The Operations Director is planning to produce a new ice cream that does not contain sugar. Production of the new product will require a new automated production line. It will require new equipment to be purchased. Additional skilled workers will need to be recruited by the Human Resources department and existing workers will need to be retrained. To manufacture ice cream that does not contain sugar, MF will have to use ingredients that are extracted from plants in the rainforests in country X. This will cause environmental damage when the plants are cut down.
MF’s Operations Director is worried about the high cost of this raw material and the cost of removing all the waste from the production of this new ice cream. The cheapest way to get rid of the waste is to take it to local landfill sites, which are nearly full. The Government is responsible for the costs of managing landfill sites. Farmers lose their land when new landfill sites are created.
The new ice cream will be targeted at people who want to lose weight or who, for medical reasons, are not allowed to eat products that contain a lot of sugar. Statistics show that 10% of the adult population should not be eating sugary foods and a further 40% are thought to be overweight.
Country X has several new TV programmes aimed at people who are health conscious and new gyms are
being set up. Several other food businesses in country X are planning the introduction of new food products that are low in sugar but they are not yet ready to launch them. MF and its competitors sell food products through wholesalers and to large supermarkets.
Appendix 1
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Country X is experiencing increasing numbers of overweight people and this is causing serious health problems. Food products which contain a lot of sugar are being blamed for this crisis. Treating people who are overweight increases costs to public sector organisations such as health care services. Businesses in country X also complain that when employees are ill they do not work efficiently or they need time off work to get better.
07 Identify and explain how the following two stakeholder groups of MF will be affected by the production of this new product. [8]
Possible KN Points:
Employees
• increased production – output per worker increase
• increased job security – more skills acquired
• new production methods used – workers may not like change
• more training required
• job satisfaction – gain higher wages
Customers
• more choice of product / help to reduce weight for some consumers
• may not buy the new product – as customers are unhappy with the effect on the environment
• better meets the needs of some customers – makes customers feel more loyal to the company
• will have to pay a higher price if customers want the new ice cream