He can:
- Have more flexibility over the management or repair of the building.
- Have profit from the building if he decides to sell it.
- Let or rent the property out in the future and receive another income stream.
There are risks Adrian would have to take if he way to buy premesis.
Buying a property could:
- Tie up a lot of his capital, which could be used to set up and invest in other areas of Gunner Pass.
- Adrian may have to spend money on atlerations or other building work.
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Adrian would need to be up-to-date with health and safety regualtions, fire precautions and securtiy of the property.
Identify the key customers and main competitors
When running a driving school, around 70% of the customers will be young adults turned 17. The other 30% will be older adults who are starting their lessons at a later age. Drivers who may need a refresher course or extra tuition also fit into the 30%. Adrian must set his prices suitably to the age he is working with. People aged around 17 will probably only have a part-time job, so Adrian must make his prices affordable but competitive. There are many ways in which a business can identify its customers. Market research is the most commonly used, or just seeing the customers which buy your product or service can also identify the customers. Adrian’s key customers are young adults. Adrian must advertise in the correct places to attract the business. As Daventry is constantly expanding. This can only mean more Driving Schools will be set up in the local area. Adrian must identify the prices of his competition and adjust his suitably.
Describe the current economic conditions and main environmental constraints of Gunner Pass
According to government figures. The average family should be £220 better off more than last year. This is only happens if the annual income is over £22,000. The government has also raised the minimum wage for adults from £4.10 to £4.85. This together, means that more money is available to be spent. Adrian will possibly raise his prices slightly, so more money will be coming into the business. This would help him with his bills and mortgage, which is on the increase. Due to a low unemployment rate in Daventry, people are getting more money and wanting to spend it. Adrian could possibly increase his advertising to attract all the young adults whose wages is a minimum of £3.00 an hour for 16-17 year olds. Environmental constraints put pressure on Adrian as he constantly drives his car, which is polluting the atmosphere. His car runs on diesel to reduce the dangerous emissions produced by his vehicle.
Identify how Gunner Pass competes with its main competitors, and is dealing with economic conditions and environmental constraints
Adrian needs to keep earning money and getting as many new customers as he can. Adrian has lower prices than BSM and the AA, which are the leading driving schools in the country. Gunner Pass is only a sole trader and Adrian works very hard to compete with his competition. Adrian will always be a competitor while his business is running. He can compare his customer pass rate with the other driving schools over the internet. He has recently raised his prices slightly to keep up with the costs of running a busy family. He may decide to raise them again, but must keep a watch on his competitors prices.
Adrian’s only economic constraints is the use of his car. He has to constantly use his car for his business. The pollution issue can be a concern for him, but he uses diesel to reduce the pollution he is adding to the air.
Explain how the location of Gunner Pass is an advantage or disadvantage in dealing with these external influences
When becoming a driving instructor there is no real location, as Adrian’s primary workplace is out in his car. An advantage of this is that he can drive to his customers instead of them coming to him. He can use a car park to teach his customers certain skills needed. A disadvantage of using his car is again it causes pollution. The location of Gunner Pass is unlikey to affect any environmental contraints. The only issue regarding the environment is the usage of the fuel to run his car.
Judge how well Gunner Pass has responded to competition, economic conditions and environmental constraints. Judge whether the location of Gunner Pass has been an important factor in these responses
When a new driving school is set up Adrian researches the new businesses prices. He has to do this so Gunner Pass remians competitve. He will change his prices accordingly to keep a steady flow of customers. He has competed well with bigger businesses as he is only a sole trader. Due to environmental conditions Adrian has used diesel and successfully reduced his emissions. He could decide to promote the use of using diesel with Gunner Pass. For example if he advertises that he is reducing polluting emmissions then it is likely his possible customers will give him a call and have lessons with Adrian. This can give him more customers and reduce the customers his competition is getting. This could also lead to the Adrian receiving an award for reducing the polluting emmissions into the atmosphere. He would proudly display the award on his car and leaflets etc. which is likely to attract more customers to do business with Adrian. He would also have a good reputation around the local community for being environmentaly aware, and also a good instructor. The location of Gunner Pass has not been an important factor. This is because Adrian travels to his customers using his car rather than them coming to him. However Adrian must be based in the local area, as he is, so he does not use extra fuel in getting to his customers.
Cummins UK
Describe the location of Cummins
Cummins’ have many worldwide locations spreading widely into each continent. The European and Central Area Headquarters are located at Iver in Buckinghamshire. The Global Headquarters are located in Columbus in Indiana (USA). A map to show the location of the Cummins plant in Daventry is shown below. The location of the Daventry plant is in a central position in the country and is close to motorways, train-stations, and an International Airport (Birmingham). This makes it ideal for products and materials to be delivered and distributed throughout the country and onto other countries. The majority of Cummins’ employees are from Daventry. The unemployment level is 4.8% nationally, it is significantly lower in the Daventry district. The current unemployment rate in Northamptonshire is 1.7%. Before Cummins decided to set up a plant in Daventry they should have looked at the various aspects:
• Does Daventry have the qualified and skilled employees that Cummins need?
• Is the wage rate high in the Daventry area?
• Do we need to be near our customers?
• How much will it cost to set-up and keep running the plant in the Daventry area?
Below is a map to show the location of Cummins in Daventry. It shows the surrounding roads which can be important to the location of a premises.
Businesses set up in certain areas can gain by receiving grants. The government has sectioned the UK into Tier 1 and Tier 2. Tier 1 is the section in most need of grants because of high unemployment, lower earning levels. Tier 2 is the areas are more local areas of the country.
Grant eligibility - the main factors
There are a number of factors that affect the eligibility for grants.
Location of your business
Each of the countries of the United Kingdom has its own range of grants available.
Some areas get extra grants due to social deprivation or high unemployment.
Some grants are given by local authorities to help local businesses.
Size of your business
You may only be eligible for some grants if your business is a particular size, measured either by turnover or the number of employees.
Many grants are limited to small or medium-sized enterprises (SMEs) - roughly one with fewer than 250 employees.
Industry sector
Grants are commonly targeted at industries that are economically disadvantaged.
The government targets grants at industries they want to encourage.
Grants rarely target retail businesses.
Sales development increasingly attracts government grants, with an emphasis upon assistance to exporters.
Grants are frequently targeted at manufacturing, farming and tourism.
Businesses specialising in information technology and innovation are eligible for many grants.
The purpose of the grant
Grants are often awarded for a specific purpose such as purchasing machinery, improving offices, or developing export markets.
Grant bodies prefer to see specific targets and results - often compatible with their own objectives.
The importance of the grant money to the project
As well as making an assessment of the importance of their contribution the awarding body will expect a high level of commitment and a strong probability of success. Whether you are eligible or not for a grant will depend on the terms and conditions of the specific grant applied for.
Cummins has a backlog of orders. This is when more orders are coming in when the production line cannot keep up with them. To solve this backlog Cummins’ will need more premesis and production plants to keep customers happy. Cummins are expanding in Daventry. The Daventry plant is not fully fiunctional. By the end of the year Cummins Daventry will be fully functional to all orders specific for the Daventry plant. Cummins may also decide to open up new locations across the country and the rest of the world to generally expand and get on top with its orders.
Identify the key customers and main competitors
Cummins’ believe they are the leading supplier of engines (for marine, military, transport, mining and construction), generators, filtration systems. Businesses from all over world purchase Cummins’ produce. During Cummins’ years of business they have done market research to find out what their customers need. The key customers for Cummins are: Governments, heavy machinery giants and marine industries. Governments across the world purhcase high powered engines for their public defenses. Businesses such as mining and quarying firms require heavy duty engines for their work. Marine producers purchase engines and filtration systems for boats, submarines and cruisers. Unlike the average sole trader or small business who look for every possible customer. Cummins already know their target market. This can be an advantage as Cummins’ can specifically design the correct product to suit their customers and their needs.
Describe the current economic conditions and main environmental constrainsts of Cummins
Cummins produce many engines. Unfortunately for Cummins many emissions are being produced by their business. Cummins ‘environmental mission states that they are finding ways to reduce noise, reduce emissions and improve fuel economy. At Cummins, we provide the technologies that power the world and support its economies. We conduct our business with the consent of society and we strive to improve the quality of life of all people. We demand that everything we do leads to a cleaner, healthier, safer environment.
Economic constraints always affect how successful a business is. Businesses buying from America can save money due the dollar being strong to the pound. Exchange rates will affect Cummins for every product/part they buy and sell from abroad. Interest rates do not affect Cummins. This is due to their customers. Interest rates affect families the most. The Bank of England is set to raise interest rates at 5% by the end of the year. Cummins do not need to worry about this as customers buying their products will not be families, they will mainly be large businesses and organisations/governments. The current exchange rate for the US dollar ($) to the British pound (£) is 1.8114. This can affect Cummins’ profits a great deal. For example, if Cummins make a $5million profit, from a sale to America. Then the profit will need to be exchanged to the British pound. The amount of profit after the exchange will be £2,760,295.90. This is a significant loss, which is caused by the exchange rates.
Foreign Currency and exchange risks
When Cummins exports or imports goods or services, they will need to consider how they will protect themselfs against changes in the exchange rate. A tiny variation in the rate could potentially cost Cummins many thousands of pounds.
Cummins will need to decide how to make and receive payments in foreign currencies. They can decide to open a bank account in a foreign country if they choose.
Identify how Cummins competes with its main competitors, and is dealing with economic conditions and environmental constraints
Cummins will always have many competitors. This is because there is always money to be made when dealing with engines, parts and machinery. In order to keep a constant revenue flowing into the business, Cummins need to adjust their prices in order to compete with rival businesses. In order to be successful and beat competitors it is not always the price which needs to be affordable. The quality of the end product can affect how many customers Cummins can get. For example,
JCB are currently producing heavy duty machinery to be fitted into earth moving equipment for use in quaries. JCB are selling the machinery and equipment for £2m per machine. New customers may see this as a ideal situation to grab a bargain. But if they look at the history of JCB then the may be put off. JCB’s reliability for producing long lasting and quality equipment is poor. Therfore they may be attracted to Cummins which can provide equipment of the same specification, of a better quality and reliabilty rate all. The cost will be more, but many businesss would prefer to have quality and for a long time. All this is an example of how Cummins compete with competitors. This has also led to Cummins taking more customers and JCB losing customers.
Explain how the location of Cummins is an advantage or disadvatnage in dealing with these external influences
Due to international locations and plants across the world, the external influences do not affect Cummins beacause of its location. As Cummins is spread across the world, with many locations it can only be an advantage. This is possible because different regions and continents have different laws and restrictions. For example in the USA it may only be possible for Cummins USA to produce so many products, as when they are made chemicals are released into the atmosphere. The USA may have certain laws on how much chemicals or polluting emmisons can be released per month. This can be applied on other parts of a business which can change in different countries.
Judge how well Cummins has responded to competition, economic conditions and environmental contraints. Judge wether the location of each business has been an important factor in these responses
When Cummins faces competition or a new competitive product in the market they will need to react in many ways. If possible they will get hold on the new product and asses it with their existing product. If the product is of the same genre or specification, then Cummins will possibly reduce the price of their product and advertise it more. Cummins generally compete well with rival competition. This is shown by the sales of their products which are in competition with other leading businesess.
Environmental constraints have affected Cummins in many ways. Due to exchange rates Cummins have opened more branches and locations worldwide. This will help with the loss of profit which can be affected throughout the world. The location if Cummins in Daventry is in the United Kingdom. The UK has the world’s fourth largest economy. The unemployment level is low compared to other European countries. The local economy of the Northamptonshire area is constantly high. The main reason for this is annual British Grand Prix held a Silverstone. That one event adds £40m into the regional economy. All these factors are catching for new or existing businesses wanting to move to the area.
