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A-level
BUSINESS
Paper 3 Business 3
Insert
Source 1: Speed-e-Puds Ltd
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2
Sanjay opened the first branch of Speed-e-Puds Ltd after seeing the huge growth in the
dessert parlour market during the last 10 years. Driven by franchise brands such as
Creams and Treatz, there are now just over 500 dessert parlours in the UK, serving
waffles, pancakes and ice cream in eat-in restaurants.
Sanjay has developed a patented waffle maker, the ‘SuperWaffler’, which cooks perfect 5
waffles in less than half the time of other waffle makers. This innovation is central to
Speed-e-Puds Ltd’s customer offer – ‘desserts as tasty as anywhere, served twice as
fast’ – a unique selling point that appeals to its target market of young families and
teenagers.
Despite his engineering background, Sanjay sees himself primarily as an entrepreneur. 10
Sanjay now owns three successful Speed-e-Puds Ltd branches just one year after he
opened his first. All three branches are very busy throughout the day, operating at high
levels of capacity utilisation. This success has made Sanjay impatient to grow the
business further. He believes that a Speed-e-Puds Ltd outlet in 75 cities in the UK
would enable him to achieve the marketing objective he has set: 15
Achieve a 15% share of the UK dessert parlour market in the next three years
A new product?
Sanjay is considering offering a new product through his Speed-e-Puds Ltd branches –
slushies. These flavoured, crushed-ice drinks are served from a large machine that
would take up a significant proportion of the counter in each Speed-e-Puds Ltd branch. 20
Detailed financial information on the slushy machines has been provided by the slushy
Revision303
machine supplier and is shown in AppendixRevision303
B. Revision303
Sanjay’s personal financial objective is to achieve a return on investment of 25% on any
money invested in his business.
Growth 25
Sanjay knows that opening new branches is critical to achieve his marketing objective.
He faces a choice over which method of growth to use:
Option 1
Sanjay could retain tight control over Speed-e-Puds Ltd by growing purely organically.
All new branches would be part of the Speed-e-Puds Ltd organisation, with Sanjay 30
frequently meeting the managers that he appoints to run these branches.
Option 2
Sanjay could sell Speed-e-Puds Ltd franchises to entrepreneurs who are interested in
owning their own Speed-e-Puds Ltd franchised outlet. In return for an initial franchise
fee and a monthly payment of 10% of revenue, franchisees would be allowed to use 35
Sanjay’s patented ‘SuperWaffler’. Franchisees would also receive training and support
for running their business and Speed-e-Puds Ltd would provide national advertising of
the brand.
Sanjay produced a SWOT analysis for his business to help him with the decision
provided in Appendix C. 40
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IB/G/Jun24/G4004/7132/3/INS Revision303 Revision303
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3
Appendix A Speed-e-Puds Ltd financial data for last year (three branches)
Revenue £750 000
Operating profit £200 000
Cash £20 000
Current ratio 0.2 : 1
Gearing ratio 90%
Total equity £100 000
Average start-up cost per branch £100 000
Appendix B Slushy machines
Initial cost of buying each slushy machine £750
Contribution per slushy 95p
Slushy machine supplier’s forecast of number
Revision303 of slushies sold per branch per year
Revision303 3600
Revision303
Increased electricity usage each year per branch £3000
The machines are expected to have a useful life of five years.
Turn over for Appendix C
Revision303 Revision303 Revision303
A-level
BUSINESS
Paper 3 Business 3
Insert
Source 1: Speed-e-Puds Ltd
Revision303 Revision303 Revision303
Revision303 Revision303 7132/3
Revision303
,Revision303 Revision303 Revision303
2
Sanjay opened the first branch of Speed-e-Puds Ltd after seeing the huge growth in the
dessert parlour market during the last 10 years. Driven by franchise brands such as
Creams and Treatz, there are now just over 500 dessert parlours in the UK, serving
waffles, pancakes and ice cream in eat-in restaurants.
Sanjay has developed a patented waffle maker, the ‘SuperWaffler’, which cooks perfect 5
waffles in less than half the time of other waffle makers. This innovation is central to
Speed-e-Puds Ltd’s customer offer – ‘desserts as tasty as anywhere, served twice as
fast’ – a unique selling point that appeals to its target market of young families and
teenagers.
Despite his engineering background, Sanjay sees himself primarily as an entrepreneur. 10
Sanjay now owns three successful Speed-e-Puds Ltd branches just one year after he
opened his first. All three branches are very busy throughout the day, operating at high
levels of capacity utilisation. This success has made Sanjay impatient to grow the
business further. He believes that a Speed-e-Puds Ltd outlet in 75 cities in the UK
would enable him to achieve the marketing objective he has set: 15
Achieve a 15% share of the UK dessert parlour market in the next three years
A new product?
Sanjay is considering offering a new product through his Speed-e-Puds Ltd branches –
slushies. These flavoured, crushed-ice drinks are served from a large machine that
would take up a significant proportion of the counter in each Speed-e-Puds Ltd branch. 20
Detailed financial information on the slushy machines has been provided by the slushy
Revision303
machine supplier and is shown in AppendixRevision303
B. Revision303
Sanjay’s personal financial objective is to achieve a return on investment of 25% on any
money invested in his business.
Growth 25
Sanjay knows that opening new branches is critical to achieve his marketing objective.
He faces a choice over which method of growth to use:
Option 1
Sanjay could retain tight control over Speed-e-Puds Ltd by growing purely organically.
All new branches would be part of the Speed-e-Puds Ltd organisation, with Sanjay 30
frequently meeting the managers that he appoints to run these branches.
Option 2
Sanjay could sell Speed-e-Puds Ltd franchises to entrepreneurs who are interested in
owning their own Speed-e-Puds Ltd franchised outlet. In return for an initial franchise
fee and a monthly payment of 10% of revenue, franchisees would be allowed to use 35
Sanjay’s patented ‘SuperWaffler’. Franchisees would also receive training and support
for running their business and Speed-e-Puds Ltd would provide national advertising of
the brand.
Sanjay produced a SWOT analysis for his business to help him with the decision
provided in Appendix C. 40
Revision303
IB/G/Jun24/G4004/7132/3/INS Revision303 Revision303
, Revision303 Revision303 Revision303
3
Appendix A Speed-e-Puds Ltd financial data for last year (three branches)
Revenue £750 000
Operating profit £200 000
Cash £20 000
Current ratio 0.2 : 1
Gearing ratio 90%
Total equity £100 000
Average start-up cost per branch £100 000
Appendix B Slushy machines
Initial cost of buying each slushy machine £750
Contribution per slushy 95p
Slushy machine supplier’s forecast of number
Revision303 of slushies sold per branch per year
Revision303 3600
Revision303
Increased electricity usage each year per branch £3000
The machines are expected to have a useful life of five years.
Turn over for Appendix C
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