Answer — Exercise 2

1 - a new product

• You launch a prototype of a new product to get feedback on it from possible users / reviewers, to see if it works OK, etc.
• If you can identify a gap in the market, it might mean there’s a space / an opportunity to sell your new product into. You usually first identify the gap, then start designing and making the product.
• You conduct focus groups to identify gaps in the market, see how people feel about existing products, get feedback on prototypes.
• You may get positive feedback on existing products, prototypes or new products from focus groups or users.

2 - an industrial dispute

• There are ongoing negotiations between unions and management to try and avert a strike or to come to an agreement on pay increases or hours.
• A union or workers make pay demands when they want more money.
• If both sides can reach an acceptable compromise, the industrial action will be averted or end if already started.
• Both sides probably need to have a plan B in case their main plan of action doesn’t work.
• Unions may threaten to call a strike if their demands aren’t met

3 - a takeover

• A small company may be happy to be taken over if they feel the big company is a good fit for them.
• If the offer is large enough, the board will recommend it to shareholders, who may well then decide to sell.
• If an offer is rejected, the prospective buyers may up the offer (come back with an increased offer).
• A hostile bid is when a company tries to buy a company which doesn’t want to be bought and which will fight the attempted takeover.
• If shareholders raise their stake in a company, it means they buy more shares. This may mean they are closer to overall control / ownership and put pressure on other shareholders to sell the whole firm to them.

4 - cutting costs

• A company will undertake restructuring to reorganise the way it is run to make it more efficient and profitable.
• A company will scale back output / production, advertising or recruitment to cut costs.
• A company will outsource work to get it done more cheaply somewhere else.
• To cut costs a company may lay people off (make them redundant).
• A company will negotiate new deals with suppliers to get better prices and cut costs.

5 - sales

• Companies hope their staff will exceed targets by selling more than they were asked to do.
• When a new company or product appears they start from a low base – they don’t expect to sell many to begin with, and so make it easy to, say, increase by 100% over a number of years.
• A company or sales person always hopes to seal a major deal and sell a lot of products at a good profit.
• Perhaps having sealed a major deal, company sales or profit might increase fourfold – sell four times more than previously achieved.
• A company’s products might be dropped by a client because they are no longer popular.

6 - business taxes

• Big firms may lobby the government not to increase business taxes – they may well win concessions from the government, who reduce increases they were planning to make.
• Businesses will claim that more taxes will hit profits, which will affect their bottom line, and make them less profitable and less competitive.
• If business taxes are increased, this money could be used to fund more government programmes.