Abitur Hessen Wirtschaftslehre 2022 · LK · bilingual Englisch

VegGreen Ltd. – An Irish veggie drink manufacturer going global

1 VegGreen Ltd. is an Irish company producing veggie drinks. The company is recognized for its product innovations in the vegetable drinks sector. Based on thorough market research VegGreen Ltd. has made the decision to develop and launch a new kind of veggie drink called GoGinger. The current product portfolio is made up of four veggie drinks: PowerPlant, CocoCreme, MangoMousse and AppleAction.

Material 1: Sales figures (in units)

Year · PowerPlant (PP) · CocoCreme (CC) · MangoMousse (MM) · AppleAction (AA)

1 · 3,000 · 9,000 · - · -

2 · 5,000 · 11,000 · - · -

3 · 9,000 · 7,000 · 10,000 · -

4 · 13,000 · 4,000 · 16,000 · -

5 · 19,000 · 2,000 · 19,000 · 3,000

6 · 21,000 · - · 17,000 · 7,000

7 · 23,000 · - · 12,000 · 16,000

8 · 23,000 · - · 11,000 · 21,000

9 · 19,000 · - · 9,000 · 26,000

1.1

From the sales figures in Material 1 describe the product life cycles of the products PowerPlant and CocoCreme at constant sales prices. Establish for the product PowerPlant two suitable product policy measures and describe their concrete realization. [12 BE]

1.2

Explain and assess whether the product portfolio of VegGreen Ltd. has been well managed over the years 1-9. [10 BE]

1.3

New products usually pass through five product innovation stages when they are being developed. Name and describe these five stages. [10 BE]

1.4 At each of the five stages many ideas are rejected. This means that very few ideas generated in the first stage will end up as a product launched onto the market. The table in material 2 shows that in stage one 600 ideas were put forward for the new veggie drink which costs EUR 36,000. The rate of ideas further developed in stage one is 1 in 20, with 19 out of 20 being rejected. In stage two, the rate falls from 1 in 20 ideas to 1 in 5. At the end of the process, only one out of a total of 600 ideas has "survived" to be launched onto the market. A competitor analysis has shown that VegGreen Ltd.'s strongest competitor spends an average total of EUR 90,000 on the development and launch of a fruit juice drink onto the market.

1.4.1

With the help of the data in Material 2, calculate the number of ideas introduced into stage 2, 3, 4 and 5 according to the rate of further developed ideas as well as the total cost of developing the new veggie drink GoGinger. Briefly comment on your result. [6 BE]

Hint: Complete the table below to record your calculations.

Product innovation stage · No. of ideas put forward · Rate of ideas further developed · Cost per idea per stage (in EUR) · Cost per stage (in EUR)

1 · 600 · 1 in 20 · 60.00 · 36,000.00

2 · · 1 in 5 · 600.00

3 · · 1 in 3 · 10,000.00

4 · · 1 in 2 · 15,000.00

5 · · 1 in 1 · 40,000.00

Total cost (in €) · -- · -- · --

1.4.2

In general, illustrate three constraints that might restrict the number of new products being developed and suggest one possibility each to overcome these. [9 BE]

Aufgabe 2

To produce the new veggie drink GoGinger, VegGreen Ltd. has to acquire a manufacturing plant. Two alternative offers from European manufactures are being discussed. The two manufacturing plants (offer A and offer B) are mutually exclusive offers. The acquisition cost of both machines amount to EUR 97,000 and their useful economic life is 5 years. The minimum rate of return desired is 9 %. As discount rates $i_1 = 6\,\%$ and $i_2 = 14\,\%$ are used. Further information on the estimated net cash flows can be found in the table below.

Year 1

Year 2

Year 3

Year 4

Year 5

net cash flows (in EUR) offer A

15,000

30,000

20,000

40,000

30,000

net cash flows (in EUR) offer B

20,000

35,000

25,000

20,000

25,000

2.1

Calculate the net present values of offer A and offer B and the internal rate of return for both offers. Based on your calculations, suggest one alternative to the management of VegGreen Ltd. Please round to the second decimal place. [17 BE]

EUR

EUR

%

EUR

EUR

%

2.2

Examine the usefulness of the internal rate of return method as a discounting method of investment appraisal by pointing out four aspects. [8 BE]

3

While developing the new product GoGinger, VegGreen Ltd. is planning to find a new market in order to expand globally.

Material 3

Economic Data of Country A in %

Economic Data of Country A

Year

Year +1

forecast

Year +2

forecast

Year +3

forecast

Unemployment rate in %

11.0

10.0

9.0

9.0

Change vs. previous year in %

Gross Domestic Product (real)

3.0

3.5

5.0

5.0

Industrial production

2.0

3.0

3.5

3.5

Gross investments

6.1

6.9

7.4

7.3

Private consumption expenditure

4.0

4.2

5.0

5.0

Consumer prices

4.5

5.1

4.8

4.2

Exports

5.0

7.5

8.0

8.5

Imports

8.0

10.0

12.2

12.0

Among other data, the office for the collection and research of economic data in country A published in its yearly report that the population of currently 21 million people will continue to grow in the future. The average age of the population is currently 35.5 years and will be decreasing in the future due to the immigration of predominantly younger people. The population tends to adopt a health-conscious diet.

3.1

Economic data is compiled for the preparation of sales forecasts. Analyse and assess the overall economic development of country A based on the macroeconomic data given in Material 3.

(10 BE)

3.2

Assess whether country A is an attractive target country for the planned expansion of VegGreen Ltd.

(6 BE)

3

While developing the new product GoGinger, VegGreen Ltd. is planning to find a new market in order to expand globally.

Aufgabe 3.3

VegGreen Ltd. has a history of profitable growth and has recently become part of a global production network (GPN) which should help foster its global sales growth.

Describe what a global production network is and identify four potential benefits and four risks to companies being organized in GPNs. [12 BE]

Mexican Burrito Corp.

Mexican Burrito Corp. is a restaurant chain with 32 subsidiaries operating in the US. At the beginning of the first quarter of 2021, they plan an investment of USD 1,680,000 in an online food delivery portal to expand their business by a home delivery service. They discuss either to finance the investment by taking out a loan or by issuing new shares.

1.1

Compare both options with regard to the distribution of profits, independence of management, equity capital ratio and temporal availability.

(8 BE)

1.2

The management of Mexican Burrito Corp. decides to finance the investment by raising a loan of USD 680,000. As a consequence of the restaurant crisis in the Corona year 2020, Mexican Burrito Corp.’s internal bank rating and external credit rating is downgraded to “junk” 1. Those ratings are not only based on financial figures and ratios but also on qualitative parameters.

Name four qualitative aspects used by credit rating agencies to conduct a rating. Show the effect of Mexican Burrito Corp.’s downgrading on raising a loan.

(7 BE)

1 junk: lowest credit rating

Mexican Burrito Corp.

Mexican Burrito Corp. is a restaurant chain with 32 subsidiaries operating in the US. At the beginning of the first quarter of 2021, they plan an investment of USD 1,680,000 in an online food delivery portal to expand their business by a home delivery service. They discuss either to finance the investment by taking out a loan or by issuing new shares.

1.3 The management of Mexican Burrito Corp. analyses the performance of their subsidiaries on a regular basis. The variable and fixed costs for each subsidiary are shown in Material 1.

Calculate the contribution 1 for drinks and food as well as the profit/loss in each subsidiary with the help of Material 1. Interpret your results. [6 BE]

Material 1: Performance indicators of the New York and Las Vegas subsidiaries

New York subsidiary

Las Vegas subsidiary

Turnover with drinks per month

USD 123,000

USD 115,000

Turnover with food per month

USD 1,250,000

USD 625,000

Variable costs for drinks

USD 23,000

USD 50,000

Variable costs for food

USD 500,000

USD 500,000

Total fixed costs

USD 320,000

USD 125,000

Contribution Margin Calculation (in USD):

Indicator

New York

Las Vegas

Contribution margin 1 drinks

Contribution margin 1 food

Total contribution margin

Profit / Loss

2. The following economic data apply to the state of XY-Republic in Southern America. The economic targets of XY-Republic are comparable to those as laid down in the German Law of Stability and Growth (1967). They include the latest figures of the years 2019, 2020, 2021 and a forecast for 2022. Companies, stock markets and citizens have been hit severely by the COVID-19 pandemic in 2020.

Material 2

Economic data of XY-Republic

2.1

Name the six goals of the uneasy hexagon and their target values. With the charts (Material 2) examine if the country reached the targets and intentions of the uneasy hexagon in 2020 and 2021.

(21 BE)

2.2

Experts forecast that the XY-Republic is heading into a stagflation. Describe such an economic scenario. Verify whether this opinion is correct.

(6 BE)

2.3

Suggest concrete instructions for governmental measures to achieve the goals of full employment and fair income distribution (two measures each).

(8 BE)

2.4

In order to protect the environment, the government plans to introduce a carbon dioxide tax for individual emitters. They have to pay a tax for every ton of greenhouse gas released into the atmosphere. Estimate the impact of such a tax on the goal achievement of the uneasy hexagon (three self-chosen goals).

(6 BE)

Material 2

Economic data of XY-Republic

The government plans to introduce a stimulus package of USD 25 bn. to reduce the negative effects of the COVID-19 pandemic financed by the new carbon dioxide tax which is estimated to increase the tax revenue by that amount. The following measures are taken into account:

investment in digital infrastructure of rural areas financed by the carbon tax

rise in child benefit financed by the carbon tax

stop the tax reform and increase spending on road construction, new school buildings and national hospitals financed by a 25 bn. loan

stop the tax reform and increase unemployment benefit financed by a USD 25 bn. loan

$C_a$

= USD 200 bn.

$I_a$

= USD 90 bn.

$G_a$

= USD 150 bn.

$Z_a$

= USD 50 bn.

$T_a$

= USD 200 bn.

$c$

= 0.8

Calculate the national equilibrium income in the initial situation and the effects the measures have on the equilibrium income. Evaluate your results.

1.

2.

3.

4.

5.

6.

Material 2

Economic data of XY-Republic

The Harmonized Index of Consumer Prices (HICP) of XY-Republic is rising steadily. Currently, collective bargaining in several branches of industry is taking place. The trade unions are calling for high wage agreements.

3.1

Economists fear that the wage increase may trigger a wage-price spiral. Describe in how far wage agreements support this development. [5 BE]

3.2

Describe three measures of monetary policy and their mode of action that could be implemented by the Central Bank of XY-Republic to fight the ongoing rise of the inflation rate. Evaluate the monetary policy of the Central Bank taking the data of Material 2 into account. [11 BE]

3.3

The national XY-Republic Newspaper titles "Perceived inflation at 20 %: much higher than official data show". Assess the headline by referring to two arguments. [8 BE]

AirBike Inc. goes Hawaii

AirBike Inc. is one of the worldwide leading producers of lightweight bikes. For the company a bike is more than a mode of transportation. It is a feeling – a passion. Therefore, each bike is equipped with the best components available. The production site is located in Indianapolis, Indiana.

The triathletes using the new triathlon bike which was introduced two years ago have already been very successful. Besides a win at the Roth Challenge in Germany last summer, the bike also won a World Championship in Kona, Hawaii. An update of the winning bike has been introduced to the market last fall.

1 In the carbon frame production, the divisional board is planning to invest in a digital production island. The current figures and discounting factors are available in Material 1.

Material 1: Data - Investment objects

production island A

production island B

Initial costs (in $)

6,500,000

6,000,000

Useful life (in years)

8

8

Residual value (in $)

550,000

0

Imputed interest rate (in %)

5

5

Projected cash flow

year

production island A

production island B

cash inflow (in €)

cash outflow (in €)

cash inflow (in €)

cash outflow (in €)

2023

1,450,000.00

600,000.00

1,200,000.00

600,000.00

2024

1,600,000.00

650,000.00

1,500,000.00

700,000.00

2025

1,750,000.00

800,000.00

1,800,000.00

800,000.00

2026

2,000,000.00

1,000,000.00

2,000,000.00

1,000,000.00

2027

2,250,000.00

1,250,000.00

2,450,000.00

1,250,000.00

2028

2,500,000.00

1,500,000.00

2,800,000.00

1,450,000.00

2029

2,800,000.00

1,800,000.00

3,000,000.00

1,750,000.00

2030

3,200,000.00

2,200,000.00

3,150,000.00

2,150,000.00

1.1

Calculate the net present values of both investment objects. Assess your results briefly. [12 BE]

Hint: Please round the discounted surpluses to the second decimal digit.

1.2

The investment decision shall not only be based on the net present value method. The controlling department wants to have a more precise result and applies the internal rate of return method. They have already calculated an internal rate of return of 5.29 % for the digital production island A.

For the digital production island B they calculated net present values of USD 216,887.60 at an imputed interest rate of 6 % and USD -525,053.25 at 9 %.

Draw a graph in a coordinate system and estimate the internal rate of return of the digital production island B on the basis of the given results. [6 BE]

1.3

Also, calculate the internal rate of return of production island B and assess your results briefly. [6 BE]

1.4

Explain and assess the effects of a low market interest rate on the level of the discounting rate. Also, assess the impact of the low market interest rate and the resulting development of the present values considering the profitability of the company. [10 BE]

1.5

In addition to the dynamic methods of appraisal, static investment calculations play an important role in investment decisions. Describe two static investment calculation methods. [6 BE]

AirBike Inc. wants to raise the additionally needed funds for the production island by increasing its share capital. In the annual general meeting of the shareholders, it was decided to put the suggestion of the executive board to increase the share capital by USD 10 million to USD 60 million into practice. The face value of the shares is USD 50. The new shares shall be issued at an initial price of USD 120. The stock exchange price before the capital increase amounted to USD 150 per share.

2.1

Name and describe three advantages and disadvantages for equity and debt financing. (6 BE)

2.2

Calculate the subscription ratio, the value of the subscription right, the capital inflow and the average share price after the capital increase. Explain the lower price of the average share price after the capital increase briefly. (10 BE)

2.3

An old shareholder owns 1,800 old shares. Calculate the potential loss of value of the shareholder if he does not get any compensation. (4 BE)

2.4

Develop two scenarios the shareholder can choose from in order to avoid a dilution of the value of his share capital. Explain one advantage of each of the two possibilities. (8 BE)

2.5

The old shareholder who owns 1,800 shares of the AirBike Inc. not only wants to avoid a dilution of his share capital. He would like to acquire a total of 500 new shares. Calculate how much financial means/money the old shareholder must raise for his investment. (6 BE)

2.6

Assess the impact a capital increase or an additional loan would have had on the rating of the credit worthiness of AirBike Inc. (6 BE)

The CEO of the company supports the Republican Party that always applies a supply-oriented fiscal policy. Unfortunately, the governing party of Indiana only applied demand-oriented fiscal political measures in the past.

3.1

Describe two demand-oriented fiscal political measures that can be applied in an economic recession. (4 BE)

3.2

Develop two effect chains on the basis of two other fiscal political measures of the supply-oriented economic policy which show how the competitiveness of an economy in recession could be improved. (10 BE)

3.3

Explain two points of criticism of a supply-oriented fiscal political approach. (6 BE)