IB BUSINESS MANAGEMENT SL, Paper 2, November, 2004, TZ0, Solved Past Paper

Superscent, a leading luxury cosmetics company, is planning to launch a new fragrance called Bcool. This product is aimed at the 15-25 year old demographic, focusing on themes of individuality, fun, and internationalism. Bcool is designed to complement Superscent's existing market position, which is known for high-quality products sold through exclusive outlets, targeting consumers with high disposable income and extravagant lifestyles. The launch will be supported by Superscent's strong cash flow, with industry analysts predicting an investment of over $100 million to establish Bcool as a significant addition to Superscent's product range.

The promotional strategy for Bcool includes advertisements featuring sports and pop music celebrities from diverse cultural backgrounds. The fragrance will be sold through Superscent's existing retail network at a price 10-15% higher than its closest competitors, yet still priced lower than the existing Superscent range.

$WMB$ is a well-established car manufacturer operating in a wealthy developed country. Despite stable domestic sales, the company has experienced a decline in its global market share due to intense competition from manufacturers focusing on producing cars for the global economy, thereby benefiting from economies of scale. The newly appointed chief executive, Kosuke Ozumi, intends to introduce financial incentives to boost motivation within the company, believing that individuals should be rewarded for producing good results.

However, industry commentators are skeptical of Kosuke's plans, suggesting that $WMB$ should subcontract more of its activities and find ways to reduce excessive stock levels, which have resulted in too much money being tied up in working capital.