17 Identify and explain two problems that a fall in profit might cause for the company. [6]

[BASEL Moderator]

Javid is a company that manufactures a range of luxury chocolates using batch production. Over the past year, profit has fallen due to increased competition. In order to cut costs, the Finance Director has suggested the company introduces new technology into the production process. The Human Resources Director is not sure that workers would benefit from the introduction of new technology.

17 Identify and explain two problems that a fall in profit might cause for the company. [6]

Possible KN Points:
• Lack of finance
• Lenders/investors unwilling to give money
• Workers insecure
• Damaged reputation
• Shareholders may sell shares