11 Identify and explain two factors (other than finance) that CLW’s management need to consider when increasing.....[6]

[BASEL Moderator]

CLW makes wood furniture, including chairs and tables. Demand has risen quickly over the past 3 years and the business needs to increase the scale of production at its factory. The factory is located near the city centre in an area of low unemployment. The Finance Director has produced a business plan, including a balance sheet. The Finance Director is pleased with CLW’s liquidity

11 Identify and explain two factors (other than finance) that CLW’s management need to consider when increasing the scale of production. [6]

Possible KN Points:
• Enough workspace
• Access to sufficient supplies
• Labour issues e.g. need to recruit/train more workers
• Market demand/increase in demand permanent
• Diseconomies of scale e.g. communication issues
• Storage issues e.g. have they sufficient storage space
• Quality issues e.g. are they able to check standard
• Machinery issues e.g. is condition/level of machinery sufficient