External influences facing businesses

Kestrel Coaches operates 140 coaches from depots in the North West, running school contracts, private hire and a growing network of scheduled express routes between cities. Revenue last year was £38m and operating profit £2.3m. Its balance sheet shows non-current liabilities of £6.0m and total equity of £4.0m. Fuel is about 22% of costs. The government has announced a rise in fuel duty, and several cities are introducing clean air zones that will charge older diesel coaches. Kestrel is considering buying four electric coaches for its Manchester–Liverpool route at a total cost of £1.2m. Fuel and maintenance savings are forecast at £300 000 a year for five years. Five-year discount factors at 5% are 0.952, 0.907, 0.864, 0.823 and 0.784. Kestrel employs 260 drivers; 52 left last year. There is a national shortage of coach drivers and the union is asking for a 9% pay rise. Kestrel recently introduced online booking with dynamic pricing on express routes. Economists warn that the UK may enter a mild recession.

Aurelia Beauty is a UK-based multinational selling hair and skin products in 40 countries. Last year revenue was £640m, of which £224m was earned in the UK. It has factories in Wales and Poland and is building a new factory in Vietnam to serve Asian markets. Aurelia uses palm oil in many products. Campaign groups accuse the industry of contributing to deforestation. Aurelia buys 60% of its palm oil from certified sustainable sources and has promised 100% within five years, which would raise costs. In the EU, Aurelia earns about €50m a year. The euro has moved from €1.15 to €1.20 per pound. Some countries in South America have raised tariffs on imported cosmetics. Aurelia's marketing director wants a single global brand image and advertising campaign; regional managers argue that products, ingredients and messages should be adapted locally. The board is also considering buying Belamar, a Brazilian cosmetics company with a strong local brand and its own factory.