Peter has just purchased a small honey manufacturing company that was having financial difficulties. Peter has asked you about the financial difficulties of the company. After a brief operating period, you decided that the companys main problem was the lack of any financial planning. The company made a good product and the market potential was great. (15 marks)

Question a) Briefly explain to Peter why a company needs a good budget plan. Explain at least three benefits of a good budget. (3 marks)

Tina, the marketing manager of the company, find that the market for the companys primary product is becoming competitive because of potential entrants to the local market. The current advantage of the company is that Peter maintains a good relationship with local suppliers so that the price of raw materials is lower than that of the companys peers. In addition, the customer on the honey market is not sensitive to the differentiation among available products.

Question b) If you were Tina, which strategy of the two basic ones is more appropriate for Peters honey company? (2 marks)

Question c) Contd, based on Porters five forces (see the figure below), please briefly discuss the current industrial advantages and threats for Peters honey company. (4 marks)

D) The company is to sell 10,000 units of finished products in June 20X9 and anticipate a growth rate in sales of 5 percent per month, the desired monthly ending inventory in units of the finished product is 80 percent of the next months estimated sales, plus a safety stock of 500 units regardless of market variations. Fill the table below to calculate the desired production in July. (6 marks)