Models And Theories

Question 1

What is the Tannenbaum Schmidt continuum?

Answer 1

• highlights the different managment styles that can be adopted.

Question 2

Key points of the Tannenbaum Schmidt continuum ?

Answer 2

-Left side: team centred approach. Right side: boss-centred approach
- is a continuum instead of categorising as ‘authoritarian’ and ‘democratic’

Question 3

What is the Blake mouton grid?

Answer 3

Shows the different management styles, based on their focus on the task and the focus on people within the business

Question 4

Describe the corners in the blake mouton grid.

Answer 4

• top left: country club- high concern for people, low concern for task
• top right- team leader- high concern for task, high concern for people
• bottom left- impoverished- low concern for task, low concern for people
• bottom right: produce or perish- of concern for people, high concern for taking

Question 5

What is the ‘scientific decision making’ model?

Answer 5

Highlights different stages in scientific, data based approach to decision making. Takes a logical and rational approach

Question 6

When can you use the scientific decision making model?

Answer 6

• the value of data (reliability, variety etc) that led to a particular outcome eg poor data leading to poor decision making.
• The need to make decisions, then discuss opportunity costs
  Importance of implementation
• whilst deciding if a decision is good to choose or not. Eg is this the right way to do it or should we collect more data and then act on it?
• considering why decisions have gone wrong.

Question 7

What is a decision tree?

Answer 7

An example of scientific decision making.

Question 8

What do each shape on a decision tree represent? (Square, lines, circle)

Answer 8

A square: decision that has to be made
Lines: possible choices
Circles: the outcomes as a result of the choice

Question 9

Tell me about the probability on a decision tree.

Answer 9

• an estimated likelihood of a given outcome
• ## the probability of all outcomes must add up to 1.

Question 10

What is net gain? (Decision trees)

Answer 10

Expected value minus the initial coast of a given choice.

Question 11

What is the expected value (decision trees) and how do you work it out?

Answer 11

Shows the weighted average of a given choice.
Multiply the probability of each given outcome by its expected value and add them together

Question 12

What is the ‘stakeholder mapping’ model?

Answer 12

Categorises stakeholders in terms of their relative power and interest.

Question 13

Describe the stakeholder mapping model.

Answer 13

High power+ low interest= keep satisfied
Low power+ low interest= monitor (minimum effort)
High power+ high interest= manage closely
Low power+ low interest= keep informed

Question 14

What is market mapping?

Answer 14

Identifies how products/brands are perceived by customers in relation to other products/ brands in the market.

Question 15

Describe the market mapping diagram

Answer 15

Portrait arrow= high price, low price
Landscape arrow= conservative, innovative

Question 16

When is the market mapping diagram helpful?

Answer 16

Allows brands to identify the categorises a customer considers when assessing a product.
Helpful when talking about a business moving their positioning of the business.

Question 17

What is price elasticity of demand?

Answer 17

The percentage change in quantity demanded of a product in relation to the percentage change in price.

Question 18

Why is price elasticity of demand relevant?

Answer 18

• influences pricing decisions
• allows managers to know how to change price to increase overall revenue
• provides useful information on the quantity demanded if price changes. This is helpful as it allows them to deicide staffing, inventory controls, planning cash flow and estimating profit and loss.

Question 19

What does it mean if a product/ service is price ELASTIC?

Answer 19

IS sensitive to price. A fall in price leads to a bigger INCREASE in quantity demanded. Total revenue is increased too as more units are sold

Question 20

What does it mean when a product/ service is price INELASTIC?

Answer 20

INSENSITIVE to price changes. So a price increase will increase revenue as the price change is larger than the quantity demanded percentage change.

Question 21

Problems of using PED?

Answer 21

Reliant on whether all other factors stay constant. Eg, income, weather, price of other products. Etc. Can be difficult to achieve this so PED is hard to measure.

Question 22

Influences on PED?

Answer 22

• if the product is heavily branded, customers are not especially sensitive to price changes
• substitutes and their accessibility, if easily accessed then price elastic.
• proportion of income spent: if its a low percentage then they are less sensitive to to price change.
• if someone else is paying, then price changes don’t effect the consumer directly.

Question 23

When is PED helpful?

Answer 23

• link to output, inventory control, staff levels, revenue and profit.
• link to exchange rates. Eg, strong pound means imports are cheaper. Think about material used.
• helpful when considering marketing, branding, differentiation etc.