed to making a positive impact on
the world. By demonstrating a strong commitment to CSR, SVT can attract employees who are
motivated by these values, and help to retain existing employees who are looking for a sense of
purpose beyond their job.
- Thirdly, CSR initiatives can help to mitigate risk and reduce costs. For example, by
implementing environmentally-friendly practices, SVT can reduce its carbon footprint and
minimise the risk of regulatory fines or reputational damage from negative environmental
impacts. Similarly, by promoting diversity and inclusion, SVT can reduce the risk of
discrimination claims and promote a more inclusive workplace culture.
- Overall, CSR is an important aspect of SVT's business strategy, as it allows the company to
demonstrate its commitment to social and environmental issues, attract and retain talent, and
reduce risk and costs. By embracing CSR, SVT can not only improve its bottom line, but also
contribute to the greater good of society.
26. Using the case study, explain two strengths and one weakness of SVT. [6]
- Two strengths of SVT are:
1. Monopoly in Regional Water Supply Networks - SVT has a regional monopoly in each
country in which it operates, providing it with significant competitive advantages. This
ensures that the company is the sole provider of potable water to its customers, allowing
it to set prices and control the market. This also eliminates the need for competition,
providing SVT with a stable revenue stream. For instance, SVT's Fresh Water Division
supplies potable water to over 1 million people in Norway and millions of households in
over 20 other countries, giving it a dominant market position.
2. Diversified Business Portfolio - SVT has diversified its business portfolio by expanding
into other business sectors, such as desalination and household water treatment products,
through the acquisition of other companies. This has enabled the company to increase its
sources of revenue and spread its risks across different sectors. For example, the
Desalination Division of SVT provides two income streams by manufacturing and
35
 operating desalination plants worldwide, and by producing smaller desalination plants for
installation on seagoing vessels. This has enabled the company to be less vulnerable to
market fluctuations.
- One weakness of SVT is:
1. Resistance to Change - One weakness of SVT is its employee's resistance to change,
particularly in terms of shifting to a new working schedule. This was evident when the
company took over H4 and attempted to modernize its operations by introducing a 24/7
shift pattern, but met resistance from a significant number of long-serving employees.
This resistance could have led to a loss of productivity and hampered the company's
efforts to achieve its goals. Although the company overcame this resistance by offering a
one-time incentive payment to employees who agreed to sign a new flexible-working
contract, it still resulted in a significant exodus of employees who refused to sign the new
contract, leaving the company with 300 vacancies to fill.
- Overall, despite this weakness, SVT's strengths of having a regional monopoly in its market and
a diversified business portfolio have enabled it to be successful in providing potable water and
related products to customers around the world.

27. Describe how SVT's external growth strategy may help it to become the brand leader in Europe and the
US (lines 91 - 92). [4]
28. Explain two advantages and one disadvantage of external growth strategies of SVT’s Fresh Water
Division (lines 27 - 33). [6]
29. Explain two possible reasons for SVT's decision to take over H4 PLC in 2015 (lines 49 - 50). [6]
30. Outline two STEEPLE factors that influence SVT’s growth strategies [4]
31. Explain two possible types of for SVT as a large multinational company [6]
a. are the cost-saving advantages that businesses can enjoy by enlarging the scale of its output.
Examples of possible for SVT include:
- Technical : Being a large business, SVT can afford to invest in sophisticated and innovative
technologies to increase scales of output, thereby reducing the per unit cost of production. H4
PLC’s factories also operate 24/7, using modernised operations, which again helps the company
to achieve technical .
- Financial : Large businesses like SVT are usually able to borrow more money and at a lower cost
(interest rate change). This is because they are more ‘credit worthy’. For example, SVT
represents lower risk for a financial lender, such as a commercial bank, because it is an
established multinational company with operations in 21 countries and is profitable so can
benefit from more favourable rates of borrowing.
- Marketing : Large businesses like SVT can spread their advertising and substantial marketing
budgets over a large volume of output as well as purchasing their stocks/inventory in bulk, at
discounted prices, e.g, electric pumps, pressure gauges, hoses, and osmosis system (water
filtration system).

Unit 2: Human Resource Management

1. Explain the importance of the human resource management (HRM) department [6]
a. Human resource management refers to the business function or department responsible to all
aspects of personnel in an organisation.
- A division where HRM is important is in terms of Human resource planning. This is the
management process of forecasting an organisation's future demand for, and supply of, human
resources in order to ensure that it has the optimal number of employees with the right skills in
the right place at the right time. Given the large scale of operations, including employees at Geng
PLC and H4 PLC, this function is vital at ensuring the company operates efficiently.
- Another area where it is important is for the training and development of employees. They
provide adequate and relevant training. This training can have a positive impact on staff
36
 motivation and productivity because confident and competent employees lead to greater job
satisfaction and higher levels of output. At SVT this includes training employees so that they feel
sufficiently upskilled to transition to new work systems and processes, such as the innovative
technologies introduced at the company to enhance the speed and quality of production lines.
- The HRM department is also responsible for managing organisational change as well as the
potential resistance to change that often comes with this. This includes communicating the
purpose and benefits of change and developing improved communications channels. This can
help to prevent conflict within the workplace, such as the mass exodus of highly experienced
employees when H4 PLC was taken over by SVT.

2. Give/list examples of financial (extrinsic) and non-financial (intrinsic) motivators.

3. Outline one monetary incentive and one non-monetary incentive to motivate employees at SVT. [2]
4. Compare and contrast the leadership style of Yannick and Ariadne. [6]
5. Examine the effectiveness of the leadership style displayed by Yannick [4]
- Yannick’s situational leadership style
6. Explain 2 reasons for which SVT’s employees in the engineering division may have resisted change [4]
7. Examine the effectiveness of the leadership style displayed by Ariadne [4]
a. Many employees view her as an autocratic leader. Advantages of this can include: Quick
decision making because Adriane makes all decisions within SVT’s Engineering division.
Another advantage is that all expectations and communications are clear, productivity may be
high. After all, the Engineering Division is an industry leader in terms of productivity per
employee. However there are some disadvantages, one can be the demotivational effects because
employees are not empowered to make autonomous decisions. There also might be a lack of trust
within the team as communication is top-down and one way only. Therefore, highly skilled and
experienced team members of the Engineering Division may feel there is a lack of trust in them
when making important decisions.
8. Draw the organisational chart of SVT . [4]

9. With reference to SVT, describe two steps in recruiting employees. [4]

37
 10. Define Induction training. [2]
Induction is training done to new recruits to familiarise them with the firm's policies as to decrease the
time needed to be familiar, which impacts productivity.
11. Explain two advantages of induction training towards SVT employees [4]
12. Explain the factors leading to low labour turnover in the engineering division. [4]
13. Explain how SVT could overcome high labour turnover [4]
14. How did the flexible work-time contract affect SVT positively? [4]
15. Examine the reasons why employees at H4 PLC were resistant to change. [8] HL
16. Explain 2 benefits to SVT of having flexible working contracts . [4]
17. Using the Handy Shamrock model, prepare an organisational structure for SVT. [6]
18. Explain any 2 external forms of recruitment adopted by the HR department of the engineering division.
[6]
19. Using any two relevant motivational theories examine the reasons behind employee turnover in the
engineering department of SVT. [6]
20. Explain the importance of induction training to an organisation like SVT . [4]
21. Examine the one-time incentive scheme adopted by SVT for their engineering division. [6]
22. Apply Daniel Pink's theory to SVT. [6] Describe one advantage and one disadvantage of high staff
turnover resulting from SVT’s modernization programme for H4 PLC (lines 56 - 64). [4]
23. With reference to SVT, describe two functions of the human resources department (line 59). [4]
24. Explain the suitability of SVT's organisational structure by product (line 10). [6 or 8]
25. Describe how SVT's Outreach Programme may impact the motivation of its employees. [4]
26. Explain two financial and one non-financial methods that H4 PLC could have used to keep its
employees motivated (lines 54 - 55). [6]
27. With reference to SVT, distinguish between charities and non-governmental organisations (NGOs) [4]
- A charity is a non-profit organisation set up to provide help and raise money or aid for those in
need. Charities typically rely on donations to fund their operations. Charities are typically
focused on providing direct
28. Using appropriate motivational theory, explain the factors that affect the level of motivation at SVT. [6]
29. Outline two possible sources of conflict between Ariadne and Yannick (HL only). [4]
30. Explain the reasons for resistance to change by some of H4 PLC's employees after the takeover by SVT
in 2015 (HL only). [6]

Unit 3: Finance & Accounts

1. Evaluate any two sources of finance available to a profitable organisation like SVT. [6]
- Bank Loans: A bank loan is a traditional source of financing that allows a company to borrow a
sum of money from a bank and pay it back with interest over a set period of time. This type of
financing is usually used for long-term investments, such as purchasing new equipment or
expanding operations. SVT can use bank loans to finance its expansion plans, including building
new water treatment plants or acquiring new companies. One advantage of bank loans is that
they usually offer lower interest rates compared to other forms of financing, such as issuing
bonds. However, the disadvantage is that the company must have a good credit history and may
be required to provide collateral or a personal guarantee.
- Equity Financing: Equity financing involves selling shares of a company to investors in
exchange for capital. This type of financing can be used to fund a variety of business activities,
such as research and development, marketing, and expansion. One advantage of equity financing
is that the company does not have to pay back the capital or interest, as investors receive a share
of ownership in the company instead. This can be a great way for SVT to raise large sums of
38
 money without taking on debt or risking bankruptcy. However, the disadvantage is that the
company will need to share control and profits with its investors, which can lead to conflicts of
interest and a loss of autonomy.
- In conclusion, bank loans and equity financing are two viable sources of financing for a
profitable organisation like SVT. Each option has its own advantages and disadvantages, and the
choice ultimately depends on the company's specific needs and financial situation.

2. Examine any 2 sources of finance available to them for launching WF15. [6]
- Equity financing: SVT could consider issuing new shares in order to raise the required capital for
the launch of WF15. This would involve selling ownership in the company to new investors in
exchange for cash. Equity financing has the advantage of not creating any debt obligations for
the company, which can be attractive to investors who are concerned about a company's debt
level. Additionally, if SVT is able to successfully launch WF15 and generate profits, the value of
the company could increase, leading to capital gains for shareholders. However, equity financing
can dilute the ownership stake of existing shareholders, which may lead to a decrease in the
value of their shares.
- Bank loan: SVT could also consider obtaining a bank loan to finance the launch of WF15. This
would involve borrowing a fixed amount of money from a bank, with a set repayment schedule
and interest rate. Bank loans have the advantage of providing a fixed source of financing, which
can help with budgeting and planning. Additionally, the interest paid on the loan is tax
deductible, which can reduce SVT's tax burden. However, bank loans also create a debt
obligation for the company, which can be a burden if the launch of WF15 is not successful and
the company is unable to generate sufficient profits to make the loan payments.
- Overall, both equity financing and bank loans have their advantages and disadvantages. SVT
should carefully consider its financial needs, the potential risks and rewards of each financing
option, and its ability to repay any debt before making a decision.

3. Outline one fixed cost and one variable cost for SVT. [2]
- One fixed cost for SVT could be the salaries and benefits of their executive team. This cost
remains the same regardless of the level of production or sales.
- One variable cost for SVT could be the cost of raw materials, such as chemicals and energy, used
in the water treatment and desalination processes. This cost will vary depending on the level of
production or sales.

4. Explain subsidy as a source of finance. [4]

- A subsidy is financial assistance provided by the government or a public authority to support a
specific activity or industry. It is a form of financial support given to businesses, organisations,
or individuals to help them offset their costs or increase their revenue.
- In terms of finance, a subsidy can be seen as a source of funding because it provides financial
resources to the recipient. For instance, a government may provide a subsidy to a business to
help it start or expand its operations, or to encourage the development of a new technology or
product.
- Subsidies can take various forms, such as cash payments, tax exemptions, loan guarantees, or
direct funding. They can also be targeted towards specific industries or groups of people, such as
farmers, small businesses, or low-income households.
- From the perspective of the recipient, subsidies can be a valuable source of finance because they
can help reduce the cost of production, increase revenue, or provide access to capital that might
otherwise be unavailable.

39
 5. Describe two suitable sources of finance for SVT's WF15 project in LEDCs (lines 126 - 131). [4]
- One source of finance SVT can be the retained earnings SVT has developed over the years of
being a PLC, through the profits and share capital they obtain. This internal source of finance
will not pose threat to SVT, as no external factors will affect the financial inflow and outflow
throughout their sourcing for WF15.
- Another source includes government grants and/or subsidies as the government can directly
assist SVT in raising finance for initiation for the WF15 project. This could also pose threats to
SVT through reporting requirements and other legalities, as the requirements to submit reports
can be time consuming as well as inaccuracy would lead to several problems within the financial
calculations and the trust within the organisation.
6. Outline how SVT benefits from a fall in its unit costs (line 75). [4]
7. Explain the importance of the substantial marketing budget that the directors have approved for the
Consumer Products Division (lines 93 - 94). (HL only) [6]

Unit 4: Marketing
1. Define market share. [2]
The percentage of all sales in a market that is held by a business
Measured in terms of volume and value
2. Explain the usefulness of secondary data as a method of research. [6]
3. Explain any 2 pricing strategies that SVT can adopt for WF15 [6]
Cost plus - This pricing strategy adds a fixed amount (mark-up) to the actual cost of producing
the water purifier. Hence, SVT would first determine the cost of the purifiers and then add a fixed mark-
up to the cost of the purifiers in order to determine the selling price. This piece would then be applied
when selling the purifiers in less economically developed countries. By setting the price in this way,
SVT can ensure that it is earning a profit while still offering a competitive price to their customers. THis
would address the issue of two of the SVT directors who are against subsidising the WF15 water
purifiers and making other stakeholders in the business unhappy, such as shareholders who may receive
lower dividends.
Loss leader pricing - This could be an effective way for SVT to increase sales of the WF15
water purifiers, particularly in low-income countries. This pricing strategy involves selling the product
at a very low price, even at a loss, in order to attract customers and increase sales of other products. In
the case of selling water purifiers in low-income countries, SVT could absorb all of this as a loss as part
of its corporate social responsibility program by offering a basic, low-cost water purifier at a
significantly reduced price. Although the business would make a loss on the sale of the WF15 water
purifier, it is what several directors want, i.e the product to be a non-for-profit operation.
4. Explain one advantage and one disadvantage if SVT adopts a low-price strategy for the WF15 water
purifiers [4]
- As pointed out by Jayne Deez, a low-pricing strategy aligns well with SVTs long standing vision
statement (which has remained the same since its founding). Doing so will make these water
purifiers more accessible to the many low-income individuals and households in LEDCs.
- Due to the perception associated with low prices, SVT may deter some customers who are more
concerned about the quality of healthcare products and devices. This can have a negative impact

40
 on the demand for the WF15, even in low-income economies and despite the product meeting
quality standards set by the WHO.
5. Prepare a suitable promotional mix for WF15 as a product. [6]
- Advertising: This could involve creating ads for print, online, and broadcast media. The ads
should highlight the benefits of using the portable water purifier, such as clean and safe drinking
water on-the-go.
- Public relations: This could involve generating positive publicity for the portable water purifier
through media coverage, social media, and influencer marketing. The focus should be on
creating awareness of the product and its benefits.
- Direct marketing: This could involve reaching out to potential customers directly through email,
mail, or social media. The messaging should be tailored to the target audience and emphasise the
convenience and affordability of the portable water purifier.
6. Examine the channel of distribution that SVT can adopt for WF15. [6]
7. What is the importance of branding for SVT? [4]
8. What type of advertising is recommended for SVT to recruit specialised and highly skilled employees?
[6]
9. Recommend a form of marketing for the WF15 according to the results of their . [4]
10. Suggest a New marketing Mix for WF15 [10]
11. Explain how sales forecasting calculations can help SVT's Desalination Division to benefit from the
growing opportunity in the demand for cruise holidays (lines 43 - 45). (HL only) [6]
12. Describe the value of SVT using (line 134). [4]
13. Describe the significance of first hand data collected by Jayne Dees in Sudan (line 107 - 111). [4]
14. Outline two advantages for SVT's Consumer Products Division being a brand leader (line 92). [4]
15. Explain two benefits and one disadvantage for SVT having regional monopoly power in the countries in
which it operates (line 7). [6]
16. Recommend a suitable distribution channel for the WF15. [4]
17. Describe the importance of effective distribution channels for SVT to distribute consumer products in
LEDCs
- - Distribution channels describe how the final good or service, such as the WF15 water purifier,
passes from the producer to consumers in LEDCs (the end users). They enable the company to
get products from the manufacturer to the end consumer.
- - Distribution channels are even more important in less economically developed countries as they
often face exceptional challenges including inferior infrastructural, communication, and
transportation networks (such as road and rail systems).
- - Effective distribution channels are necessary to ensure that SVT products are delivered
efficiently and safely in a timely manner. This can also provide SVT with a competitive
advantage by giving the business a presence in LEDCs, not necessarily for a profit but an
improved corporate image for supporting low-income in LEDCs.

18. Describe two suitable pricing strategies that SVT can use for the WF15 water purifier. [4]
- Penetration Pricing: as the WF15 is a brand new designed and created product, there will be little to
no recognition around the world. Through penetration pricing, the water purifier will be set at a low
price as it enters the markets for familiarisation as well as growth of sales. This allows for creating brand
awareness and brand recognition for SVT through this pricing strategy.
- Predatory Pricing: Another pricing strategy SVT can use is predatory pricing, where SVT charges a
very low price for the water purifier, much lower than the production cost so as to damage the sales of

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 competitors in the market. This is suitable for the process of initialization within the markets, which can
then gradually be brought up to the ideal selling price.
19. Outline how SVT can benefit from levels of social media usage fast approaching the levels seen in
advanced economies (line 138). [4]
- Increased brand awareness. With more people using social media, businesses have the
opportunity to reach a wider audience and increase their brand awareness. By using social media
platforms such as Facebook, Twitter, LinkedIn, and Instagram, businesses can create a strong
online presence and engage with their target audience.
- Better customer service. Social media provides businesses with an additional channel for
providing customer service. Customers can use social media to ask questions or report issues,
and businesses can respond quickly and efficiently, improving the overall customer experience.
20. Suggest two possible pricing strategies that SVT can adopt for its WF15.
a. Price discrimination: SVT can charge different prices to different countries. For instance, it
can charge cheaper prices for LEDCs for them to afford it and slightly higher prices for MEDCs
to make a profit.
b. Cost-plus pricing: SVT can calculate the average unit cost of producing a WF15 and a
percentage markup. This ensures that WF15 covers its costs and recoups its R&D costs.
However, using cost-plus pricing may not appeal to the market as it may be too expensive for
LEDCs.
21. Evaluate the effect of e-commerce to selling WF15 to it's customers?
22. Discuss the two marketing strategies that SVT can use?
23. Compare and contrast two marketing strategies.

Unit 5: Operations Management

1. Define labour productivity, capacity utilisation HL
2. Examine the impact of implementing sustainability on SVT [10]
3. Explain how SVT is environmentally and socially sustainable. [6]
4. Explain whether the low cost purifier identified for the LEDCs is being adaptively creative or
innovative. [4]
5. Explain and evaluate the implications of the modernisation programme and reorganisation of the
operations of H4’s UK factories. [10]
6. Describe the importance of ecological sustainability for SVT's operations. [4]
7. Describe the importance of social sustainability for SVT's operations. [4]
8. Describe the importance of economic sustainability for SVT's operations. [4]
9. Outline how meeting quality standards set by institutions such as the World Health Organization (lines
123 - 125) is important for SVT's launch of the WF15 water purifier. [4]
10. Water contamination (lines 84 - 86) is an ever-present threat to SVT. Describe one advantage and one
disadvantage for SVT's Fresh Water Division having a contingency plan. (HL only) [4]

Other Possible Questions

1. Explain one feature of a public limited company (PLC) (line 1)
A company’s shares are publicly traded on a stock exchange. Through this the Public Limited Company
can raise capital by selling its shares to the public, as there is a large pool of investors.
2. Explain one advantage and one disadvantage of being a PLC to SVT (line 1)
Advantage: SVT can raise its capital by issuing and selling its shares to the pool of investors. It also
allows SVT to access a range of funding options, such as issuing new shares or borrowing against assets.

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 Dis-Advantage: As it is a PLC and numerous shares are issued to the public, the ownership of SVT
will be more dispersed, and the original founders of SVT could possibly lose control over the business
and its management and decision-making.
3. Explain one advantage and one disadvantage of a vision statement to SVT (line 2)
A: SVT management as well as employees would be driven by the motivation through the vision
statement SVT has, which gives them an overall idea as to what their vision is, hence making aims.
D/A: The major disadvantage to SVT’s vision statement is its vague goal of “Making the world a safer
place”. Numerous factors would have to be considered in order to achieve this vision statement’s aim,
and may add to arising uncertainties within the employees and higher management. This in turn would
negatively affect SVT and make it difficult for the PLC to achieve its goals.
4. Distinguish between a mission and vision statement (line 2)
MISSION: A statement of the business’s core aims, phrased in a way to motivate employees and to
stimulate interest by outside groups.
VISION: A statement of what the organisation would like to achieve in the long term.
5. Discuss the effect of the acquisition to SVT (line 9)
1. SVT’s market share could possibly increase and can gain a competitive advantage in the growing
vast market. Revenue and profit could increase.
2. Newer products and markets will be accessed in turn of SVT’s acquisition of other companies.
This is seen in the case study where SVT’s takeover and expansion into other markets, such as
the desalination market, and creating household water treatment products.
3. SVT’s acquisition of other companies results in an increase of . As it combines its existing and
new resources and products for an increase in reachability to these new markets. Cost savings
and efficiency are one of the few outcomes of the acquisition.
4. Cultural clashes and other factors can arise between SVT and the other company, in this case
Geng PLC. The cultures followed and adhered to will differ from that followed in SVT’s, which
could lead to resistivity and reluctance to change.
6. Difference between takeover and acquisition (line 49)
7. Internal VS external motivation factors (line 55)
8. Internal VS

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Q. 1 Between 2005 and 2010, SVT’s Consumer products division made
consistently increasing contributions to the SVT's overall profits. In the
same time period, enabling the company to increase its dividends every
year.

For the manufacturing unit of consumer water filters consider the following details.

Particulars 2005 2010

Maximum capacity 300,000 320,000

Units sold 50,000 y

Selling price per unit $150 Increase by $32 ($182)

Total variable cost $3,000,000 Increase by 10% (3,300,000)

Fixed cost $1,530,000 Increase by 200,500

The increase in profit is directly proportional to its increase in share price.

1. Find out the following and show your working clearly:
A. Contribution per unit for 2005 and 2010. [4]

(2005) Contribution Per Unit = Price Per Unit - variable cost per unit
= ($150) - [3,000,000 (TVC) /50,000 (Units)]
= ($150) - ($60)
= $90

(2010) Contribution Per Unit = Price Per Unit - variable cost per unit
= ($182) - [3,300,000 (TVC) / y]
=

TR = P x Q sold
TR = P x y
TR = idk

2. Break-even point for 2005 and 2010 [4]

(2005)
Break even level of output = FC/(P-VC per unit) = 15,300,000 / 90 = 170,000 quantity

170 000 x 150 = 25,500,000$

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 Break even = (quantity = 170,000 ; price = 25,500,000$)

3. Margin of safety for 2005 and 2010 [4]

Maximum capacity - Break even level of output

(2005) 300,000 - 170,000 = 130,000

(2010) 320,000 -

4. Draw a fully labelled diagram for the year 2005. [6]

2. Define
A. Dividends
The distribution of company’s earnings to shareholders, the value is determined by the board of
directors
2. Share price
Refers to the value in the company’s stock
3. Market share
Measures the value of the firm’s sales revenue as a percentage of the total sales revenue in that industry

4. Cost of sales

Q. 2 SVT’s consumer product division has a separate division manufacturing

and sales of water filters. Following are the details of their cash flow for
their first months of operation.
● Sales unit for the month of January is 3000 units.
● Sales unit increases by 10% every month as compared to the previous one.
● Selling price of each purifier is $100 throughout the year. Received immediately.
● SVT also charges $10 as compulsory installation fees. Received immediately.
● SVT pays wages of $50,000 in January. Wages increase in line with sales unit increases.
● The manufacturing machine needed a repair in the month of March, which amounted to $30,000.
● Rent is to be paid in January and then every second month. $50,000 per payment.
● New equipment was bought in January for $200,000.
● Other costs are $20,000 per month.
● Opening balance at the beginning was $20,000.
● Cost of goods sold is $46 per unit out of which only 50% is paid in cash. The rest is paid one
month later on credit.

Prepare the cash flow statement for the first 4 months of the year.
SVT’s accounting cycle is from January – December.

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 January February March April

Opening balance $20,000

Inflows

Sales units 3000 units 3300 units 3630 units 3363 units

Sales revenue $300,000 $330,000 $363,000 $336,300

from units

Installation fees $30,000 $33,000 $36,300 $33,630

State the reason for the increase in the expense every month.

How can the use of cash flow be beneficial to SVT?

The company is offered a cash discount to pay other expenses in cash.

Based on the above cash flow suggest whether they should opt for the
given option. (Justify your answer)

Topics that the Case Study Covers (important topics to study)

● Innovation
● CSR
● HR
● Globalisation
● Operations
● Marketing
● Marketing mix
● External & Internal Growth
● Stakeholder conflict
● Leadership styles
● Motivation
● Conflict resolution
● Organisational structure
● Acquisition/Takeover
● Diversification
● Market research
● Sources of income
● Vision and mission statement
● Balance sheet
● Budgeting (HL)

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https://www.scribd.com/document/625598037/ib-business-management-case-study-may-2023-svt-key-terms?
secret_password=de0ELmrYAkKpEJK0q3ym#fullscreen&from_embed

Here is a link for some key terms…

Es
Mock Paper 1 SL

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48
Mock Paper 1 SL Answers
1. (a) Describe one advantage and one disadvantage of SVT being a public limited company [4]
Advantages:

1. Increased access to capital: As a PLC, SVT can raise large amounts of capital by issuing shares
to the public. This provides the company with greater financial resources to invest in its
operations, expand its business, and fund research and development activities.
2. Limited liability: Shareholders of a PLC have limited liability, which means that their personal
assets are protected if the company faces financial difficulties. This makes investing in SVT
more attractive to potential shareholders, as they can invest without the risk of losing more than
the value of their investment.
- Disadvantage:
1. Increased regulatory requirements: As a publicly traded company, SVT is subject to various
regulatory requirements, such as those related to financial reporting, disclosure of information,
and corporate governance. Compliance with these regulations can be time-consuming and
expensive, which can increase the company's administrative costs and reduce profitability.

(b) Explain possible that may apply to SVT. [6]

1. Explain two possible types of for SVT as a large multinational company [6]

are the cost-saving advantages that businesses can enjoy by enlarging the scale of its output.
Examples of possible for SVT include:

- Technical : Being a large business, SVT can afford to invest in sophisticated and innovative
technologies to increase scales of output, thereby reducing the per unit cost of production. H4 PLC’s
factories also operate 24/7, using modernised operations, which again helps the company to achieve
technical .
- Financial : Large businesses like SVT are usually able to borrow more money and at a lower cost
(interest rate change). This is because they are more ‘credit worthy’. For example, SVT represents lower
risk for a financial lender, such as a commercial bank, because it is an established multinational
company with operations in 21 countries and is profitable so can benefit from more favourable rates of
borrowing.
- Marketing : Large businesses like SVT can spread their advertising and substantial marketing budgets
over a large volume of output as well as purchasing their stocks/inventory in bulk, at discounted prices,
e.g, electric pumps, pressure gauges, hoses, and osmosis system (water filtration system)

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3. (a) With reference to SVT, explain one advantage and one disadvantage of an organizational structure
based on product. [4]

With reference to Skandvig Terra PLC (SVT), one advantage of an organizational structure based on
product is that it allows for a clear division of responsibilities and expertise within the company. This is because
each division can focus on its specific product and develop expertise in handling it. As a result, coordination
problems that may arise under functional departmentation can be reduced.

On the other hand, one disadvantage of an organizational structure based on product is that it can lead to
a loss of central control over each separate division. This is because each division may focus more on its own
goals rather than the overall goals of the organization. This can result in duplication of functions and resources,
leading to higher costs and less top management control.

(b) Explain how internal and external growth have helped SVT to grow. [6]

1. Explain one method of internal and one method of external growth that SVT used [6]
- One method of internal growth that SVT used was expanding its product range through the
creation of new divisions. SVT initially specialised in producing and delivering potable water in
Norway, but in the 1980s, it expanded into other business sectors, including desalination and
household water treatment products, by acquiring other companies. SVT also created four new
divisions based on product: The Fresh Water Division, The Desalination Division, The
Engineering Division, and The Consumer Products Division. This allowed SVT to diversify its
product offerings and increase its revenue streams without relying on external acquisitions.
- One method of external growth that SVT used was through acquiring other companies. SVT has
grown through both internal and external growth strategies. Its most recent acquisition was Geng
PLC, a major water supplier in the United Kingdom (UK). Acquisitions allow SVT to rapidly
expand its business and customer base, as well as to acquire expertise and resources that may not
be available in-house. This strategy has helped SVT to expand its operations globally, supplying
potable water to millions of households in over 20 countries, and becoming one of the industry
leaders in productivity per employee.

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SVT decided to produce the portable water purifiers “WF15” within the consumer products division.
The board of directors finally decided to set a cost plus (mark up) pricing strategy for the “WF15”. Sales
of household filters have exceeded forecasts and reached 10,000 filters for the year. All profits have been
reinvested into developing the portable water purifier. The portable water purifier “WF15” is now fully
developed and tested. The price and costs of the water purifiers once production has begun are estimated
in the following table (Table 1)

The water portable purifiers will be first sold in Sudan. “Sudan Clean Water” (SCW) is a nationwide
not-for-profit organization established by wealthy Sudanese that live abroad. SCW’s objective is to
provide clean potable water to all areas of Sudan. SVT is considering forming a joint venture for the sales
and distribution of the portable water purifiers “WF15”in Sudan. SCW will have the majority ownership
in the joint venture and will provide its expertise and local knowledge to help solve the sales and
distribution of the purifiers in Sudan. SCW will sell and distribute “WF15” through volunteers that are
present in all areas of Sudan. The volunteers will also train the locals on how to use the product. SCW
will also provide senior managers for the human resources and marketing of the joint venture while SVT
will be responsible for the production of the water purifiers. SCW will promote “WF15” through social
media and sponsorships of local football events. However, SVT’s board of directors are worried about
the success of the joint venture and the brand image of the portable water purifiers although this joint
venture is an opportunity to make a real change to access to potable water in Sudan especially in rural
remote areas.

4. (a) Define two characteristics of a not-for-profit organization. [2]

Non-distribution constraint: Any surplus revenues generated by the organization must be reinvested in
the organization to further its mission rather than being distributed to owners or shareholders as profits.

Tax-exempt status: Not-for-profit organizations are often exempt from paying certain taxes because they
provide a public benefit.
Their purpose is to help the society and not seek for profits. Its to help the community which may result
in a positive change in the society.

Estimated cost and price data for WF15 (Table 1)

Fixed costs: $30,000 per year

Variable costs: $2.1 per item

Price: $2.5 per item

(b) (i) Using the information in above, calculate the break-even output for the portable water purifiers
“WF15” (show all your working). [2]

fixed cost/unit contribution

Unit contribution = 2.5-2.1

30000/(2.5-2.1) = 75000

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(ii) Comment on the usefulness to SVT of break-even analysis. [6]

Break-even analysis can be useful for SVT when considering the WF15 project by helping the company
determine the minimum sales volume needed to cover the costs of production. This information can assist in
setting sales targets and guiding pricing strategies. By calculating the break-even point, SVT can gain a clearer
understanding of the financial feasibility of the project and make more informed decisions on product pricing.

However, there are limitations to break-even analysis in this context. The case study suggests that SVT's
board of directors is contemplating a not-for-profit or even a subsidized pricing strategy for the WF15. In such
scenarios, break-even analysis may be less relevant as the primary goal is to maximize social impact rather than
profit. The focus on corporate social responsibility (CSR) and the need to make the WF15 affordable for those
in LEDCs may lead the company to prioritize other factors over profitability.

Moreover, break-even analysis assumes a linear relationship between costs and revenues, which may not
hold true for the WF15, given the unique market conditions in less economically developed countries (LEDCs).
Factors such as fluctuating demand, variable production costs, and potential government interventions can
complicate the break-even calculation and limit its accuracy.

In conclusion, while break-even analysis can provide some insights into the financial viability of the
WF15 project, its usefulness may be limited given SVT's potential focus on social impact and the complexities
of operating in LEDCs.

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(c) Recommend whether SVT should enter into a joint venture with SCW. [10]

Advantages

1. Access to new markets: Sudan is a large and growing market with a population of over 40 million
people. SCW has a strong presence in Sudan and has developed relationships with key stakeholders,
including the government, NGOs, and local communities. This would give SVT access to a new market
that it would not be able to access on its own.
2. Shared risk and costs: A joint venture would allow SVT to share the risks and costs of entering the
Sudanese market. SCW would be responsible for the sales and distribution of the water purifiers, which
would free up SVT to focus on its core competency of manufacturing.
3. Access to local knowledge and expertise: SCW has a deep understanding of the Sudanese market and
its challenges. This would be invaluable to SVT, which would be entering the market for the first time.
4. Positive brand image: A joint venture with SCW would be seen as a positive move by SVT. It would
demonstrate its commitment to social responsibility and its desire to make a difference in the world.

Disadvantages

1. Loss of control: SCW would have a majority ownership in the joint venture, which would give it more
control over the business. This could be a disadvantage for SVT, as it would not be able to make
decisions without the approval of SCW.
2. Potential for conflict: There is always the potential for conflict between joint venture partners,
especially when they have different goals and objectives. This could be a problem for SVT and SCW, as
they have different missions and values.
3. Financial risk: A joint venture is a financial risk for both partners. If the joint venture is not successful,
both partners could lose money.

Recommendation

I recommend that SVT should enter into a joint venture with SCW. The potential benefits of the joint
venture outweigh the risks. SVT would gain access to a new market, shared risk and costs, access to local
knowledge and expertise, and a positive brand image. While there is always the potential for conflict between
joint venture partners, I believe that SVT and SCW can overcome this challenge by working together and
communicating effectively.

However, it is important for SVT to carefully consider the risks of the joint venture before making a
decision. SVT should ensure that it has a clear understanding of the terms of the joint venture agreement and
that it has a plan in place to manage the risks. SVT should also make sure that it has a good understanding of
SCW's business practices and its financial situation.

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