SCENARIO ONE

Jessie has a new business idea to sell a range of celebration gift boxes for special occasions. She would run the business from her home garage and use a shed in the backyard for storage of supplies. The contents would differ depending on the occasion, with some examples provided below.

party box: chocolates, lollies, popcorn, biscuits, chips and sugar cookie

luxury bos: wine premium choco, cracker, fruita and sugar cookie

baby box: teddy bear, choco, socks and beanie, bib and sugar cookie

Jessie thinks she will be able to make the sugar cookies and write a personalised message on them related specifically to each order. However, she needs more practice to make them look professional.

Required:

(a) Jessie is planning to charge one fixed price ($40) for the gift boxes, no matter which one is ordered. Provide one advantage and one disadvantage of this pricing strategy. (2 marks)

(b) Jessie is nervous about making the cookies initially as she will not have much experience, and might be too busy packing orders. She is thinking of outsourcing the making of the cookies to a local bakery who will charge her $3 per cookie. Provide three potential risks specifically related to Jessie outsourcing the cookies. (3 marks)