When the owner of FrameText reviewed the first-year accounts, the business had enough cash to fund only one major plan. FrameText writes subtitles for small...
Question 1 Report
When the owner of FrameText reviewed the first-year accounts, the business had enough cash to fund only one major plan. FrameText writes subtitles for small documentary producers. The owner is considering employing an additional editor, buying software that makes subtitles faster to produce, or cutting prices to win more customers. Its main objective for the next year is to increase profit while maintaining accurate work. A manufacturer has offered the software at a discounted price for one month.
(a) Identify what is meant by a business objective. [2]
(b) Which one of the following plans is most likely to support FrameText's profit objective in the long term?
A Employ an editor without checking expected demand.
B Purchase software that reduces the time taken to complete each subtitle file.
C Cut the price of every product by 50%.
D Stop checking subtitle accuracy. [1]
(c) Explain one reason why the owner should consider the costs, as well as the likely benefits, before choosing the plan. [2]
(d) Explain one disadvantage to FrameText if its objective changes frequently during the year. [2]
Answer Details
(a) A business objective is a target or aim set by a business. It guides decisions, such as which plan to choose, and provides a standard against which performance can be judged later. [2]
(b) Purchase software that reduces the time taken to complete each subtitle file. Faster production can lower costs per file or allow more files to be completed, supporting profit while still allowing accuracy checks. [1]
(c) The owner must compare costs with benefits because a plan such as the software may have a high initial cost. If the extra sales or cost savings are smaller than this cost, profit may not rise; the purchase could also leave less cash for other business needs. [2]
(d) Frequently changing objectives can make staff unclear about the business's priorities and the work expected of them. This may lead to inconsistent decisions, wasted resources, or failure to achieve the original objective. [2]
Exam reminder: An objective is not just a wish: it must guide action and allow the business to assess performance.
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