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.
- LW TABLE.JPG (12.46 KiB) Viewed 151 times
26 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
• Provide good customer service