1.2 L4M2 LO1

Question 1

Research:

what is primary or field research?

What is secondary or desk research?

Answer 1

Primary

• undertaken for a specific purpose
• research is developed from a specific source
• eg a supermarket gathering data from customers via a questionnaire

Pros and cons - expensive and time consuming but more accurate, detailed and reliable

Secondary

• already existing data - eg books, websites, reports that were published previously and not specific to your specification/need

Pros and cons - cheap, quick, readily available from multiple sources but not as specific or reliable relative to your need

Question 2

What is qualitative research?

What is quantitative research?

Answer 2

QUANTITATIVE

• focuses on numerical data. Eg “we asked 85% of users if xyz”

QUALITATIVE

• focuses on theories, thoughts, opinions

Question 3

What is an RFI and what is it used for?

Answer 3

Request for information

A way of gathering info from potential suppliers, testing the market and used early in the proc process

Question 4

Direct and indirect costs - give some examples

Answer 4

Direct - raw materials, consumables etc that go into making a product

Indirect - all other costs that cannot be measured directly relative to each unit produced

Question 5

Fixed and variable costs - direct or indirect?

Answer 5

Fixed costs are indirects

Variables will vary dependent on volume - these are directs

Question 6

What is breakeven point

Answer 6

Point where total costs and sales revenue are the same.

Question 7

What is Purchase Cost Analysis (PCA)

Answer 7

• A tool that is used to analyse the costs of things bought
• Enables cost reduction strategies to be developed
• Can improve supplier relationships

Question 8

Use the Kraljic Matrix as a segmentation model for PCA regarding the nature of the purchase and supplier relationship.

Answer 8

LEVERAGE (ongoing purchases, arms length):
Items purchased in large quantities and made by many suppliers

STRATEGIC (ongoing purchases/strategic alliance):
Items important to the future success of the organisation

LOW IMPACT (one off purchase, arms length):
Low unit cost items

CRITICAL PROJECTS (one off purchase, strategic alliance)
Critical projects or long-term capital investments

Question 9

Life Cycle Costing - explain 3 elements of this

Answer 9

Total Cost of Ownership

Whole Life Costing (WLC)

Investment appraisal methods
e.g. accounting rate of return (ARR), payback period (PP), discounted cash flow (DCF), Internal rate of return IRR)