IB Business Management

Case Study: Skandvig Terra PLC

May 2023
Table of Contents

Key Words 3

Explaining the Divisions and Products 33

Water Treatment 33

The Fresh Water Division - Potable water 34

The Desalination Division – construction and operation of desalination plants 35

The Engineering Division – manufacturing of water treatment equipment and power

turbines 37

The Consumer Products Division – manufacturing of home water filters 38

IB Business Management Unit 1 39

Skandvig Terra PLC – Public Limited Company 39

Skandvig Terra PLC – Vision Statement: “Making the world a safer place” 41

Skandvig Terra PLC – Specialization 43

Skandvig Terra PLC – Growth strategies 45

Internal growth or organic business growth 45
External growth strategies 46

Skandvig Terra PLC – Economies of scale 47

Skandvig Terra PLC - STEEPLE Norway 49

Skandvig Terra PLC - STEEPLE Tanzania 52

Skandvig Terra PLC - SWOT Analysis 55

Skandvig Terra PLC - Ansoff Matrix Analysis 57

Skandvig Terra PLC - Stakeholder Discussion 59

2
Key Words

PLC – Public Limited Company

Commercial business with limited liability and owned by shareholders. Profits must be
distributed among shareholders. Shares (ownership) is bought at the stock market

Line 1
Specialization
Specialization refers to the process of developing expertise in a particular field, industry,
or subject, by focusing one's time, energy, and resources on it. This process can lead to
a person or organization having a unique set of skills, knowledge, and abilities in
comparison to others, and can help them to excel in their chosen area of focus.
Specialization can be beneficial in a variety of fields, including business, education,
technology, and more

Line 2
Vision Statement
Optimistic and inspiring declaration that defines the purpose and values of an
organization and where it wants to be in the future

Line 4
Supplies
In a business context, supplies may refer to the inputs needed to produce goods or
services
Four factors of production: land, labor, capital and enterprise

Line 5
Plant
is a building or group of buildings where goods are manufactured or assembled. It is a
place where raw materials are transformed into finished products through a series of
processes, using machinery and human labor.

3
Line 6
Regional (network)
A regional network refers to a interconnected group of entities, such as individuals,
organizations, or systems, that are located within a specific geographic region. These
networks can be established for a variety of purposes, including sharing resources,
exchanging information, coordinating activities, and promoting collaboration.

Line 7
Regional monopoly
A regional monopoly refers to a situation in which a single company or entity controls
the market for a particular product or service within a specific geographic region. This
can result in the absence of competition, giving the monopolistic company the power to
set prices and control supply without facing challenges from other firms.
Line 7
Expansion
In business, expansion refers to the growth of a company by increasing its operations,
products, markets, or workforce. This can be achieved through organic growth, such as
increasing sales and production, or through acquisitions, mergers, and partnerships.

Line 8
Desalination
Desalination is the process of removing salt and other minerals from seawater to
produce fresh water. This process is necessary in many parts of the world where fresh
water is scarce

Desalination is often seen as a solution to water scarcity, as it provides a reliable source

of fresh water, even in areas with limited natural sources. However, it can also be an
energy-intensive process, and requires a significant investment in technology and
infrastructure.

4
Line 10
(Product ) Divisions
Product divisions refer to a type of organizational structure commonly used by large
companies to manage their different product lines. In this structure, a company is
divided into separate units, each responsible for managing a specific product or group
of products.

Each product division has its own management team, sales and marketing staff,
research and development team, and production facilities, and operates as a separate
business unit within the larger company.

Line 13
Manufacturing
Manufacturing refers to the process of transforming raw materials or components into
finished goods through a series of processes, using machinery and human labor.

Line 15
Director
A director is a senior-level executive in a company, responsible for overseeing a specific
department, division, or aspect of the business. A director typically reports to the CEO
(Chief Executive Officer) or the board of directors

Line 15
Operational authority
Operational authority refers to the power and responsibility to make decisions and take
action within a specific area of an organization. This authority is typically granted to
managers, supervisors, and other personnel who have a specific role and responsibility
within the organization.

5
Line 15
Tactical authority
Tactical authority is typically held by lower-level managers and supervisors, who are
responsible for executing the plans and strategies developed by higher-level managers.

Line 18
Alternative sources
Alternative sources refer to sources of energy, goods, or services that are alternatives
to traditional or conventional sources. Alternative sources are often used to address
environmental and sustainability concerns, as well as to reduce dependence on non-
renewable resources.

Examples of alternative sources in the energy sector include renewable energy sources
such as solar, wind, and hydro power, as well as alternative fuels such as biofuels and
hydrogen.

Line 19
Leadership (styles)
Leadership refers to the ability to influence, motivate, and direct individuals or groups
towards a common goal. It is a process of social influence that enables a leader to gain
the support and commitment of others in achieving a shared purpose.

Line 19/20
Situational leadership
Situational Leadership is a leadership theory developed by Paul Hersey and Ken
Blanchard. It suggests that the best leadership style to use depends on the situation,
and that a leader should be able to adapt their style to the needs and development level
of the followers.

The theory is based on the idea that there are four main leadership styles: directing,
coaching, supporting, and delegating.

6
Line 21
External environment (STEEPLE)
STEEPLE is an acronym for the elements that make up the external environment of an
organization. STEEPLE stands for:

S - Social
T - Technological
E - Economic
E - Environmental
P - Political
L - Legal
E - Ethical

The external environment refers to the factors and forces that are outside the control of
an organization, but that can have an impact on its operations and success. A thorough
understanding of the external environment is essential for effective strategic planning,
as it helps organizations to identify and respond to trends, opportunities, and
challenges.

Social factors refer to changes and trends in the attitudes, values, beliefs, and
behaviors of a society. For example, demographic changes, changes in consumer
behavior, and the impact of social media can all be important social factors.

Technological factors refer to changes and advancements in technology that can have
an impact on an organization. For example, advances in digital technology and artificial
intelligence are transforming many industries and affecting the way organizations
operate.

Economic factors refer to changes and trends in the broader economic environment,
such as interest rates, inflation, and economic growth. For example, an economic

7
recession can impact consumer spending and reduce demand for certain products and
services.

Environmental factors refer to changes and trends in the physical environment, such as
climate change, natural disasters, and resource depletion. For example, organizations
may need to adapt to changing environmental regulations, or respond to the impact of
natural disasters.

Political factors refer to changes and trends in the political environment, such as
changes in government policies, regulations, and taxes. For example, changes in trade
policies, immigration policies, and data privacy regulations can all impact organizations.

Legal factors refer to changes and trends in the legal environment, such as changes in
laws and regulations. For example, changes in intellectual property laws, employment
laws, and consumer protection laws can all impact organizations.

Ethical factors refer to changes and trends in the ethical environment, such as changes
in societal expectations and norms around ethical behavior. For example, the growing
concern over corporate social responsibility and the ethical treatment of employees and
customers can impact an organization's reputation and bottom line.

Line 23
Autocratic leadership
Autocratic leadership is a style of leadership in which a leader has complete control and
decision-making power, and often makes decisions without seeking input from others.
This type of leader tends to be highly directive, relying on commands and orders to
achieve desired results.

In an autocratic leadership style, the leader typically focuses on maintaining order and
control, and places a high value on efficiency and getting things done quickly. This style

8
can be effective in situations where fast, decisive action is required, such as in
emergency situations or when decisions need to be made quickly.

Line 24
Productivity
Productivity is a measure of the efficiency of an organization, individual, or process in
converting inputs (such as labor, materials, and time) into outputs (such as goods and
services). High productivity means that more outputs are being produced per unit of
input, while low productivity means that fewer outputs are being produced per unit of
input.

Line 29
Distribution
Distribution refers to the process of making a product or service available to customers
through various channels, including retail stores, online platforms, wholesalers, and
direct-to-consumer sales. Effective distribution is a critical component of a company's
overall success, as it can help to increase the reach and accessibility of a product,
improve the customer experience, and increase sales and revenue.

Line 31
Internal growth
Internal growth refers to a company's ability to increase its size, profitability, and
competitiveness by leveraging its own resources and capabilities, without relying on
external factors such as acquisitions or mergers.

Internal growth can provide several benefits to a company, including:

● Increased control and ownership over the business and its future direction
● A more stable and predictable growth trajectory, as the company is not
dependent on external factors

9
 ● Improved profitability, as internal growth often leads to increased economies of
scale and improved efficiency
● Increased brand recognition and customer loyalty, as the company grows and
becomes better known in its markets

Line 31
External growth
External growth refers to a company's ability to increase its size, profitability, and
competitiveness by acquiring other businesses or entering into strategic partnerships.
This can be achieved through a variety of means, including mergers, acquisitions, joint
ventures, and strategic alliances.

Line 32
Acquisition
Acquisition refers to the process of acquiring ownership or control of a company,
business unit, or assets. This can be done through a variety of means, including
mergers, takeovers, purchases, and joint ventures. Acquisitions can be strategic or
financial in nature, and are often used as a means of expanding a company's
operations, accessing new markets and customers, and achieving economies of scale.

Line 37
Income Stream
Income stream refers to the various sources of revenue that a company generates over
time. An income stream can come from a variety of sources multiple product lines,
interest payments etc.

10
Line 38
(15% of the world’s desalination) capacity
According to the information provided, 15% of the world's desalination capacity means
that the company, group, or region in question is responsible for producing or operating
15% of the world's total useable drinking water. This would make it a significant player
in the desalination market and give it important influence over the supply and price of
fresh water in its region.

Having a significant share of the world's desalination capacity can bring several
benefits, including:

● Improved economies of scale, as the company can benefit from increased

production and purchasing power
● Access to new technology, expertise, and intellectual property, which can help to
drive innovation and competitiveness
● Increased bargaining power with suppliers, customers, and governments, as the
company can leverage its size and market position to negotiate favorable terms
and conditions

However, having such a large share of the market also carries some risks, including:
● Reputation risks, as the company may face negative publicity if its operations are
seen as contributing to environmental degradation or water scarcity in its region
● Increased competition from other large global companies

Line 39
Market
A market refers to a place, either physical or virtual, where goods and services are
traded between buyers and sellers. A market can be local, national, or global in scope,
and can cover a wide range of products and services.

11
Line 44
Demand
Demand refers to the quantity of a good or service that consumers are willing and able
to purchase at a given price over a given period of time. Demand is a crucial factor in
determining the price of goods and services in an economy, as prices are set based on
the interaction between supply and demand.

Line 49
Takeover
A takeover is a type of corporate action in which one company acquires control of
another company.

● Merger: A merger occurs when two companies combine to form a single entity.
● Acquisition: An acquisition occurs when one company buys another company's
shares or assets, giving it control over the company.
● Friendly takeover: A friendly takeover occurs when the target company agrees
to the takeover and works with the acquiring company to complete the process.
● Hostile takeover: A hostile takeover occurs when the acquiring company tries to
take control of the target company without its cooperation. This may involve a
hostile bid for the target company's shares or an attempt to gain control of its
board of directors.

Takeovers can be motivated by a number of factors, including the desire to increase

market share, access new markets or technologies, or achieve economies of scale.
They can also be used as a way to reduce competition.

Line 52
(work) shift
A work shift is a period of time during which an employee works. The duration and
timing of work shifts can vary depending on the industry, company, and job. Common
types of work shifts include:

12
 ● Day shift: A day shift typically runs from 9am to 5pm or similar hours.
● Night shift: A night shift typically runs from 11pm to 7am or similar hours.
● Swing shift: A swing shift typically runs from 2pm to 10pm or similar hours.

The allocation of work shifts can have a significant impact on the work-life balance of
employees, as well as their health and well-being. In some cases, employees may be
required to work rotating shifts, which can involve regularly switching between day,
night, and other shifts.

Line 53
Competitive salaries
Competitive salaries refer to the amount of pay offered by an organization that is
comparable to other organizations in the same industry or geographic region. This can
include both base pay and any additional benefits such as bonuses, stock options, and
health insurance.

Offering competitive salaries is an important aspect of attracting and retaining talented

employees. When salaries are competitive, employees are more likely to feel valued
and motivated to perform at their best. This can also help organizations to build a strong
reputation as a good place to work, which can in turn attract additional top talent.

Line 54
Rival businesses
In business, we call a close a competitor a rival. In other words, rivals are the same size
and make similar products. If two companies are leaders in their field, we refer to them
as arch rivals. (Coca Cola and Pepsi)

13
Line 55
Motivation
Employee motivation refers to the set of drives, forces, and influences that encourage or
compel an individual to act in a certain way towards achieving their job-related goals.
Some common factors that can impact employee motivation include recognition, growth
opportunities, meaningful work, good working conditions, fair pay, and positive
relationships with coworkers and superiors. Effective management and leadership
practices that align with employee motivations can increase job satisfaction,
commitment, and productivity.

Line 55
Non-financial motivation methods
Non-financial motivators, which are less common, are often intangible and do not
involve money directly. Examples of these include recognition, added responsibility
and trust in a role, participation in decisions, flexible schedules, mentorship, feedback,
and others.

1. Recognition and praise: Acknowledging and appreciating an employee's good

work can boost their confidence and morale.

2. Growth and development opportunities: Providing training, mentorship, and

opportunities for advancement can increase an employee's sense of purpose and
fulfillment in their work.

3. Empowerment: Allowing employees to make decisions, contribute to problem-

solving, and have a say in the direction of the company can foster a sense of
ownership and investment in their work.

4. Flexibility: Offering flexible work arrangements, such as remote work options or

flexible schedules, can improve work-life balance and job satisfaction.

14
 5. A positive work environment: Creating a supportive, inclusive, and respectful
workplace can improve employee morale and foster a sense of community.

6. Meaningful work: Assigning tasks and projects that are aligned with an
employee's values, interests, and strengths can increase job satisfaction and
motivation.

Line 55/56
Financial motivation methods
The main methods of financial motivation used in business are remuneration, bonuses,
commission, promotion and fringe benefits.

Line 55
Employees
a person employed for wages or salary, especially at nonexecutive level.

Line 56
Modernization
Business modernization entails examining outdated processes and adapting them to the
current practices that govern our day-to-day business dealings.

Line 57
Economies of scale
Are the cost-saving benefits of operating on a large scale, i.e. the reduction in unit costs
of production as an organization grows

Internal economies of scale: refers to the fall in unit costs of production for a single
organization as it experiences growth

Examples of internal economies are:

● Financial economies – larger firms obtain finance easier and cheaper

15
 ● Managerial economies- larger firms can afford greater numbers of experts and
high-skilled employees - can boost productivity and output
● Production economies – fixed costs of production are spread out over larger
output quantities
● Marketing economies – marketing costs per unit fall when sales volume grows as
the larger firm can market its full product portfolio globally
● Purchasing economies- bulk purchase and delivery of supplies, machinery and
stock components reduces the average cost of production

External economies of scale: refers to the fall in unit costs of production for all
organizations as the industry experiences growth

Line 59
Human Resource (department)
A team within a company that is responsible for managing the employee life cycle (i.e.,
recruiting, hiring, onboarding, training, and firing employees) and administering
employee benefits.

Line 59
Resistance (to change)
Resistance to change is the reluctance of adapting to change when it is presented.
Employees can be either overt or covert about their unwillingness to adapt to
organizational changes. This can range from expressing their resistance publicly, to
unknowingly resisting change through their language or general actions.

Line 60
Incentive payment
Incentive pay is a type of wage or salary payment that is made to employees in
addition to their normal wages or salaries. Incentive pay is designed to motivate
employees to work harder or to achieve specific goals. It can take the form of individual
bonuses, group bonuses, or profit sharing payments.

16
Line 61
Flexible-working (contract)
Flexible contracts, which include zero hours, temporary, freelance and seasonal
working, are used across industries and by many different types of workers.

There are several different types of employment contract including full-time or part-time,
fixed-term contracts, temporary, internships, apprentice agreements and freelancer
contracts.

Line 61
(employment) contract
An employment contract is between an employer and the employee being hired to
perform a service in exchange for payment.

Line 63
Payments to leave (severance)
Severance pay is compensation given to an employee who is laid off, whose job has
been eliminated, or who has otherwise parted ways with a company.

Paid leave
Paid leave is the time that is taken off from work due to personal reasons, illness,
vacation, or any other reason with pay. Every employee working with whether private or
government sector is entitled to a specific number of paid leaves in a year that can be
utilized as per the leave policy of the organization.

17
Line 66
Recruitment
Recruitment refers to the process of attracting, screening, and selecting qualified job
applicants for an organization. It is an important part of human resource management
and involves advertising job vacancies, reviewing resumes, conducting interviews, and
making hiring decisions. The goal of recruitment is to find the best fit for a particular job
and organization, and to build a diverse and talented workforce.

Line 66
Vacancies
A job vacancy is defined as a paid post that is newly created, unoccupied, or about to
become vacant: for which the employer is taking active steps and is prepared to take
further steps to find a suitable candidate from outside the enterprise concerned

Line 67
Team
A team is a group of people working together to achieve a common goal. Teams can be
found in many different settings, including businesses, sports, and volunteer
organizations. Effective teamwork requires good communication, a clear division of
labor, and a shared sense of responsibility.

Line 68
Highly skilled (workers/employees)
Workers with advanced technical, academic, and interpersonal skills

Line 69
(Short) supply
Shortages occur in a market economy when the demand for workers for a particular
occupation is greater than the supply of workers who are quali- fied, available, and
willing to do that job

18
Line 70
Induction Training
Induction, as a type of training, is intended for new employees in order to help them
acclimatise with the people, policies and processes of the organization. This might
include a tour of the campus, meeting key personnel in the organization, and a series of
induction sessions to get accustomed with work practices and expectations in the
business. Induction can also be used to support colleagues who take on a new role
within the organization, such as an internal promotion.

Line 71
Flagship factory
A flagship factory is the lead factory in a group of factories or plant chain acting as a
showcase for the brand or manufacturer. Often equipped with innovative technologies
and a visitor center to attract customers.

Line 71
Innovative technologies
Using Technologies that are either newly invented or are being utilized in new ways in
the production / operational processes.

Line 72
Quality (of production)
Production quality, also known as manufacturing quality, is a measurement that
describes how well the manufacturing process develops products to fit their initial
design specifications. When producing goods, manufacturers create a plan for how they
want the items to look and function.

19
Line 74
Objectives
Objectives are the targets an organization is trying to achieve, e.g. to maximize
shareholder value. Objectives are vital for any business organization to communicate
the strategic (long-term), tactical (medium term) or operational (short-term)

Line 75
Labour productivity
Labour productivity is defined as output per worker or per hour worked. Factors that can
affect labour productivity include workers' skills, technological change, management
practices and changes in other inputs (such as capital).

Line 75
Unit costs
Unit costs refer to the cost of producing each unit of a particular product or service. It is
calculated by dividing the total cost of production by the number of units produced. The
unit cost helps businesses to determine the cost-effectiveness of their production
processes and to set prices for their products or services in a way that covers their
costs and generates a profit.

20
Line 76
Labour turnover
Measures the rate of change of human resources within an organization, per period of time.

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑠𝑡𝑎𝑓𝑓 𝑙𝑒𝑎𝑣𝑖𝑛𝑔 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟

𝑥 100
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑠𝑡𝑎𝑓𝑓 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑

Line 80
Full order book
An order book is a record of all open buy and sell orders for a specific product
organized by price level. A full order book includes all bids (buy orders) and asks (sell
orders) and their respective sizes, providing a comprehensive view of the supply and
demand for that product.

Line 81
Fossil fuels
including coal, oil and natural gas -- are drilled or mined before being burned to produce
electricity, or refined for use as fuel.

Line 83
Consumer products division
The Consumer Products Division is a business unit within a company that specializes in
the development, marketing, and sales of products designed for everyday consumer
use.

Line 88
Contribution
Contribution per Unit = Selling Price per Unit - Variable Cost per Unit

21
Line 88
Profit
Profit is the difference between the revenue received from selling goods or services and
the expenses incurred in producing and selling them. It is a measure of a company's
financial performance and can be expressed as a percentage or a currency amount.
Profit is a key indicator of a company's success and can be used to reinvest in the
business or distribute to shareholders as dividends.

Line 88
Share Price
Share price is the value of a single share of stock in a company, determined by the
market forces of supply and demand. It is the price at which an investor can buy or sell
a share of stock in the market. Share price can be influenced by a number of factors,
including the financial performance of the company, the state of the overall economy,
and investor sentiment. Share price can fluctuate daily and can be seen as a reflection
of investor confidence in a company's future prospects.

Line 89
Dividends
Dividends are payments made by a company to its shareholders, typically in the form of
cash or additional shares of stock. They are typically paid out of the company's profits
and are a way for the company to distribute some of its earnings to its owners. The
amount of dividends paid and the frequency at which they are paid can vary, and
companies may choose to pay dividends or retain earnings to reinvest in the business.
Dividends are generally considered a sign of a company's financial stability and are
often a factor in investor decisions to buy or sell shares.

Line 90
Market Share
Market share refers to the portion of a market (such as an industry or geographic area)
that is serviced by a particular company or product. Market share can be calculated

22
by dividing a company's sales by the total sales of the market or industry. A
higher market share indicates a stronger position in the market, while a lower market
share means the company has less dominance.

Line 92
Brand leader
A brand leader is a product or brand that is recognized as the most popular or dominant
within a specific market or industry. It is often the first brand that comes to mind when
consumers think of a particular product category and has a strong reputation and
customer loyalty. A brand leader typically has a large market share and is often imitated
by competitors.

Line 93
Board of Directors
The Board of Directors is a group of individuals elected by the shareholders of a
corporation to represent their interests and make major decisions on behalf of the
company. The board is responsible for overseeing management, setting company
strategy, and ensuring that the company is financially sound. They are typically made
up of both inside directors (such as company executives) and outside directors
(independent individuals from outside the company). The board's ultimate goal is to
maximize shareholder value and ensure the long-term success of the company.

Line 94
Marketing budget
A marketing budget is the amount of money a company allocates to promote and sell its
products or services. It covers the costs of various marketing activities such as
advertising, events, promotions, public relations, and market research. The size of the
marketing budget varies depending on the size of the company and its marketing goals.
The budget is usually set at the beginning of each financial year and may be adjusted
as market conditions change. The allocation of funds within the marketing budget is a

23
key factor in determining the success of a company's marketing efforts, and it should be
developed based on a well-thought-out marketing plan and strategy.

Line 95
Corporate Social Responsibility (CSR)
Corporate Social Responsibility (CSR) is a concept in which companies take into
account the social and environmental impacts of their operations in addition to their
economic performance. CSR is a voluntary commitment by companies to operate in an
ethical and responsible manner, taking into account the interests of various
stakeholders such as employees, customers, suppliers, local communities, and the
environment. Examples of CSR activities include supporting charitable causes, reducing
the company's carbon footprint, promoting diversity and inclusion, and implementing
environmentally sustainable business practices. CSR is increasingly seen as a way for
companies to build a positive reputation, attract customers, and engage employees, as
well as to contribute to the wider community and address global challenges.

Line 95
Outreach Program
An outreach program is a initiative or effort by an organization to reach out to and
engage with a specific target audience or community. Outreach programs can take
many forms, such as educational programs, community service projects, or public
awareness campaigns. The goal of an outreach program is to build relationships and
increase awareness of the organization and its mission among the target audience.
Outreach programs are often used by non-profit organizations, government agencies,
and corporations to connect with the community, address social issues, and promote
their brand or cause. Outreach programs can also be a valuable tool for organizations to
gather feedback and gain insights from their target audience, helping them to better
understand the needs and perspectives of the community they serve.

24
Line 97
Less Economically developed countries (LEDC’s)
Less Economically Developed Countries (LEDCs) are countries with low levels of
economic development and a low standard of living for their citizens. These countries
typically have a weak industrial base, low per capita income, high levels of poverty, and
a lack of basic infrastructure and social services. LEDCs are often located in less
developed regions of the world, such as Africa, Asia, and Latin America. The economic
and social challenges facing LEDCs include poverty, unemployment, low levels of
education, limited access to healthcare, and environmental degradation. The
international community and developed countries often provide aid and support to
LEDCs in an effort to help address these challenges and promote economic
development.

Line 99
Paid career break (sabbatical)
A paid career break, also known as a sabbatical, is a period of time away from work that
is paid by the employer. During this time, an employee is allowed to take time off from
their regular job responsibilities to pursue personal or professional development
opportunities, such as travel, education, or volunteer work. A sabbatical is typically
offered to employees who have been with a company for a certain period of time, such
as several years, and is seen as a way to reward and retain valued employees. Paid
career breaks can range from a few weeks to several months and the length of the
break and specific arrangements, such as pay and benefits, may vary depending on the
company's policies and the employee's circumstances. The goal of a sabbatical is to
provide employees with a sense of renewal and to enable them to return to work with
fresh perspectives and new skills that can benefit the company.

25
Line 100
Salary
A salary is a fixed amount of money that an employee is paid for their work by an
employer. Salaries are typically paid out on a regular basis, such as weekly, bi-weekly,
or monthly, and are often accompanied by benefits such as health insurance, retirement
plans, and paid time off. Employees on salaries have an employment contract.

Line 101
Infrastructure
Infrastructure refers to the basic physical and organizational structures and facilities that
are needed for a society or organization to function. In relation to business,
infrastructure refers to essential facilities and structures that are necessary for the full
operation of the business. An example of a type of business infrastructure is an office
building, which a business runs from.

Line 102
Training
Employee training is the process of providing employees with the skills, knowledge, and
information they need to perform their job effectively. This can include on-the-job
training, workshops, online courses, and other forms of learning and development. The
goal of employee training is to improve job performance, increase productivity, and
enhance overall job satisfaction.
Employee training is a program that helps employees learn specific knowledge or skills
to improve performance in their current roles. Employee development is more
expansive and focuses on employee growth and future performance, rather than an
immediate job role. 50% of employees will need to be reskilled by 2025.

26
Line 104
Charity
A charity is a non-profit organization that uses donations and funding to support a
specific cause or mission. Charities can take various forms, including foundations,
religious organizations, and community organizations. The main purpose of a charity is
to serve the public good and provide assistance to those in need, rather than to make a
profit for shareholders or owners.

Line 104
NGO- Non-Governmental Organization
NGO stands for Non-Governmental Organization, which is a type of non-profit
organization that operates independently from any government. NGOs are established
to serve a specific social cause or address a particular issue, and they may focus on
areas such as human rights, poverty alleviation, environmental protection, or disaster
relief. They are funded through donations, grants, and other forms of support, rather
than by government agencies.

Line 104
Project
A project is a temporary effort with a specific objective that is designed to achieve a
specific goal, and typically involves a team of people with different skills and
responsibilities. Projects can be related to various fields such as construction, software
development, research, marketing, and more. The goal of a project is to produce a
unique product, service, or result that provides a solution to a specific problem or meets
a specific need.

27
Line 112
Low-cost
Low-cost generally refers to products or services that are relatively inexpensive
compared to other options in the market. The term is often used to describe budget-
friendly alternatives that provide a cost-effective solution for consumers.

Line 113
Research
Research refers to a systematic investigation or examination aimed at discovering,
interpreting, or revision of information and knowledge to establish facts and general
principles and reaching new conclusions. It is a process of gathering information,
analyzing data, and presenting results that can be used to solve problems or make
informed decisions.

Line 117
Competition
Competition refers to a situation in a market in which firms or sellers independently
strive for the patronage of buyers in order to achieve a particular business objective,
e.g., profits, sales and/or market share.

Line 117
Inventors
An inventor is a person who creates or discovers a new device, process, or method.
They conceive, design, and bring to market or develop new ideas or products that solve
problems or improve upon existing solutions. Some of the most famous inventors
include Thomas Edison, Alexander Graham Bell, Nikola Tesla, and Steve Jobs.

28
Line 117
Entrepreneur
An entrepreneur is a person who starts and runs a new business venture, usually with
the aim of making a profit. They take on financial risks in order to bring their ideas to life
and turn them into successful enterprises. Entrepreneurs are often seen as innovative,
creative and driven individuals who possess a strong desire to succeed.

Line 124
World Health Organization
The World Health Organization (WHO) is a specialized agency of the United Nations
(UN) that is responsible for international public health. Its main goal is to build a better,
healthier future for people all over the world. WHO works with countries to ensure the
highest attainable level of health for their populations and to improve health equity. Its
main functions include providing technical assistance, setting health standards and
norms, monitoring health trends, and providing information, training, and coordination
on health issues.

Line 126
Engineering
Engineering is the application of scientific, mathematical, and practical knowledge to
design, build, and maintain structures, machines, devices, systems, and processes. It
encompasses a wide range of fields, including mechanical, electrical, civil, chemical,
and software engineering, among others.

Line 127
Pricing-Strategy
Pricing strategy refers to the plan and tactics a company adopts to determine the price
of its products or services. The objective of a pricing strategy is to maximize profits,
attract and retain customers, and compete effectively in the market. Some common
pricing strategies include cost-plus pricing, value-based pricing, penetration pricing, and
premium pricing. The choice of a pricing strategy depends on various factors such as

29
target customer segment, product or service offerings, competition, and market
conditions.

Line 127/128
Not-for-profit
A not-for-profit organization is a type of organization that operates for the benefit of a
specific cause or group of individuals, rather than for the financial benefit of its owners
or shareholders. The surplus or excess revenue generated by a not-for-profit is typically
reinvested in the organization's mission or used to further its goals, rather than being
distributed as profit to owners or shareholders. Examples of not-for-profit organizations
include charities, foundations, religious organizations, and some educational
institutions.

Line 128
Subsidize – Subsidy
"Subsidize" is a verb meaning to provide financial support to (a business, industry, etc.)
so that prices are kept low or production is increased.

"Subsidy" is a noun meaning a sum of money granted by a government to a person or

company to assist an enterprise considered to be in the public interest.

Line 130
Profitability
Profitability refers to the ability of a company or business to generate profit, which is the
excess of revenue over expenses. It is a key indicator of the financial health and
success of a business and is closely watched by investors, stakeholders, and
management. To increase profitability, a company may focus on reducing costs,
increasing revenue, or a combination of both.

In Business, we learn about Gross Profit and Net Profit.

30
Gross Profit = Sales Revenue – COGS (variable costs)
Net Profit = Gross Profit – expenses (fixed costs)

Gross profit is an indicator of a company's ability to sell its products or services at a

higher price than the cost of producing them.

Net profit is the bottom line of a company's financial performance and represents the
profit that remains after all expenses have been paid.

Line 130
Stakeholders
Stakeholders are individuals or organizations that have an interest or concern in an
enterprise or project. They can include, but are not limited to: shareholders, employees,
customers, suppliers, lenders, governments, and the community at large. The impact of
decisions made by a company can directly or indirectly affect the interests of
stakeholders, making their involvement and consideration essential in the decision-
making process.

Line 132
Distribution (channels)
A distribution channel is a path that a product or service could take on its way to market.

Line 133
Consumer products
Consumer products, also referred to as final goods, are products that are bought by
individuals or households for personal use.

31
Line 134
Secondary market research
Secondary research is a type of research that has already been compiled, gathered,
organized and published by others. It includes reports and studies by government
agencies, trade associations or other businesses. Published financial reports by public
limited companies are also secondary sources.

Line 135
Low-income
Low-income status refers to the income situation of the statistical unit in relation to a
specific low-income line in a reference year. Statistical units with income that is below
the low-income line are considered to be in low income.

Line 138
Social media
Social media is a collective term for websites and applications that focus on
communication, community-based input, interaction, content-sharing and visuals. It’s a
form of a below-the-line marketing strategy.

Line 138
Advanced economies
The IMF World Economic Outlook classifies 39 economies as “advanced,” based on
such factors as high per capita income, exports of diversified goods and services, and
greater integration into the global financial system. The remaining countries are
classified as “emerging market and developing” economies.

Sources:
IB DP Business Management Books
ChatGPT

32
Explaining the Divisions and Products

Water Treatment

A water treatment plant is a

destination where wastewater (water
which is no longer fit for its current
purpose) moves to once it leaves
homes and businesses through
sewage pipes. The sewage system
contains miles of pipes below ground
where wastewater flows to the
treatment plant for processing.

Commercial, residential and industrial

wastewater collects at the treatment
plant where it undergoes a series of
processes in order to provide safe,
clean water.

Source: https://www.nchasia.com/en-ph/nch-
insights/industry-news/what-is-a-water-
treatment-plant

How Do Water Treatment Plants Work:

https://www.youtube.com/watch?v=0_ZcCqqpS2o

33
The Fresh Water Division - Potable water

Drinking water is water that is used in drink or food preparation; potable water is water
that is safe to be used as drinking water.

Figure 1: Potable Water Storage Tanks

Source: https://www.cstindustries.com/municipal-potable-water-storage-tanks-manufacturer/

Figure 2: Mega Storage Reservoir Example

Source: https://www.valveit.com/mega-reservoir-qatar-kahramaa-approved-valveit-technology/

● treats, stores and transports water for distribution

● supplies water to nearly 200 million people around the world
● expansion through internal and external growth strategies

34
The Desalination Division – construction and operation of desalination plants

Desalination plants remove salt and other minerals from saline waters to produce fresh
water suitable for human consumption or irrigation on farmland. The division provides
15% of the world’s desalination capacity.

Figure 3: Desalination plant

Source: https://www.nationalgeographic.com/environment/article/desalination-plants-produce-twice-as-much-waste-
brine-as-thought

● There are now nearly 16,000 desalination plants either active or under
construction across the globe.
● It is an energy-intensive process to extract salt from sea (or other saline) water,
transforming it into water that’s fit for human consumption.
● Most plants are powered by fossil fuels
● a recent desalination plant in California cost a billion dollars
● The cost, and environmental impacts, of this overall industry have spurred
researchers to look for alternatives
● Operating in 19 countries (Australia, China, Greece, India, Japan, Portugal,
Saudi Arabia, Spain and United Arab Emirates)
● Small desalination plants on seagoing vessels

Figure 4: small desalination plant on seagoing vessel

35
Source: https://www.zureli.com/product/fully-assembled-sea-going-desalination-plant

36
The Engineering Division – manufacturing of water treatment equipment and
power turbines

● manufacture equipment and machinery for the water treatment plants

● factories are located in Norway, Germany and the UK
● takeover of a rival engineering company (steam and gas turbines)
● manufacturing of wind turbines

Figure 5: Steam and Gas turbines for water treatment

Source: https://www.powermag.com/siemens-energy-sells-100th-h-class-gas-turbine-fleet-exceeds-2-5-million-
operating-hours/

Figure 6: Wind turbines

Source: https://www.sika.com/en/solutions-for-projects/wind.html

37
The Consumer Products Division – manufacturing of home water filters

● manufactures and sells water filters for home use

● filters are based on carbon and remove calcium, chlorine, copper, cadmium and
zinc
● filters cannot remove bacteria or viruses
● using external and internal growth strategies to increase market share
● takeovers of small water filter manufacturers in Europe and USA

Figure 7: Home water filters

Source: https://greenbuildingelements.com/best-whole-house-water-filter-for-well-water/

38
IB Business Management Unit 1
Skandvig Terra PLC – Public Limited Company
A public limited company (PLC) is a type of business structure.
Some of the key features of a PLC include:

1. Limited liability: Shareholders are only liable for the amount they have invested in
the company, not its debts.

2. Publicly traded: PLCs are listed on a stock exchange, allowing the public to buy
and sell shares in the company.

3. Separate legal entity: A PLC has its own legal identity and can enter into
contracts, sue or be sued in its own name.

4. Wide ownership: PLCs are owned by a large number of shareholders, providing

a wider base of ownership.

5. Access to capital: PLCs have greater access to capital, as they can issue shares
to raise funds and borrow money from banks.

Advantages Disadvantages
Being a PLC can enhance a PLCs are subject to greater regulatory
company's reputation and credibility, requirements, including disclosure and
making it easier to attract customers, reporting obligations
employees and investors
Limited liability for shareholders The process of becoming a PLC is
more complex and expensive than
other business structures.

39
Shares in a PLC can be easily bought As a PLC is publicly traded, its financial
and sold on a stock exchange, and operational information is available
providing liquidity for shareholders to the public, leading to greater scrutiny
PLCs have greater access to capital, Loss of control: With a larger number of
as they can issue shares to raise funds shareholders, the control of the
and borrow money from banks at lower company can be diluted, making it
interest rates harder for the management to make
decisions.
Short-term focus: As PLCs are publicly
traded, their management may be
focused on short-term results to meet
the expectations of shareholders and
analysts, rather than long-term growth

40
Skandvig Terra PLC – Vision Statement: “Making the world a
safer place”

A vision statement is a statement that defines a company's aspirations for the future and
its desired end-state. The purpose of having a vision statement is to:

1. Provide direction: A vision statement provides a clear and concise direction for
the company, helping to guide its decision making and focus its resources.
2. Inspire and motivate: A vision statement can inspire and motivate employees,
stakeholders, and customers, helping to create a shared sense of purpose and
direction.
3. Communicate values: A vision statement can communicate the values and
beliefs of the company, helping to build brand awareness and establish a
company's reputation.
4. Set goals: A vision statement can set high-level goals for the company and
provide a framework for creating specific, measurable, achievable, relevant, and
time-bound (SMART) goals.
5. Differentiate: A well-crafted vision statement can help a company differentiate
itself from its competitors and establish a unique position in the marketplace.
6. Attract customers, partners, and investors: A compelling vision statement can
attract customers, partners, and investors who share the company's values and
aspirations for the future.

While a vision statement can provide many benefits, it can also have some
disadvantages, including:

1. Lack of specificity: A vision statement may be too general and lack specificity,
making it difficult to translate into concrete actions and goals.

41
2. Inconsistency with reality: A vision statement may be overly optimistic or
unrealistic, creating a gap between the vision and the company's actual
performance
3. Rigidity: A vision statement can be too rigid and limit the company's ability to
adapt to changing market conditions or customer needs.
4. Resistance to change: A vision statement may be seen as an obstacle to
change, as it defines the end-state the company is trying to achieve, making it
difficult to pivot or modify the vision as needed.

42
Skandvig Terra PLC – Specialization

Initially SVT was specialized in producing and delivering potable water in Norway. The
company expanded and diversified its company portfolio into four product divisions into
global markets.

Business specialization refers to the process by which a company focuses its

resources, expertise, and efforts on a specific product or market niche. The goal of
specialization is to gain a competitive advantage and increase efficiency by becoming
an expert in a specific area.

There are several forms of business specialization, including product specialization,

market specialization, and process specialization.

Product specialization- initially potable water: This involves focusing on a specific

product or product line to increase the company's expertise and efficiency in that area.
For example, SVT specialized in producing and delivering potable water will become an
expert in that product line, allowing it to offer a higher quality product and better
customer service.

Market specialization- Norway and 20 other countries: This involves focusing on a

specific market segment, such as a specific geographic region or customer
demographic, to better understand the needs and preferences of that market. This can
lead to more effective marketing and sales efforts, as well as the development of
products and services tailored to the specific needs of that market.
SVT built regional water supply networks and created a regional monopoly in
each country it operates.

Process specialization- Desalination plants: This involves focusing on a specific

aspect of the production process, such as the manufacturing process or supply chain
management, to increase efficiency and competitiveness.

43
Specialization can bring several benefits to a business, including increased efficiency,
improved quality, better customer service, and reduced costs.

However, it can also have some disadvantages, such as reduced flexibility, reduced
market reach, and an increased dependence on a specific product or market. Therefore,
it is important for a company to carefully consider its specialization strategy and weigh
the potential benefits and risks before committing to it.

44
Skandvig Terra PLC – Growth strategies

Internal growth or organic business growth

Definition: Internal growth or organic business growth refers to the expansion of a

business through the use of its own resources, without relying on external sources such
as mergers, acquisitions or partnerships. Internal growth can take many forms, including
increasing production capacity, developing new products or services, opening new
locations, expanding into new markets, and improving operational efficiencies.

One of the key advantages of internal growth is that it allows a company to maintain
control over its operations, culture, and strategic direction. By relying on internal
resources, companies can also avoid the complexities and potential risks associated
with mergers and acquisitions.
In addition, internal growth can be a more sustainable and cost-effective strategy
over the long term, as it allows companies to build their businesses gradually and
maintain a focus on innovation and customer satisfaction.

It may require significant investment in research and development, marketing, and

other areas, and success may depend on factors such as market conditions,
competitive pressures, and changing consumer preferences. In addition, internal growth
may not provide the same level of immediate results as external growth strategies,
which can be a drawback for companies seeking to achieve rapid growth or gain a
competitive advantage.

Application from the case study:

● Recruitment to fill 300 vacancies

● Induction training in Norway with innovative technologies
● Setting up the Outreach programme

45
External growth strategies

Definition: External growth refers to the expansion of a business through the

acquisition of another company or by forming strategic partnerships with other
businesses. External growth can take many forms, including mergers, acquisitions, joint
ventures, and strategic alliances.

One of the primary advantages of external growth is that it allows companies to rapidly
expand their operations and market share, often in a more cost-effective way than
internal growth strategies. By acquiring or partnering with another company, businesses
can gain access to new markets, customers, technologies, and resources, and can
often achieve synergies that result in increased efficiency and profitability.

Another advantage of external growth is that it can help companies to diversify their
operations and reduce their exposure to market fluctuations and other risks. By
expanding into new markets or product lines, businesses can spread their risk and
create a more resilient and sustainable business model.

However, external growth can also be challenging, particularly in terms of managing

cultural and operational differences between the acquiring and acquired companies,
and integrating their operations and systems. In addition, external growth can be
expensive and risky, and success may depend on factors such as market conditions,
regulatory approvals, and the ability to effectively manage post-merger or partnership
integration.

Application from the case study:

● Expansion into different business sectors, including desalination and household

water treatment products by acquiring other companies
● Takeover of a rival engineering company H4 PLC in 2015

46
Skandvig Terra PLC – Economies of scale

Internal economies of scale occur for a particular organization (rather than the
industry in which it operates) as it grows. These cost savings are generated within the
business by operating on a larger scale.

when a firm grows and expands, the firm is able to lower its production costs and
overheads. With lower average costs, the firm can reduce its prices to gain competitive
advantages and attract more customers.

Reading in detail:
https://www.thinkib.net/businessmanagement/page/22361/economies-and-
diseconomies-of-scale

Technical economies: modernization programme of the former H4 factories was

completed in 2016 and as a result, labor productivity has improved and unit costs
have fallen

Explain:

Cost savings by greater use of large-scale mechanical processes and specialist

machinery (such as mass production techniques).

Advantages:
● Modern technology enables businesses to produce very high levels of output at
much lower unit costs than smaller firms can do.
● Large firms can afford to use sophisticated and specialized machinery to mass
produce their output using flow production techniques. They are able to justify
huge investments in mass production technologies (such as assembly lines)
because working at a high-capacity level can significantly lower average costs of
production.

47
Disadvantages
● mass production uses expensive capital equipment, only very large businesses
can afford the level of capital investment required
● The use of more specialized equipment and technologies may reduce a
business's flexibility and ability to adapt to changing market conditions or
customer needs
● Achieving technical economies of scale may require specialized skills and
expertise that are difficult to find or develop, leading to a dependence on a limited
pool of skilled workers or vendors.

48
Skandvig Terra PLC - STEEPLE Norway

Norway is a country located in Northern Europe, with a population of approximately 5.4

million people. The country is known for its natural beauty, including fjords, mountains,
and forests, as well as its strong economy and social welfare system. In this STEEPLE
analysis, we will examine the political, economic, social, technological, environmental,
legal, and ethical factors that may impact Norway's future.

Social Factors
Norway has a highly educated population and a strong social welfare system that
provides universal healthcare, education, and social benefits. The country also has a
high level of gender equality and is known for its progressive attitudes towards social
issues. However, the country faces some social challenges related to aging population
and integration of immigrants.

Technological Factors
Norway is a world leader in technology and innovation, particularly in areas such as
renewable energy, maritime technology, and aquaculture. The country has invested
heavily in research and development, and has a strong digital infrastructure. However,
there are concerns about the impact of technology on jobs and income equality,
particularly as automation and artificial intelligence become more prevalent.

Economic Factors
Norway has a mixed economy with a strong welfare state and a significant public sector.
The country's economy is heavily dependent on the oil and gas industry, which
accounts for around 14% of its GDP (World Bank, 2021). The country also has a high
level of income equality and low unemployment. However, Norway faces challenges
related to the sustainability of its economic growth and the need to diversify its economy
to reduce dependence on the oil and gas sector.

49
Environmental Factors
Norway is known for its commitment to sustainability and environmental protection. The
country has set ambitious targets to reduce greenhouse gas emissions and increase the
use of renewable energy sources. Norway is also home to some of the world's most
biodiverse ecosystems, and the government has implemented policies to protect its
natural resources. However, the country faces challenges related to the impact of
climate change on its environment, particularly in the Arctic regions.

Political Factors
Norway is a parliamentary democracy with a constitutional monarchy. The country has a
stable political system with a high level of transparency and accountability, which is
reflected in its ranking as one of the least corrupt countries in the world (Transparency
International, 2021). However, the country faces some political challenges, including
concerns over immigration and rising levels of nationalism.

Legal Factors
Norway has a well-developed legal system that is based on a combination of civil law
and common law principles. The country is known for its strong protection of individual
rights, including freedom of speech, assembly, and religion. However, there are some
legal challenges related to immigration and human rights, particularly in relation to the
treatment of refugees and asylum seekers.

Ethical Factors
Norway has a strong ethical culture, and is known for its commitment to social
responsibility and sustainability. The country has implemented a range of ethical
policies and practices, including the promotion of sustainable business practices and
corporate social responsibility. However, there are some ethical challenges related to
the use of natural resources, particularly in the oil and gas sector, and the need to
balance economic growth with environmental protection.

50
References:
Transparency International. (2021). Corruption Perceptions Index 2020. Retrieved from
https://www.transparency.org/en/cpi/2020/index/nor

World Bank. (2021). World Development Indicators. Retrieved from

https://databank.worldbank.org/home.aspx

51
Skandvig Terra PLC - STEEPLE Tanzania

STEEPLE analysis is a framework used to evaluate the external factors that may affect
an organization's strategy. The acronym STEEPLE stands for Social, Technological,
Economic, Environmental, Political, Legal, and Ethical factors. In this analysis, we will
focus on Tanzania's STEEPLE factors and how they may impact high-tech companies
operating in the country.

Social Factors:

Tanzania has a population of over 60 million people, with a median age of 18.4 years
(World Bank, 2021). The country has a diverse culture with more than 120 ethnic
groups (KPMG, 2021). High-tech companies need to consider the social factors that
may impact their operations, such as language barriers, cultural differences, and the
need to adapt products and services to the local market.

Technological Factors:

Tanzania has made significant progress in improving its telecommunications

infrastructure, with the government investing heavily in expanding broadband access
and improving connectivity (World Bank, 2021). High-tech companies operating in
Tanzania must stay abreast of technological advancements and invest in research and
development to remain competitive.

Economic Factors:

Tanzania is one of the fastest-growing economies in Africa, with a GDP growth rate of
4.8% in 2020 (World Bank, 2021). However, the country faces significant challenges,
including high levels of poverty and income inequality. High-tech companies must
consider these economic factors when pricing their products and services and ensuring
they are accessible to all.

52
Environmental Factors:

Tanzania has a rich biodiversity with diverse wildlife and ecosystems. The country faces
environmental challenges such as deforestation, pollution, and climate change (KPMG,
2021). High-tech companies must consider their environmental impact and strive to
minimize it through sustainable practices.

Political Factors:

Tanzania has a stable political environment, with peaceful transitions of power since
independence (World Bank, 2021). However, the government has been criticized for
limiting freedom of speech and press freedom (Freedom House, 2021). High-tech
companies must comply with local laws and regulations and carefully navigate the
political environment.

Legal Factors:

Tanzania's legal system is based on English common law, with the judiciary providing
independent oversight (KPMG, 2021). However, the legal system has been criticized for
being slow and inefficient (World Bank, 2021). High-tech companies must comply with
local laws and regulations, including those related to intellectual property and data
privacy.

Ethical Factors:

Tanzania has a diverse population with different cultural and religious beliefs. High-tech
companies must respect local values and norms, and ensure that their products and
services do not promote unethical practices, such as discrimination or exploitation.

In conclusion, high-tech companies operating in Tanzania must consider the various

STEEPLE factors that may impact their operations. By understanding and responding to
these factors, companies can effectively navigate the business environment and
contribute to Tanzania's economic growth and development.

53
References:

Freedom House. (2021). Tanzania. Retrieved from

https://freedomhouse.org/country/tanzania/freedom-world/2021

KPMG. (2021). Doing Business in Tanzania. Retrieved from

https://home.kpmg/xx/en/home/insights/2019/08/doing-business-in-tanzania.html

World Bank. (2021). Tanzania. Retrieved from

https://data.worldbank.org/country/tanzania

54
Skandvig Terra PLC - SWOT Analysis
Strengths Weaknesses
● Supplies potable water to over one ● Vision statement has remained
million people in Norway = 20% of unchanged (Limited
the market (large marketshare) differentiation)
● Supplies to millions (200) of ● Machinery in water treatment
households in over 20 countries plants need updates (safety and
● Has a regional monopoly (little quality issues)
competition-price maker) ● Senior directors have priority
● Expansion through acquisitions conflicts
● Quick decision making through ● Indication that H4 PLC’s
distributed leadership employees were demotivated yet
● Four divisions – spreading the paid competitively
risks and multiple sources of ● SVT had to modernize and
income reorganize the operations of H4’s
● Engineering division is a leader in UK factories (costs)
the industry ● H4 long-serving employees
● Recent acquisition of Geng PLC, a responded resistant to
major water supplier in the UK organizational change (loss
● Desalination plants provide two productivity)
income streams ● SVT had to offer incentive
● Desalination has a 15% global payments (additional costs)
market share ● 25% of long-serving employees
● SVT’s sales have increased by took severance payment to leave
300% since 2015 (age group 61 and above)
● Takeover of a rival engineering (knowledge loss)
company H4 PLC ● 300 new vacancies had to be filled
● Achieved economies of scale at ● Differing leadership styles among
UK factories divisions
● Team environment

55
 ● Factories operate 24/7 with three ● Wind turbine factories produce at
shifts maximum capacity (might lose
● Labor turnover below national potential customers to
average competitors)
● Wind turbine factories produces at
maximum capacity
Opportunities Threats
● Market for desalination is growing ● Climate change causing shortages
rapidly – double in the next 10 of potable water in some countries
years ● Labor shortage in the UK for
● Large increase in the demand for highly-skilled and specialized
cruise holidays in the last 20 years employees (must pay higher
● Demand for wind turbines is salaries or import labor)
expected to grow

56
Skandvig Terra PLC - Ansoff Matrix Analysis

Market Penetration

● Market penetration focuses on existing markets (Norway, UK) and existing

products (acquisition of a direct competitor: Geng PLC)
● low risk strategy - already supplying over 200 million people around the world
(L31), SVT doesnt need to invest in market research since the need for fresh
water is a global need
● SVT can focus on increasing revenues and continue marketing their products to
other B2B or B2C customers
● helps the company to increase sales revenues and in SVT’s example company
share value - dividends

Market Development

● market development is a growth strategy where a business sells its existing

products into new markets i.e. the product remains the same, but its sold to a
new group of customer - initially producing and delivering potable water in
Norway, SVT now operates desalination plants in 19 out of 120 countries
● foreign direct investment by taking over or acquiring other companies - higher
financial risk
● given the type of products SVT is selling - its a universal need - fresh water or
drinking water

57
Product Development

● is a growth strategy where a business introduces new products into existing

markets
● SVT is introducing wind turbines - full order book for 2023 -(L80)
● develop water purifier (L119)

Diversification

● diversification involves businesses marketing completely new products to new

customers (develop water purifier (L119))
● related diversification means organizations remain in a market (industry) that
they are familiar with - SVT and water related products

Source: Hoang, P. “Business Management Study and Revision Guide”, Hodder

Education

58
Skandvig Terra PLC - Stakeholder Discussion

Definition:
Stakeholders are individuals or organizations or groups with a direct interest in the
operations and performance of a particular business or organization. They have varying
degrees of influence on the organization.
Internal stakeholders are members such as employees, managers or owners /
shareholders.

Stakeholder Interests Conflicts

Group

H4 employees paid competitive salaries by change in leadership and

old management team / operating times
owners

H4 Board Reluctant to change New leadership – new strategies

directors

SVT - 24/7 operation in UK factories H4 employees resistant to

Engineering change and the new eight-hour
Division introducing new shift patterns shifts
every six months
pay leave (severance) to long-
improving labor productivity serving employees- additional
costs for SVT
reducing labor turnover or
maintaining below national
average to avoid recruitment
costs, induction training leads

59
 to productivity loss
autocratic leadership style –
may lead to demotivation
among highly skilled engineers

SVT’s - HR hiring highly skilled, motivated

department and specialized team players

Consumer Wants to become brand leader Products cannot be used in

Products in both Europe and the USA countries that have problems
Division New marketing strategies with with polluted water
extensive marketing budget No experience in distributing
consumer products in LEDC’s

SVT’s rising share prices (2005-2010 avoid extra costs (hiring new
shareholders share price rose by 65% and employees)
annual profits doubled L89) subsidies lower overall
profitability
yearly increasing dividends

Norwegian / Access to clean and potable Large manufactured reservoirs –

other country water land – opportunity costs / trade
households off

Director Jayne SVT should develop low-cost, Pricing strategies (SVT’s board
Dees easily transportable water members)
purifiers operate using solar
power

60
NGO’s and other More projects in developing or
charities LEDC’s countries with SVT
working with employees support
SVT

SVT’s Board of Increasing profitability to see WF 15 not-for profit operation

Directors increase in share value = (conflict)
happy shareholders No distribution channels in place

61