Business P2 Jan 2026

IAL_IAL_BUSINESS_2026_Jan_U2_QP.pdf

IAL_IAL_BUSINESS_2026_Jan_U2_MS.pdf

#Section A

1a) Market share is calculated by sales made by a firm divided by total sales in the market, it ressentially tells us how much of a market a firm has captured by sales or sales revenue.

1b) 35856/633090 x 100 = 5.66 % operating prodfitmargin - 3 minutes for a and b - 57

1c) One reason that kwiik fit may find it diffucult to sales forecast is inflation as some businesses in 2024 experienced troubles with inflation where if inflation continues to increase at an unpredictable ammount then kwik may have trouble accurately forecasting their sales due to the demand flucations associated with inflation; this means that kwik can not assume that their generous over 10 percent revenue growth in one year may continue as inflation means the average price level of things rise and now servicing their cars take up a greater proprotion of their income and therefore they would either take less services or swicth to cheaper competiotrs making it diffucult to froecast their sales

Another reason that kwiik fit may find it diffucult to sales forecast is the continuing changes in customer needs where one year they may have low needs and just want basic serving and cleaning their car , where demand would be high increasing their sales forecast as that is any easy ervice an inexperienced employee can deal with however the next year their demands may have skyrocketed to needing smart screen repair and masseaging seats repair and a full engine service therefore since they dont have many techicians with those skills to repair them they cannot keep up with consumers expectations which will swicth to theit ecompetitors which offer those services therefore reduing the sales forecast and market share for kwik sales. This means historical growth rate is not indicative of future growth as they may not be able to keep up with consumers changes in what they require to be serviecd- 5 minutes - 51:47 - asked ai to improve it

1d) Benefits On the job training for kwik fit would allow kwik fit to train their new empoloyees in their 600 service centers while they are on the job. This would save kwik fit the cost of taking their employees and training them off site where they cannot contribute to output/servicing cars and consumers as they are in a training room which costs them money and they still have to pay the employees a wage eventhough kwik if not getting any output from them. This means that kwik fit gains the extra output from the workers now working and producing output instead of being trained externally and they do not have to pay external training centers which are costly, this means kwik faces lower costs and therefore their average costs decrease which decreases their breakeven point and increases their profit margin, and they could pass these lower costs onto their consumers such as by having lower prices and if servicing cars is a price elastic service then a decrease in price would lead to a more than proprtioaniate increase in demand which would lead to increased revenue and increased customers and therefore increased marketshare. (allso since they have over 50 years of experience their experienced staff can probably train their new employees better than a non specilised training center, in that sense they can train there workers for cheaper while still producing output)

Drawbacks However on the job training could lead to higher defects and more disastified customers as more people and their cars are being serviced by inexperienced traineese and these increased defects and bad service could lead to kiwk fits repuation being damaged as instead of being known for qualitity and keeping cars in a good working order, they may have a bad reputation which then propgates into loyal customers choosing their competitors cash as Uservice and therefore decreasing their future revenue therefore profit and market share which are all bad for kwik fit; which is further excaberated and signifcant by the scale of kwik fit as they have over 600 service centers where one bad interaction with one of them with a customer would mean their entire brand and every service center is assumed to have the same bad service therefore they would again swicth to kwiks comeptitors and therefore loose kwik on market share

Judgement - commited to one side To render a judgement, the consequenccs outweigh the benefits of the on the job training as though it is cheaper in the short run of having cheaper training costs across their 600 centers and they still gain output from employees who are undergoing training which assuming they are new trainees and not the 4892 employees in 2024, in the long run these losses compound as on bad customer experience would snowball into themm telling their friends and coworkers about i and further ruin the good high qualitity reputation of kwik fit which would lead to signifcant future losses however this all depends on if the slip ups and mistakes are really that signifcant from the trainees or if kiwk using an on the job training similar to hospitals where trainees only shadow mechanics and not interact with the job. - 13 mins - 39:14 - thererfore the reputational risk is disaproptionaly large relative to the minor cost mimization in the short run, all in all the risks outweight the benefits leading to a net negative if OTJ training was implemented unless rigouous qualitity control was enacted.

1e) 17 minutes - 22:22 KAA For Gross profit is total revenue minus the cost of goods sold. If kwik increases their prices, and if demand is price inelastic then a increase in price would lead to a less than proprtioaniate decrease in demand which would lead to increased revenue and increased customers and therefore increased marketshare and therefore increase gross profit is the increase in revenue surpasses the increase in variable costs however variable costs would probably decrease as less people are demanding the service therefore the cost of goods sold would decrease from 494786 thousands pounds and the revenue would increase from 633090 thousand pounds. Therefore increasing prices for kwiks service would lead to an increase in gross profit if demand is price inelastic. Further to this increasing price would also increase a customers perception of their service as customers believe that higher priced items typically have a better qualitity then lower priced items; therefore higher priced car servcies could attract more luxury/higher end customers who are willing to pay a preminium to service their luxury cars like a lambogini sbj roadster, since these higher income consumers have a higher income then an increase in their service price by 10 or 100 pounds would not really make a difference in how willing they are to consumer their service therefore increasing the price would attract more higher paying clients and therefore icnrease their gross profit if kwik charges these higher income clients with a higher paid service for example ultra deep servicing at a 10 x multiple of their prexisting basic offer - (alex hormoxi offers)

EVAL However this depends on if price is inelastic where if price is elastic then an increase in price would lead to a more than proprioniate decrease in demand leading to decreased revenue which in turn decreases their market share which is signifcant as in extract A it tells us increasing market share is ther primary aim for kwik fit. However attracting higher income clients depend if kwik can actually offer a higher quality service then its luxury competiitors where if they cannot then luxury clients may try out their service and pay for it once but then be disastified and choose to not buy again from them and not market/word of mouth market their brand to their other high income friends and therefore in the short run increase gross profit however in the long run since their are no repeat purchases gross profit would stay the same or decrease as lower income clinenets can not afford this bespoke ultra deep cleanning service.

KAA Against Increasing their prices could also decrease their revenue and gross profit. If price is elastic and customers are not loyal to their brand, as they have 50 years of experience but the extract never mentiones they have a good reputation or loyal customers, then an increase in price would lead to a decrease in revenue as their is a more then proptionaite decrease in demand then there is an increase in price therefore leading to decreased revenue and gross profit and reduced market share which is signficant as kwik fit is a leading car serving business in the UK and its main aim is to increase market share.

EVAL However, this depends if consumers have the luxury to shop around and overcome the intertia of swicthing providers where if kwik has customers locked in month or year long packages or if finding other car servinging centers is hard or they are 10s or 100s of kilometers away then consumers may satisifise with kwik and continue using them regardless of the increase in price

Judgement To render a final judgement, increasing price would increase gross profit. However this is contingent is they can properly structure their offers and if they can match the percieved increase in qualitity that is required in order to charge a preminium price and mentain high paying consumers. However if price is elastic than an increase in price would be determinetal to kwiks gross profit but all in all increasing price would be better.

#Section B start at 1:22 time left

2a) A consumer is a person or firm who purchases and uses goods or services from the a firm such as valigranos consumers are. people who buy their pasta.

2b) 15300/22100 = 0.693 x 100 = 69.23 % capicity utilsation.

2c) 1:20 start - 1:13 end Capital intenstive production is when most of the production process is automated using (capital such as) machines. A disadvantage of using capital intenstive production is that there are less employees who are employed if they used labour intensive production therefore meaning that less people are employed and therefore those prevsiouoly emplyed people no longer have an income therefore are worse off; this is due to their work being displaced by the 18 pacjaging machines adn the each phase being controlled by a highly advanced computer syste where before humans would have overseen them Another disadvantage of using captial intenstive production to employees is that it is very costly to set up at the begining as machine are costly pieces of equipmenets so when a business installs these 18 packaging machines or the highly advanced computer system, some employees may not recieve bonsuses or pay rises and some may be let off who were previosuly involved in the production process however are now redudant as a machine has taken over their job. As well as this their employees may be underemployed as before they would have to use their skills to produce things in labour intesntive production such as when validgrano first started up 70 years ago as opposed to now where the production line is automated by packaging machines and a computer system therefore meaning employees now only supervise the machines and make surenothing bad happens therefore erroding their baraging power when it comes to having higher wages as they can be esasily replaced.

2d) For Trademark

Against Trademark

Short Judgement + eval

2e)

#Section C