Paper 1 Case Study Flashcards
Public Sector
Services that non-payers also benefit from, funded by taxes or the state, delivers public services (transport, education, healthcare)
Private Sector
Motivated by money, run by private individuals, legally regulated by the state and laws of the country
Public-Private Sector
High cost public infrastructure projects funded with private sector money. Normally involves a long term maintenance contract. Also known as private finance initiative
Aim of PPPs
To share skills and resources to provide public services
For profit commercial
Sole traders, partnerships, and cooperations
For profit social
Cooperatives, Microfinance providers, PPPs
Microfinance
Banking service that is provided to low income or unemployed individuals or groups who otherwise have no access to financial services
Microfinance providers
Small loan given to impoverished people to help them start a business or become employed
Advantages of Microfinance providers
Helps impoverished back on their feet, low interest rates, who don’t have resources gain access
Disadvantages of Microfinance providers
Clients may not be able to benefit from credit, large debt can occur from borrowing, higher interest than normal loans
Corporate social responsibility
As well as a priority of maximising profit, a business has legal and moral responsibilities, allowing businesses to adopt ethical code
Non governmental organisations (NGOs)
A volunteer based organisation to meet a goal for the betterment of society with no profit
Advantages NGOs
Can experiment with views, adapt to local needs, communicate on all levels, recruit anyone
Disadvantages NGOs
Workers don’t earn income, restrictions of approaching a problem or area
Vision statement
The preferred future, what an organisation would like to achieve in the long run, where they want to be
Mission statement
The present state of a company to its stakeholders and how they can reach the vision
Cell production
Mass production in teams with a focus on quantity and responsibility
Impact of cell production
Allows organisations to move away from traditional hierarchical organisation structures, allows businesses to interfere many non-financial rewards (EG: job rotation, job enrichment, teamwork etc)
Process of cell production
Adjusts mass production so workers can work in a team and be responsible for a certain part of the production line. In comparison, mass production only allows workers to carry out 1 specific tast
Cell production advantages
Often improves quality, increases productivity, and reduces production costs. Workers are more motivated than mass production even though a similar production process is taking place
Disadvantages cell production
Production could be slower which decreases total output levels
The key functions of management
Planing, organising, leading, controlling
The key functions of management: Planning
Defining the goals of the organisation and determining the activities and resources required to achieve them
The ley functions of management: Organising
Creating an organisation structure that is suitable for the achievement of of the agreed goals and objectives of the organisation
The key functions of management: Leading
Guiding and motivating others to work effectively to achieve the organisation’s goals and objectives
The key functions of management: Controlling
Checking to determine whether an organisation is progressing towards its goals and objectives and then taking corrective action if it’s not
Management involves:
Planning resources and tasks to achieve goals set, budgeting how funds will be spent, staffing - which is the process of recruiting, training, and compensating employees, organising activities to particular people to carry them out, controlling activities done such that they are. Not different from pre-planned ones
Management is about:
Making sure that resources such as time, money, HR, and equipment are used efficiently and effectively to achieve goals/tasks, the primary focus is work/tasks
Leadership is about:
Knowing what is best for an organisation and leading them in the right direction 0 thinking through the right action, being able to change
Leadership involves
Having a long term vision, motivating and empowering people, inspiring others, encouraging teamwork, listening to people and getting to the root causes quickly and effectively, mentoring by imparting knowledge and wisdom to the team and its members
Styles of leadership
Autocratic, democratic, paternalistic, laissez-faire, situational
Autocratic leadership
Leaders who take full authority and assume full responsibility over their employees. They centralise power and decision making in themselves and expect employees to do what they are told. It is typically negative based on threats and punishment, it can be positive if they choose to reward employees
Democratic leaders
Leaders who decentralise authority with decisions arising from consultation with subordinates and participation by them. Employees are informed about conditions affecting their jobs, which encourages them to express their ideas and suggestions
Paternalistic leadership
A paternal leader adopts a fatherly style, exercising the organisational power to control and protect subordinate staff, who are expected to be loyal and obedient. It is suitable for businesses with a formal hierarchical structure and where creative thinking is not solicited from staff
Laissez-faire or free reign leaders
Avoid power and responsibility, depend upon the group to establish its own goals. Useful in situations where a elder can leave a choice entirely to the group
Situational leader
Involves adjusting leadership styles depending on the abilities of subordinates. Under such leadership style, it is important for the leader to find the right balance between giving directions and providing support and respond with a style that is appropriate to the situation
Advantages of autocratic leadership
Effective in emergencies when absolute followership is needed
If business leaders do not change accordingly to respond to change in the global world. This may result in the following costs:
Reduced creativity, missed opportunities, cultural blundering
Subcontractor
An external company that is hired to carry out a task on behalf of another company. The process of hiring the external company is known as outsourcing or subcontracting.
Reorganisation methods
Outsourcing, subcontracting, offshoring, in-housing, re-shoring
Outsourcing (or subcontracting)
Transfer of internal business activities to an external business organisation
Offshoring
Similar to Outsourcing yet moving business activities overseas / abroad
Advantages of outsourcing (and offshoring)
Reduced labour and productions costs (eg: rent), improved efficiency, increase expansion into foreign markets, reduced government regulations and taxes
Disadvantages of outsourcing (and offshoring)
Complex to set up, organise, and administer, loss of jobs in the original location which leads to a lack of job security for remaining employees, loss of quality control, reputation at risk, ethical concern of exploiting foreign workers in LEDCs
In Housing
Conducting production within a company rather than relying on outsourcing
Re-shoring
Opposite of offshoring, to bring back production form overseas
Commercial marketing
Focuses on a customer’s needs and wants
Social marketing
Focuses on Society’s wants and needs
Two ways in which a new product can be developed
Product or market orientation
What is product orientation based on?
The assumption that there will always be a market for the product that the firm makes
Product orientation is driven by
Technological innovation, rather than a customer’s needs - it rests on the belief that if an innovative product is produced to a good quality - people will buy it
Examples of product orientation
Pharmaceuticals, electronic industries
What is market orientation based on?
The satisfaction through market research and analysis - they make their decisions based on what customers want and need
In the 21st century (most common orientation method)
Market orientation because more companies are becoming more accomodating to customer preferences
Distribution
The process of getting good from producers to customers, ensuring that products and services are available when required
A company’s channel decisions
Directly effect every other marketing decision
A company’s pricing depends on
Whether it uses mass merchandising or high quality specialty stores
Distribution channels
Direct selling to consumer, single intermediary channel, two intermediary channel
Advantages of market orientation
Reduced risk of failure, easier to anticipate changes and respond to them, easier to compete with competitors
Disadvantages of market orientation
Expensive to Confucius research, difficult to meet constantly changing customer needs, uncertainty of the future effects research
Advantages of product orientation
Associated with high quality products, niche market, succeeds in industries where speed of change is slow, company has control over its activities
Limitations of product orientation
Risk of failure because it ignores customer needs, spending money on research and development and not consumer needs might not lead to ideal results
Above the line promotion
The use of media for marketing communication with customers
AIDA model
Attention, Interest, Desire, Action
Examples of above the line promotion
Tv, internet, magazines, radio, billboards, cinema
Below the line promotion
Not dependent on the media, refers to techniques when the marketer has some kind of control. Often, customers are offered short term purchase incentives often referred to as sales promotion techniques
Examples of below the line promotion
Loyalty cards/programs, money off coupons, buy one get one half price/free, competitions, demonstrations, sponsorship, PR
5 elements of the promotion mix
Advertising, personal selling, sales promotion tools, PR, Direct marketing
Direct marketing
No intermediaries are involved in making a sales transaction. Mailing lists are used to inform what’s on sale, how long, and what price. EG: telemarketing
PR
Activities designed to give an organisation or its products/service an image amongst all stakeholders (existing/potential customers, employees, shareholders, local community, government)
Sales promotion tools
Techniques designed to stimulate customer purchases short term (EG: coupons, samples, demonstrations) they dramatise products to boost sales
Personal selling
Face to face contact between buyer and seller, salesmanship, buyers can ask questions, sales people adjust their sale messages to suit the buyer
Advertising
A tool used by marketers to send messages via the media to inform / influence the receivers (eg: radio, TV, newspapers)
Stakeholders
Groups of people who have a particular interest in a business organisation
Internal stakeholders
Groups within the business / part owners, managers, directors, employees, shareholders
External stakeholders
Groups outside the business who are still impacted by it: customers, suppliers, competitors, special interest groups, government
Penetration pricing
Products are priced low to attract more customers and discourage competitors. This strategy enables the firm to penetrate or capture a large share of the market quickly
Loss leaders
Products priced at very low levels to attract customers. The company makes a loss on each product sold. It is expected that the loss made on a loss leader will be compensated for by profit from other products
Price discrimination
When a company charges members of difference groups of consumers different prices for the same product or service
Closing balance =
opening balance + net cash flow for the month
Net cash flow =
Cash inflow - cash outflow
Supplier interest
Regular orders and steady payments.
Supplier
A person or company that provides goods and/or services to other companies as one of the contributors to the development process on the way to the ultimate customer
Stakeholders can….
Belong to both the internal and external category. EG: A manager could also be a shareholder
Share Capital
The money invested into a company by shareholders in exchange for shared of the company as a long term source of finance
Loan Capital
Capital held by a business that has been borrowed through a long term loan
Loan capital advantages
Can be secured/unsecured, the money can be used wherever the company wants, easily accessible, can be arranged quickly for a specific purpose, repayments are normally spread evenly, the provider does not share profits, you maintain ownership
Loan Capital disadvantages
Mandatory repayment, higher interest rates which make it harder to afford, short term only, if interest increases so does debt, failure to repay may lead to seizure of a firm’s assets
Personal funds advantages
No need to owe others, limited amount of people managing the movement of it, cheap, control over the business, more motivation, don’t have to share returns with investors
Personal funds disadvantages
Possible loss of money, everyone will want some, no more funds leftover for emergencies, risky (bankruptcy), might be insufficient, rebuilding might be hard and lengthy
Share capital advantages
Shareholders are usually willing to invest in business expansion, no worrying about repayment, sometimes shareholders can bring partnerships of guidance, permanent capital, no interest, not dependent on a single person
Share capital disadvantages
The company doesn’t have complete control, there are more than one investor which reduces profit, time consuming
Phycological pricing strategy
Sellers consider the phycology of pricing and not simply the economist. It takes account of the customer’s perception of value of the product. EG: 4.99
Competitive (predatory) pricing strategy
Used by companies to undermine sales of rivals or to warn rivals not to enter a particular market. A predatory pricing strategy is illegal in many countries, (it is difficult to prove whether the low prices are the result of legitimate price competition or a deliberate act to eliminate the competition)
Price leadership
Used when customers and other firms agree there is one dominant firm in market share or status. The dominant firm sets its prices and the competitors follow. If the dominant firm raises prices the other firsts follow. This results in higher profits as customers will have to pay more. This requires government regulation to protect customers
Things to consider when looking at pricing strategies:
The nature of the product, the customer, the competition, short and long term impact on sales and profit , target market and revenue, financial position of the business
Promotion is….
An attempt by marketers to inform consumers about a product and persuade them to purchase it
Social marketing is…
Promoting specific behaviours from society ‘social good’. EG: encouraging people to quit smoking
Market orientation focuses on
Customers (and their needs/wants)
Product orientation focuses on
The product rather than a need (products that a business is good at developing)
Market size
Total sales of all businesses in a market
Point-of-sale promotion
Research into customer buying behaviour in retail stores
Day-to-day running
Managing to ensure the tactical objectives fare achieved on a short term basis. A constant presence in the organisation
Strategic decision making
Plans of actions that businesses use to achieve long term aims and objetives/targets. They are made based on long term planning
Trading name
A business may adopt a name for a specific business unit to reflect the nature of the business which may differ from the company’s official name. They are brands butt usually go beyond a product including physical stores
Commissioned
A product that is ordered by an organisation of which they are likely to receive a percentage of sales
Cost to make
The monetary cost of producing essential equipment, materials etc at mid-production stage
Cost to buy
The monetary cost of buying equipment, materials etc at mid production stages
External recruitment
Recruiting non existent staff form outside the pool of the company
Agents
Individual or organisation that acts on behalf of another organisation in a local region
Trade agreements
The result of negotiations between 2 or more nations hat sets the terms of trade regarding quantities, quotas, tariffs, and sometimes pricing
Free-market economy
A market economy based on supply and demand with little or no government control. A totally free market economy where buyers and sellers are allowed to transact freely (buy/sell/trade) based on a mutual agreement on price without state intervention in the form of taxes subsidiaries and quotas
