OCR F297 (Candy Cabs) - Business Objectives and Strategy

Here are some pointers for the key application issues raised in Candy Cabs for the specification area of Business Objectives & Strategy…

Key context for assessing objectives:

- Candy Cabs is a small business (turnover

<£1m)
- The business is low risk, but operates in a low-growth and competitive (but regulated) market
- Business is well-established and has made profits in the past
- Partnership structure: influences decision-making process and creates some strains in relationships

Andrew Boddie

His objectives are based around the required returns on his investments (which need to take account of the risks he perceives he is taking)

“Businesses exist to make owners wealthy” [line 4]

Will have a main objective of profit maximisation for the business

Boddie is described as a “sleeping partner” (i.e. not involved in day-to-day operations & decision-making), but that does not diminish his influence over the strategy & direction of the business

Question - is Boddie really taking on much risk?
- Partnership (so he has unlimited liability = higher risk)
- But he only invested £1,000 (Appendix £1,000) - hardly a big deal for a “serial investor” [line 1]
- Loan of £22,500 provided to the business - which it ought to be able to refinance now that the business is established
- Catherine & Yvonne unlikely to take major risks with business decisions
- Risk of failure or major financial loss is relatively low - taxi business is local, regulated, relatively immune to changes in the economic climate; low growth

Catherine & Yvonne

Objectives when starting the business were quite different from Boddie.

A “dream of building a respected business serving the needs of the local community” [lined 17-18]

Key point to remember for the exam: the different stakeholder objectives of Boddie & Catherine/Yvonne are significant in terms of the behaviour and decisions of the business. The case study is written in a way which emphasises these differences.

Relatively limited growth objectives set by Catherine/Yvonne for 2010 and beyond - sales growth 8% p.a. with three options under review. [lines 49-50]

Local authority

Another major stakeholder in the business - the local authority:
Market is regulated - setting defined standards of quality, health & safety, and also influencing pricing & number of competitors
Local authority said to have an objective of a market served by “well run but inexpensive taxis” [line 21]
This objective can be both an opportunity for Candy Cabs (good reputation) as well as a constraint on growth (fare rises will be scrutinised)