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Operational Scale 1. Complete the table below, stating four reasons for growth. [4 marks] Reason for Growth Benefit Factor that influenced Greater profits Funds expansion Increased sales According to the Sunday Times Fast Track 100, Diet Chef was the third fastest growing private limited company in 2011. Sales have rocketed by 229% a year, from an annualised £334,000 in 2008 to £11.9m in 2011. The company employs 45 people. This Edinburgh firm doesn’t just tell its customers what to eat; it delivers calorie- controlled meals to their doors. Diet Chef offers a choice of more than 90 dinners, breakfasts, soups and snacks — ranging from macaroni cheese to muesli — and is expanding its products. The company was established in 2007 by Kevin Dorren and Andrew Veitch, who pride themselves on their “chef-prepared” meals. Their first job was as personal chef to the Mountbatten family. 2. What evidence is there to suggest that Diet Chef has grown quickly? Explain two possible reasons for this growth. [5 marks] ................................................................... ................................................................... ................................................................... Date: Name:
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Operational Scale
1. Complete the table below, stating four reasons for growth. [4 marks]
Reason for Growth Benefit Factor that influencedGreater profits Funds expansion Increased sales
According to the Sunday Times Fast Track 100, Diet Chef was the third fastest growing private limited company in 2011. Sales have rocketed by 229% a year, from an annualised £334,000 in 2008 to £11.9m in 2011. The company employs 45 people.
This Edinburgh firm doesn’t just tell its customers what to eat; it delivers calorie-controlled meals to their doors. Diet Chef offers a choice of more than 90 dinners, breakfasts, soups and snacks — ranging from macaroni cheese to muesli — and is expanding its
products.
The company was established in 2007 by Kevin Dorren and Andrew Veitch, who pride themselves on their “chef-prepared” meals. Their first job was as personal chef to the Mountbatten family.
2. What evidence is there to suggest that Diet Chef has grown quickly?Explain two possible reasons for this growth. [5 marks]
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Operational Scale
3. Define the term “economies of scale”. [2 marks]
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Premier Foods, the owner of Branston Pickle, bought the Campbell Soup Company for £450 million in 2006. Premier Foods said the purchase would give it control over well-known brands including Oxo, Batchelors, Homepride and Fray Bentos in the UK and Ireland. After the purchase, Premier Foods said it planned to continue its strategy of acquisitions. The purchase of these brands should help Premier Foods to further exploit economies of scale. “The Campbell’s UK business fits Premier like a glove”, said Robert Schofield, chief executive of Premier Foods. “This acquisition will bring an excellent portfolio of powerful and iconic brands which we intend to drive forward with increased resource and innovation”, he added. The cost of the transaction was met in large by issuing new shares to existing shareholders.
4. Analyse the possible economies of scale that Premier Foods might have achieved by growing in this way.[8 marks]
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5. Explain what is meant by diseconomies of scale and, using the example of Premier Foods, discuss the circumstances that might enable them to occur. [8 marks]
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Operational Scale
a) Using this case study as an example, explain what is meant by ‘increasing the scale of operations’. [4 marks]
b) Evaluate two technical economies of scale that Timmings plc is likely to exploit. [8 marks]
