LWM uses batch production to make car tyres in 15 different sizes. Last year LWM sold 60 million tyres including 40 million tyres of its best-selling size. The Finance Director has been looking at the financial data shown in the Table. She said: ‘Liquidity is important. I need to do some ratio analysis to measure business performance. In the previous year our Return on Capital Employed was 33%.’ The directors are worried about increased competition but they cannot decide on the best way for LWM to respond.
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11:Explain two ways LWM might respond to increased competition. Recommend which way LWM should
choose. Justify your answer.[6]
Possible KN Points:
>Introduce new products.
>Lower prices.
>Merge or takeover.
>Advertise OR use promotion.
>Keep costs low.
>Keep improving existing products OR quality.