Paper 1 Summer 2014 Flashcards
Marketing mix
the key decisions that must be taken by a marketing department in order to ensure the effective marketing of a product – product design and performance, price, promotion, and place.
Importance of “place”
- Place is where and how a product will be sold to customers.
- Place decisions concerned with how products should pass from manufacturer to the final customer.
- Place is about convenience to the customer.
- The product must get to the right place at the right time.
- Place involves decisions about distribution channels, e.g. direct selling/retailers/internet.
HRM purpose
- HRM is concerned with the effective management of staff in a business to ensure that those staff enable the business to be productive and efficient.
- Essential purpose of HRM is to recruit, train and use staff in the most productive way to assist the organisation in achieving its objective.
Cashflow forecast to new business
- Cash flow forecasts are estimates of the future cash inflows and outflows of a business.
- They show periods of negative cash flow and so allow plans for additional financing, e.g. a bank overdraft or additional owner finance.
- Or plans can be made in negative cash flow periods to reduce expenditure or increase cash inflow by discontinuing credit sales.
- Cash flow forecasts give information to investors and bankers – a vital requisite for business start up and development.
Operational management
- Operations management has been defined as the discipline of managing resources to achieve efficient on-going production/provision of goods and services.
- Concerned with workflow at the operational level – how work will be performed, who will do it, how resources will be combined.
- The conversion of strategic goals into operational activity.
Technology effects on operations
- greater efficiency in production/service processes.
- the need to update equipment and require new investment.
- Impact of technological change on employees - can they change/cope?
- If the business does not keep up with technological change the operations management may contribute to a fall in demand for the product/service.
- Possible impact on productivity and costs.
- Could mean less/different staff required.
Maslow and Herzberg’s differences
• Maslow essentially concerned with identifying and classifying human needs.
• Application to the work organisation is the presumption that satisfied needs at work lead
to greater productivity.
- Hierarchy of needs – from physical needs to self-actualised needs.
- Herzberg – focus on a two-factor theory.
• Hygiene factors (e.g. working conditions, salary), extrinsic factors can cause
dissatisfaction – these need to be removed but satisfaction with hygiene factors will not
necessarily create a motivated workforce. Motivating factors – intrinsic factors – are the
key to productivity (achievement, recognition, responsibility).
Business needs both effective managers and effective leaders
- Managers said to deal with the ‘now’ – set objectives, plan, co-ordinate, motivate, direct and control (Mintzberg classification may be cited).
- Leaders – said to be more about the future – giving clear direction, and vision and purpose for an organisation.
- Each requiring different qualities and skills.
- Arguably successful organisations need both effective managers and leaders – they can be the same people – but not necessarily!
- Accept a discussion of the concept of informal leaders.
Published accounts to stakeholders
- Published accounts are financial records of business transactions which provide essential information to groups within and externally to a business (e.g., internal managers, staff, shareholders, banks, etc.).
- Published accounts give information on profitability, value of fixed assets, liquidity, growth/investment potential.
• Interested stakeholders may use accounts and examine performance indicators such as net profit margin, level of sales, long-term liabilities. These provide indicators of performance and
financial stability/strength – more than one year’s accounts may be examined.
• While of potential value to an interested stakeholder, published accounts have limitations:
○ contain only information required by law
○ it is historic information
○ do not give details of each section of the business
○ may not include future budgets or financial plans
○ there may be ‘window dressing’
○ qualitative factors such as internal health of the business not in the remit of published accounts.
Differences bw batch and flow production
Batch production – a single product made in batches to an individual specification –production process divided into a number of different stages – each operation at each stage carried out in a batch, e.g. there is a demand for 500 bread rolls – allows each batch to be matched to a specific demand specification – flexible and some economies of scale if large batches.
Flow production – mass production of identical standardised products – continuous sequence of a range of different operations – large quantities produced – automatic – lower unit costs – semi-skilled workers required.
Implications of changing batch into flow
Factors that could affect a business as it moves from batch production to flow
production:
○ new machinery/technology – cost implications.
○ impact on staff – redundancy implications.
○ impact on morale/motivation of staff.
○ implications for inventory requirements.
○ impact on unit costs.
○ impact on quality standards of products.
○ the need to plan and manage this change.
○ impact on consumer – standardised products.
• The effect of these factors and implications for the business also determined by the context of the business and its products, e.g. existing levels of automation, the industrial relations situation, the managerial competency within the business.
Market segmentation
identifying different segments within a market and
targeting different products or services at them – a customer-focused strategy.
identifying sub-groups in a market in which consumers have similar characteristics.
Factors affect profitability of a business
– Costs of business change.
– Operational efficiency changes.
– Level of demand changes.
– Level of competition changes.
– Product mix/portfolio is tired.
– New products marketed.
– Quality of business management/leadership changes.
– Credit any other relevant factors.
– Efficiency, cost control, pricing, supply costs, rent, quality of decision-making,
effectiveness of advertising, level of sales, degree of government intervention.
Why business objectives change overtime
– Business objectives are the stated, measurable targets of how to achieve aims and a sense of purpose.
– Business objectives may include: survival, growth, profit, maximisation, sales growth, ethical
and socially responsible objectives.
– Business objectives may change for several reasons, including:
○ initial objectives achieved (e.g. survival).
○ competitive environment changes.
○ technology might change product design.
○ new management and leadership.
○ new opportunities arise.
○ internal/external growth may lead to a revision of mission/purpose and objectives.
○ economic recession – external constraints.
○ becomes more ethical.
Value added
Value added can be defined as the difference in the production process between the cost of
raw materials and the price the finished goods are sold for – a key business objective – the
degree of value added to inputs.
