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Transcription of this question: 5.In January 2009, Sophie received a letter from the Association Francaise D ‘Ecotourisme (ÅFE)informing her Of a European Union (EU) initiative on climate change. From 2010, EU grantsand subsidies will be available to regional governments to promote environmental activities,including eco-tourism. Businesses may bid for grants to support capital developments, which notonly promote sustainability, but also Offer employment opportunities in rural areas. The wagesOf newly recruited employees will be subsidized for up to two years. The AFE letter includesdetails Of existing eco-tourist businesses in the region (Item 4). Although it is not certain thatLes Maisonnettes will be awarded a grant or subsidy, the business meets the scheme’s criteria andthe local AFE official is confident that Les Maisonnettes can expect assistance up to the value Of€200 000 in the first year Of operation, if the business expands. The AFE believe that 10 Otherholiday ventures in the region will apply for grants and concentrate on eco-tourism_ All are small,farm-based projects, similar to Les Maisonnettes, with one exception. The exception is the hotelLe Soleil, which is part Of a large European chain offering a wide range Of leisure facilitiessuch as spas, fitness centres and golf.This news causes Sophie to take action. She meets with her bank manager and establishes anexpansion budget for Les Maisonnettes based on the potential grant and additional borrowing securedon the shop. These developments confirm in Sophie’s mind that she wants to grow the brand OfLes Maisonnettes_ She decides that she will prepare two business proposals to support her applicationfor the EU grants. The first proposal will focus on the plans to develop the education centre(Option 2) and the second proposal will support the repositioning Of Les Maisonnettes as a luxuriouseco-tourist resort (Option 3). Sophie hires a business advisor recommended by the AFE to draw upher financial plans and help with marketing issues. He suggests splitting the business into cost andprofit centres.(a)(b)(c)(d)Identify two strengths and two weaknesses Of the present business operations OfLes Maisonnettes.Explain how the increased economies Of scale Of Sanctucuy may providecompetitive advantage over smaller operations such as Les Maisonnettes.Analyse the role Of budgets and variances in the strategic planning OfLes Maisonnettes.Applying suitable tools such as Ansoff’s growth matrix and Porter’sgeneric strategies, and using information contained in the case study andItems I to 7, evaluate the two expansion alternatives (Options 2 and 3)proposed by Sophie.[4 marks][8 marks][8 marks][l O marks]Additional informationItem 1: End Of holida uestionnaire summa for Les Maisonnettes, Se tember 2008(Figures in %)AccommodationComfortQuality Of serviceValue for moneyRestaurantQuality of foodValue for moneyServiceActivitiesCookeryOutdoorOverall satisfactionvery poor1212poor1616161620satisfactory3630485248good364224402428very good1224123212Item 2: Economic data as at JanuaIndicatorInflation (%)Economic growth (% change in GDP)Interest rates (%)Exchange rate (E: e)200920101.51.94.0France20111.91.54.520122.12.04.252010242.14.51.3220112.71.74_751.3020122.8224.01.35Item 3: UK newspaper report — March 2008A quarter Of holidaymakers believe that travel companies should take a more active role inhelping local communities. Currently, those taking socially responsible breaks account for onlyof the 2007 UK travel market.However, Mintel* has identified that 17% Of adults have recently taken a holiday abroad thatcan be defined as ethical. This equates to 450000 holidays each year. By 2010 the outgoingeco-tourism holiday market from the UK will have increased to 2.5 million trips annually.Green travellers are more likely to have an above-average income or be retired according tothe survey.Item 4: CustomerQuality ofeeo-touristfacilitieserce tion Of holidaventures seekinPriceHighrantsHighKey:Les Maisonnet,’esRegional CompetitorsLc Soleil

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