Page 16 - CIMA MCS Workbook May 2019 - Day 1 Suggested Solutions

CIMA MAY 2019 – MANAGEMENT CASE STUDY

 economic influences – JORD must be concerned about economic situations in this context
as they will have a direct effect on their future growth plans. Particular areas of concern
might include: changes in employment, changes in interest rates, consumers’ income and
expenditure and the inevitable effect on disposable income. The size of the economy and
the economic conditions globally (e.g. the construction industry was hit hard by the
economic crisis in 2008), have a major impact on future profitability. The most relevant
aspect is the purchasing power of the clients (on which the business is heavily dependent)
falling during economic downturns.

 social influences will be a concern for JORD and will include social, cultural or demographic
factors. The prefabricated/modular home industry is affected by the changing socio cultural
trends and client preferences and JORD have to adapt to these forces. It seems that every
year new ideas as to the efficiency of the final product affect customer preferences. This is
made even more complicated as social effects such as an aging population and growing
restrictions of free movement of labour e.g. Brexit have a longer term effect on work
capacity. Changing trends may sometimes make the existing home layout obsolete or go
out of fashion playing havoc with forecasting demand. There is therefore an inextricable
link between changes in social influences and spend on new houses. This clearly results in
the need for more detailed analysis to forecast future sales and the resultant need to
participate in the rise of “big data” to predict shifts in client behaviour and product
preference.

 technological influences – technology and innovation have become important determinants
of market share in the industry. The more innovative the design and manufacturing
processes of the company, the higher its brand, reputation and market share. In the recent
years technological innovation has remained a major basis of differentiation for Jord as
their clients’ focus shifted towards efficient and well‐designed homes. Jord currently has
CAD, CAM and advanced digital production technology. This state‐of‐the‐art production
machinery is however being superseded already by 4D and virtual reality planning software
and even robotics are now available and used by existing market players. This requires a
frequent review of these processes and a frequent update to remain competitive. Similarly
the effect of social media on marketing is very relevant with online forums growing in
importance as clients seek advice, price comparisons and product reviews before
purchasing. One key issue here is getting the firms to realise that there is an issue at all.
Jord, like many other construction firms, are by nature entrepreneurial and family run.
Getting them to change will be challenging but they will invest if they appreciate the need

 ecological/environmental influences – laws related to environment friendliness,
sustainability and carbon emissions are growing more stringent world‐wide with all the
major players in the industry having to focus on reducing the effect of their products on the
environment. Similarly low emissions will be expected from their fleet of vehicles with
those vehicles low on emissions and fuel consumption potentially receiving tax subsidies
from governments. Environment friendliness has become an important test for all
manufacturers in the 21st century as governments have started focusing heavily on
pollution control e.g. control of sustainable materials in the manufacturing process. In
addition the control of waste on the external environment in terms of pollution and

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