A buyer in Seren: At a food fair Marco meets Dravo Foods, a wholesaler in Seren that wants to sell Lena's crackers from spring 2027.
Crackers at home
- Lena's Bakery Ltd sells its own crackers to the cafés it supplies at $2.50 a packet.
- It sold 18,000 in 2025, and Marco forecasts 17,500 for 2026 (4.5.1).
- Most cafés that want crackers already buy them, and Goldcrust now sells its own to cafés at $1.90.
The buyer
- Seren is the Marovian city where Goldcrust built its factory (1.6.2).
- Dravo supplies 300 cafés.
Marco is keen. Lena is not sure. How to get the crackers there is 4.6.1, and how Marovian tastes might change them is 4.6.2. The question here is simpler to ask and harder to answer: for this business, right now, do the chances outweigh the dangers?
Start with what Marovia could give Lena's. Each chance is an opportunity; each danger, in the next section, is a threat.
Four opportunities, in Lena's case
More customers
Marovia has 20 million people, and each eats about 2 packets of crackers a year: a market of 40 million packets. Dravo thinks Lena's could win 0.3% of it, which is 120,000 packets, more than six times what the town buys.
A lower cost for every packet
Above 100,000 packets a year, a $36,000 packing machine pays for itself and the cost of a packet falls from $1.00 to $0.80, 20% less (economies of scale). The saving counts on the home packets too.
Risk spread over two markets
Today every cracker is sold in one town, where the packaging factory is cutting 300 jobs in 2026. A slump at home would not empty Seren's cafés.
A second life for the product
At home the crackers have stopped growing: they are in maturity. In Marovia they are new, so selling there works like an extension strategy (4.5.1). And Marovians sit in cafés for an hour (1.6.3), which is where crackers are eaten.
An opportunity needs a fact from the case: 'A bigger market' is a phrase that fits any business going anywhere. '120,000 packets a year, five times what the town buys' is an argument about this one.
Every opportunity you write should carry a number or a name from the case.
Notice that every opportunity above rests on a figure somebody estimated: Dravo's 0.3%, the 2 packets a head, the 100,000 packets the machine needs. Keep that in mind; it matters when the weighing starts.
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Lena's list is longer than Marco's. Some of the threats come from Marovia's market, some from the border in between, and some from inside Lena's own business.
From Marovia's market
- Brodek, the Marovian market leader, holds 45% and sells to cafés at 25 crowns a packet
- Goldcrust already has 30 bakeries and a known name in Marovia
- Marovians like dark, seeded bread, so plain wheat crackers may need a new recipe (4.6.2)
- In Seren one adult in eight is out of work, so cafés watch every crown
From the border
- A 20% tariff on baked goods from abroad: 5.5 crowns on every 27.5-crown packet
- By law every packet must list its ingredients in Marovia's language
- Dravo pays in crowns, so a falling crown means fewer dollars per packet
- Shipping and labels cost $0.30 a packet, and crackers must arrive before they go stale
From inside Lena's
- Station Road opens in September 2026 on a $120,000 loan, so time and money are already stretched
- Lena and Marco make every decision, and neither speaks Marovia's language
- One wholesaler is the only way in: if Dravo stops ordering, sales stop
- About 2,300 more packets a week for Priti's night shift at Mill Lane
The tariff, in numbers
Lena's price to Dravo
27.5 crowns a packet.
The tariff
At the border Dravo pays the 20% tariff on top: 5.5 crowns.
Dravo's cost
33 crowns a packet, before it adds anything for itself.
The rival
Brodek sells to the same cafés at 25 crowns.
The dear ones on the shelf: Lena's crackers will be the dear ones on the shelf, so they must sell on taste and name, not on price.
Then there is the exchange rate (1.6.1). Lena's pays for flour and wages in dollars but would be paid in crowns. At 12.5 crowns to the dollar, 27.5 crowns is $2.20. If the crown weakens to 13.75 to the dollar, the same 27.5 crowns is only $2.00: 20 cents less on every packet, and nothing Lena's did caused it.
Threats are not only out there: It is easy to list tariffs, rivals and currencies and forget the business itself.
Two directors who are about to open a fourth shop may simply not have the hours to learn a new country as well. A business's own size, people and way of deciding can be the biggest threat on the list.
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Two lists do not answer anything. Weighing means asking three things of every point.
Three questions for every point
- How big is it?
- How likely is it?
- Can it be made smaller?
The first question needs numbers, so Lena puts Dravo's estimate next to a cautious one: half of it.
| If Dravo is right (0.3%) | If sales are half that (0.15%) | |
|---|---|---|
| Packets a year in Marovia | 40,000,000 × 0.3% = 120,000 | 40,000,000 × 0.15% = 60,000 |
| Packets in all, with 17,500 at home | 137,500 | 77,500 |
| Packing machine (needs 100,000 or more) | Yes: cost falls to $0.80 a packet | No: cost stays at $1.00 |
| Left from each packet (price minus making, shipping and labels) | $2.20 − $0.80 − $0.30 = $1.10 | $2.20 − $1.00 − $0.30 = $0.90 |
| Left per year from Marovia | 120,000 × $1.10 = $132,000 | 60,000 × $0.90 = $54,000 |
| The same, if the crown weakens to 13.75 | 120,000 × $0.90 = $108,000 | 60,000 × $0.70 = $42,000 |
| Paid once, up front | $36,000 machine + $10,000 set-up | $10,000 set-up |
What the table shows: The lower cost per packet only arrives in the good case. At half Dravo's figure, output stays under 100,000 and the machine never pays.
| Case | Left a year |
|---|---|
| The crackers at home | $27,000 |
| Cautious case: half Dravo's figure | $54,000, twice the home figure |
| Cautious case with a weaker crown | $42,000: cut by a fifth |
The condition: The numbers only hold, though, if cafés pay 33 crowns for Lena's when Brodek's cost 25.
Four questions to ask of every point
How big is it?
Put a number on it. The tariff is 5.5 crowns a packet; the weaker crown is 20 cents; the machine saves 20 cents, but only above 100,000 packets.
How likely is it?
The tariff is certain. The weaker crown may or may not happen. Dravo's 0.3% comes from a firm that wants the deal, so it may be hopeful.
Can it be made smaller?
Some threats can be reduced: agree a price in dollars so Dravo carries the currency risk, test a seeded cracker, find a second wholesaler. Others, like the tariff, cannot.
Does it fit the business now?
A good plan at the wrong time can still fail. Lena and Marco open Station Road in September 2026; spring 2027 gives them six months to settle it first.
Asked this way, some big-sounding threats shrink and some quiet ones grow. The weaker crown sounds alarming but costs 20 cents of 90. The tariff is certain, and it is what makes Lena's the dear packet. Relying on one wholesaler was nobody's first worry, yet it is the one that could end the whole plan in a single phone call.
Two directors, two answers: Marco: go in spring 2027, buy the packing machine, and stop depending on one town.
Lena: wait a year until Station Road is paying its way, because the numbers rest on Dravo's guess.
Both have a point, and the case has no single right answer. A judgement does three things: it answers the question asked, it gives the reason that tips the balance, and it says what the answer depends on. Lena's has more than two options.
Go now, the full plan
- Sell through Dravo from spring 2027 and buy the $36,000 machine at once
- Right if Dravo's 120,000 packets are close to the truth
- Risk: the machine is bought before anyone knows if Marovians like the crackers
Go small: a one-year trial
- Sell through Dravo, price in dollars, and buy the machine only once orders pass 100,000 a year
- Right if the plan is sound but the numbers are unproven
- Risk: a year of the higher $1.00 cost, and Brodek sees it coming
Wait a year
- Open Station Road first and look at Marovia again in 2028
- Right if the directors have no time to spare in 2027
- Risk: Dravo signs another supplier, and home sales keep slipping
A judgement with a condition: Lena's should sell its crackers in Marovia, but as a one-year trial through Dravo before buying the packing machine.
Why, and what next
- The market is large and home sales have stopped growing, but the profit depends on a share nobody has tested.
- If orders pass 100,000 packets a year, buy the machine.
- If the crown falls or Dravo's orders fall short, the loss is limited to the $10,000 set-up.
A good answer also says what the case does not tell you. Dravo's 0.3% is Dravo's estimate. The 2 packets a head is a national average, and Seren's cafés may be different. Nobody knows where the crown will go, or whether Brodek will cut its price when a newcomer arrives. Naming these limits is part of the judgement, not an extra.
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How this comes up: The long question gives a case about a business that plans to sell abroad, often with tables of market data and costs.
It asks you to discuss the advantages and disadvantages for that business of marketing its product internationally, for ten marks.
Use the figures: The figures in the tables are there to be used. An answer that never works with them stays in the middle marks, however good its points.
The ten-mark pattern
- Two opportunities, from the case. Each with a number worked out from the tables: sales, a market share, a cost that falls.
- Two threats, from the case. Each with a number or a fact: a tariff, a rival's price, a currency, the firm's own limits.
- Weigh them. Which is bigger, which is certain, which can be made smaller, and which depends on another.
- A judgement with a condition. Which side wins for this business, why, and what would change it.
- What the case does not say. Whose estimate the numbers are, and what is missing.
Two traps: One side only. Four strong opportunities and no threats is not a discussion, and it stays low however well each point is made. Two of each is the least.
A saving that is not there. Lower costs from a larger scale often need a certain volume. Check whether the case reaches it, and in which of its scenarios.
Using the information in the case, discuss the advantages and disadvantages for Lena's Bakery Ltd of marketing its crackers in Marovia.
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See the answer broken into clear points, with guidance on how each point earns marks.