Paper 2: Business 2

Fernhill Coffee Roasters is a private limited company that sells coffee beans to independent cafés and, since 2022, direct to consumers through a subscription service. The UK coffee market is growing, but competition from supermarket own-brands has increased. Extract A: Fernhill sales data

	2023	2024	2025
Café (wholesale) revenue (£000)	2,400	2,350	2,280
Subscription revenue (£000)	310	620	1,040
Number of subscribers	4,100	8,000	13,200
UK specialty coffee market (£m)	410	445	480

Extract B: Pricing decision Fernhill's marketing director wants to raise the monthly subscription price from £8.00 to £9.00. A small trial in one region suggested that the number of subscribers would fall by about 5%. The finance director worries that 'one bad review on social media could cost us thousands of subscribers', and argues that Fernhill should instead spend more on promotion to win market share.

Hartwell Engineering makes precision components for the aerospace industry. Demand is rising, and the factory is operating at 96% capacity utilisation. The directors are considering two investments. Extract C: Investment options

Year	Project X: new robotic line (£000)	Project Y: extension to existing factory (£000)
0 (cost)	(1,500)	(900)
1	400	300
2	500	300
3	600	300
4	600	300

(Figures in brackets are outflows. Other figures are net cash inflows.) Extract D: Workforce concerns Hartwell employs 220 skilled machinists. The trade union representing them has warned that the robotic line could lead to 40 redundancies. Labour productivity at Hartwell is 12% below the industry average, but quality is excellent: the defect rate is 0.3% compared with an industry average of 1.1%.

Brightpath Care operates 35 residential care homes for older people across England. Its mission is 'to give every resident the dignity and comfort of home'. Extract E: Staffing data

	2023	2025
Care staff employed (average)	2,100	2,050
Staff leaving during the year	420	615
Spending on agency staff (£m)	3.2	6.8
Occupancy rate	91%	84%

Extract F: A new chief executive Brightpath's new chief executive believes the company's culture has become 'top-down and task-focused'. Home managers must follow detailed procedures set at head office, and care workers say they have little time to talk to residents. She plans to give home managers more authority over staffing and budgets, but some directors fear that decentralisation will lead to inconsistent standards and higher costs.