3 Fran?ois, Demetris, José and Giuseppe are a group of students from different Mediterranean countries, taking their

MBA in a large UK city. As part of their course requirements, the group has to come up with an innovative business

idea, research into the feasibility of that idea and then present their business plan to a panel. After considerable

brainstorming they have come up with the idea of a themed restaurant based around Mediterranean cooking, menus

and service provisionally called ‘Casa del Mediterraneo’ and located in the city centre.

Initial research has revealed suitable premises to rent, but also the severe competition they will face in a city that is

very cosmopolitan and well provided for with restaurants serving cuisine from many parts of the world. The city has

a student population of around 100,000 and this, together with a young working population, means that there is a

very vibrant social life and a real willingness to sample food from different parts of the world.

Required:

(a) Identify and evaluate the critical success factors and associated competences that the group should consider

in developing their business plan for the restaurant. (12 marks)

(c) (i) Explain the capital gains tax (CGT) implications of a takeover where the consideration is in the form. of

shares (a ‘paper for paper’ transaction) stating any conditions that need to be satisfied. (4 marks)

2 Which of the following are correct?

1. The balance sheet value of inventory should be as close as possible to net realisable value.

2. The valuation of finished goods inventory must include production overheads.

3. Production overheads included in valuing inventory should be calculated by reference to the company’s normal

level of production during the period.

4. In assessing net realisable value, inventory items must be considered separately, or in groups of similar items,

not by taking the inventory value as a whole.

A 1 and 2 only

B 3 and 4 only

C 1 and 3 only

D 2, 3 and 4

(b) Analyse THREE potential problems, based solely on the information provided above, that TMC might

encounter in the acquisition of CBC. (5 marks)

(c) The inheritance tax payable by Adam in respect of the gift from his aunt. (4 marks)

Additional marks will be awarded for the appropriateness of the format and presentation of the memorandum and

the effectiveness with which the information is communicated. (2 marks)

Note: you should assume that the tax rates and allowances for the tax year 2006/07 will continue to apply for the

foreseeable future.

(b) Identify the most appropriate approved share option scheme for Happy Home Ltd. Outline the scheme

requirements and the tax benefits of using it compared to the current unapproved scheme. (6 marks)

5 Your manager has heard of Maslow’s hierarchy of needs theory and how it has some relevance to motivational techniques.

Required:

(a) Explain Maslow’s hierarchy of needs theory. (10 marks)