Benefits of niche and specialisation markets, Financial Management

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a) Ltd. stands for ‘private limited company', i.e. a business with limited liability with shares being issued only to friends and family with the approval of the board of directors. Note, however, that in some countries such as Hong Kong and Australia, publicly listed companies can also carry ‘Ltd' after their name.

b) Identification (1 mark) and description (up to 3 marks) of job production. Note: there is no need to explain the merits and dmerits of job production in this question.

c) Consequences can be negative, positive or both. Examples include:

i. High prices can be charged for the cars, Prestigious corporate image, Benefits of niche and specialisation markets, High cost of hiring skilled labour force, High profit margins, Sales limited to around 100 vehicles per year, i.e. small customer base, High costs of production, Limited, if any, economies of scale, Long working capital cycle.

ii. Motivated workforce, High salaries, High productivity, Job satisfaction from challenging work, More involved in decision making, Limited profits and sales may hinder future pay increments.

iii. Limited channels of distribution, Long waiting time (from placing the order to getting the car), Expensive (luxury perfection!), Customer satisfaction, Feeling of prestige/pride.


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