FLD is a furniture retailer．It has 460 shops and 20000 employees．Internal recruitment is used when recruiting new shop managers．The Managing Director wants to know whether job rotation is the best method of motivation for a large business to use．The Finance Director is reviewing FLD＇s income statement．An extract is shown in Table 2．1．She is concerned that FLD＇s gross profit is decreasing． （c）Outline two possible reasons why FLD＇s gross profit is decreasing． Reason 1： Reason 2： ....................................................................................................................................... ［4］

Answer:

Award 1 mark for identification of each relevant reason (max 2).

Award 1 mark for each relevant reference to this business (max 2).

Points might include:
- Low/fall in amount of sales/demand/customers [k] at its 460 shops [app]
- Change in price / increase/decrease (selling) price [k] for the retailer [app]
- Increase in cost of sales / variable cost / increase in cost of inventory [k] so gross profit is at \$200 million [app]

Other appropriate responses should be credited.

Knowledge points:

Solution: