Save:
Favorite
Share:
Calculator Allowed: Yes

Question

Answer

Transcription of this question: 4.Willow Enterprises (WE)Willow Enterprises (WE) was founded in 1989 originally as a small manufacturer of carpetingfor high-end commercial and institutional office space. In 1997 the management made severalstrategic decisions:• change from the use of cheap man-made materials to more expensive natural fibres in itscarpets• change legal status from a private to a public limited companyuse profits to increase production capacity and expand the sales force• diversify by taking over other regional businesses, including a retail chain, and transform theminto environmentally friendly businesses.Because of its appeal to environmentally conscious customers, WE became the regional marketleader and, by 2008, was an important carpet manufacturer at a national level.At this time, Chief Executive Officer Simon Dee decided that WE would adopt a far-reachingprogramme of corporate social responsibility (CSR). Every year, WE committed more resourcesto various forms of corporate social responsibility (CSR), such as charitable contributions and fairpayments to employees and suppliers. By 2018, WE had diverse revenue streams and a brandidentity strongly associated with corporate social responsibility (CSR).For the last few years, WES gross and net profit margins have been falling slightly but steadily.Simon has attributed the declining profitability to diseconomies of scale and one-off (one-time)expenses associated with each takeover. The Chief Financial Officer, Ruth Croft, disagreed.She gave Simon a copy of a 1970 article by the economist Milton Friedman entitled “The SocialResponsibility of Business is to increase its Profits”.(a)(b)(c)(d)Define the term revenue streams.Explain one advantage and one disadvantage of WE changing its legal status to apublic limited company.With reference to WE, distinguish between internal and external growth.Discuss whether WE should retain its programme of corporate social responsibility(CSR).[2][10]

Leave a Reply