Theme 1 Flashcards
What is motivation
The will or desire to work due to enjoyment of work itself
Why is motivation important
- reduced recruitment costs, increase retention
- improve reputation, due to better customer service
What are the 4 theorists
- Taylor
- Maslow
- Herzberg
- mayo
Taylor features
- scientific management
- money motivates
- piece rate
- specialisation/division of labour
- autocratic
Herzberg theory
- 2 factor theory
- hygiene factors
- motivators
What are hygiene factors
- hygiene factor: necessary to go to work, not motivating.
E.g. Pay, working environment
What are motivators
- motivators: factors that motivate.
E.g. Training, bonus
Maslow theory
- hierarchy of needs Self actualisation (H) Esteem (H) Social belonging (H) Safety (L) Physiological (L) - assumed all motivated by the above in order.
Mayo theory
- human relations approach
- Hawthorne experiment: factory female workers
- changed aspects of working environment e.g. Lighting, rest breaks.
- workers motivated by having social needs
What is a mass market
- where a business sells into the largest part of the market
- where there are many similar products on offer
What is a niche market
- where a business targets a smaller segment of a larger market - where customers have specific needs and wants
Mass markets characteristics
- customers form majority of market
- needs and wants more general
- higher output and capacity
- low cost, wide distribution
Niche market characteristics
- loyal customers
- higher profit margins
- lack economies of scale
- can attract competition if successful
What is market size
- the total volume of a market
- in terms of no.of sales or value of sales
What is market share
- the percentage/segment of a market which a business controls
Why are brands useful
- product can be given ‘personality’
- product differentiation
What is a dynamic market
- a market which is constantly changing
Four key factors to consider in dynamic markets
- online retailing
- how markets change
- innovation and market growth
- adapting to change
How does online retailing impact a dynamic market
- development of technology
- increase in online retailers
- can cause store based retailers to lose market share
- online market shares predicted to increase
How does competition affect dynamic markets
- can reduce market share of other companies
- can stimulate innovation
- can prevent monopolies
- lower prices
Difference between product and market orientation
- product, where a business chooses to focus on what it does best
- market, where a business focuses on customer preferences
Pros and cons of secondary market research
- cheap
- usually based on sales figures
- outdated
- not specific
Pros and cons of primary research
- specific to objectives
- latest info
- expensive
- bias
Qualitative data examples
- focus groups
- interviews
Quantitative research examples
- sampling
- questionnaire
Limitations of market research
- sample size
- sample bias
Uses of IT to support market research
- social media
- databases
- websites
What is market segmentation
- finding ways to divide a market up to identify untapped opportunities
Segmentation methods useful for larger businesses
- add one niche product to portfolio
- multiple segmentation
What is market mapping
- a visual way for a business to identify their position in the market and identify gaps in the market
Purpose of product differentiation
- enables business to increase prices if costs increase
- protect product from competitors
What is adding value
- the process of increasing worth of resources by modifying them
How can you add value
- create a brand image
- increase quality
- branding/packaging
Factors leading to change in demand
- price
- competition
- change in consumer income
- trends
- advertising
- demographics
- external factors
- seasonal
Factors leading to change in supply
- change in cost of production
- new technology, lower prod costs
- indirect taxes (VAT)
- government subsidies, financial contribution
- external factors
Supply curve
X axis - quantity
Y axis - price
PED
(%change in QD)/(%change in price)
Determinants of PED
- product differentiation
- substitute goods
- branding and brand loyalty
Classifying PED
0 = Perfectly inelastic
0 - 1 = inelastic
1 + = elastic
Value of PED to businesses
- sales forecasting
- pricing strategy
How to reduce PED
- product differentiation
- eliminate competition (predatory pricing)
Calculate YED
(%change in QD)/(%change in income)
Real income formula
%rise in earnings - %rise in prices
Interpreting values of YED
- normal good (+ve YED 0 - 1)
- luxury good (+ve YED 1+)
- inferior good (-ve YED)
Factors influencing YED
- necessity or self indulgence
- type of customer (affluent?)
Significance of income elasticity to businesses
- sales forecasting
- financial planning
What aspects are in the design mix
- aesthetics
- function
- economic manufacture
Changes in the design mix that reflect social trends
- concern over resource depletion, sustainability
- designing for waste minimisation and reuse , CAD
- recycling
Types of branding
Individual brand, separate form other brands
+ allows business to sell unrelated products.
- Higher cost to develop more brands
Brand family, all brands seen as one
+ Can develop brand with global presence, efficiency.
- If one product is bad the whole brand suffers.
Corporate brand, adding company name to brand to add credibility
+ Can allow business to communicate their values and target market, leading to customers forming an opinion before buying.
+ Can allow good reputation to spread across all products which may be unrelated.
- Dilution of image
Benefits of branding
- added value
- premium prices
- reduced PED
- combatting the discounter
Changes un branding and promotion which reflects social trends
- viral marketing
- social media target market + crowdfunding
- emotional branding
Promotion types
- persuasive advertising, distinctive image
- public relations, good relationship with journalists etc.
- buy 1 get 1 free, stimulate demand
Pricing strategies
- skimming
- penetration
- cost plus
- competitive
- predatory, eliminate rivals through low price
- psychological
Factors determining pricing strategy
- product differentiation
- strength of brand
- competition
- PED
- stage in product life cycle
Distribution channels
- traditional
- direct to retailer
- be your own retailer
- direct online
- online retail (ebay)
Stages of product life cycle
- R&D
- introduction
- growth
- maturity
- decline
- extension strategy
What is the value of the product life cycle
- plan marketing strategy
- identify time of maturity and decline
Extension strategies examples
- new product
- modified product
- promotion, advertising campaign
Methods used for product portfolio analysis
- Boston matrix
Boston matrix categories
- cash cow
- rising star
- problem child
- dogs
Purpose of product portfolio anlysis
- building: identify where investment in marketing is needed
- holding: maintaining sales
- milking: taking profits without a lot of investment
- divesting: selling off product
Marketing strategy
- plan for future marketing activity in order to achieve business objectives
Keys to a successful marketing strategy
- specific
- achievable
- sustainable
Approaches to staffing
- staff as an asset, (pay pensions)
- staff as a cost, (zero hour contracts)
How to achieve greater flexibility within the workforce
- multi skilling, workers given variety of tasks
- part time and temporary
- flexible hours and home working
- outsourcing
What is a trade union and collective bargaining
- organisation that employees pay to join in order to gain greater power and security at work
- union bargains with employers on behalf of all workers
What is individual bargaining
- where employee bargains with employer on their own
The recruitment process
- job description
- person specification
- advertise
- shortlist
- selection
- recruitment
Methods of external recruitment
- media advertising
- job centres
- commercial recruitment agencies
+ve and -ve of internal recruitment
- reduce recruitment/selection costs
- promotion opportunity
- lack of innovation
- conflicts
+ve and -ve of external recruitment
- wider pool of candidates
- increase innovation
- expensive
- demotivate workers
Factors influencing choice of external recruitment
- cost of recruitment method
- size of the recruitment budget
- location and characteristics of the likely candidates
Methods of selection
- interviews
- testing and profiling, aptitude, examines personality
- assessment centres
+ve and -ve of induction training
- allows to make new staff fully productive asap
- avoids costly mistakes at work
- not as productive as on the job
+ve and -ve of on the job training
- learn whilst working
- specific to workplace
- costly mistakes
+ve and -ve of off the job training
- allows employee to concentrate fully on learning
- allow access to more experienced instructors
- not productive
What is levels of hierarchy
- the number of different levels of management throughout an organisational structure
What is span of control
- the number of people directly under the supervision of a manager
What is chain of command
- the route through which information travels throughout the organisation
What is centralisation
- where decision making and power and power remains at the top management levels
What is decentralisation
- where decision making power is delegated to workers lower down in the organisation
Type of organisational structures
- tall
- flat
- matrix
Tall organisational structure
- small span of control
- long chan of command
Flat organisational structure
- large span of control
- short chain of command
Matrix organisational structure
- cross functional
- employees form different departments work as teams
+ve and -ve of matrix organisational structure
- encourages innovation
- job enrichment
- 2 line managers
- conflicts
Why is organisational structure important
Poor organisational structure leads to:
- poor communication leads to mistakes
- duplication of tasks
- task being overlooked
- departments failing to work efficiently
Consultation
- asking views of the staff you manage and take their opinions into account
Team working
- attempt to maximise staff satisfaction and involvement
Flexible working examples
- flexitime
- home working
- job sharing
- maternity leave
Job enlargement
- anything that increases the scope of a job
Methods of job enlargement
- job rotation
- job enrichment
Types of leadership style
- autocratic
- democratic
- paternalistic
- laissez faire
Ways of generating business ideas
- observation
- brain storming
- thinking to future
- personal/business experience
- innovations
What is an intrapreneur
- characteristics of an entrepreneur but works within a large organisation
Why is it risky to expand a small business rapidly
- pressure on firms resources
- outstrip entrepreneurs capacity
Skills required to be a successful entrepreneur
- financial understanding
- persuasive abilities
- problem solving skills
- networking skills
What is profit satisficing
- finding the ideal measure of profit without compromising sustainability
Non financial motives for becoming an entrepreneur
- independence
- home working
- ethical stance
- social entrepreneurship
Mission statement
- summary of aims and values of a company
Common business objectives
- survival
- profit maximisation
- sales maximisation
- market share
- cost efficiency
- employee welfare
- customer satisfaction
- social objectives
Businesses with unlimited liability
- sole traders
- partnerships
Businesses with limited liability
- private limited
- public limited
+ve and -ve of limited company
+ shareholders limited liability
+ gain access to wider range of borrowing opportunities
- public financial information
- follow more expensive rules
What is market flotation
- the process of changing an LTD to a PLC
- by issuing shares and getting public to buy them
Other forms of businesses
- franchise
- social enterprise
- lifestyle businesses
- online businesses
Opportunity coasts in developing a business idea
- personal opportunity cost, long hours, stress
- opportunity coats of choosing one idea over another
How do businesses decide between opportunities
- predict potential sales
- consider cash requirements
- deciding whether time is right
- deciding whether it is feasible skill wise
Risks of overtrading
- liquidity problems, if payment is not quick
- inadequate funding
- unable to pay staff or suppliers
What does the creation of a marketing process involve for a business?
- Decision 1: Choose which customers to serve
This involves: - Market segmentation (analysing the different parts of a market).
- Targeting (deciding with market segments to enter)
Decision 2: Choose how to serve those customers
- This also involves two important parts of marketing strategy:
- Product differentiation (what makes it difference from the competition)
- Market positioning (how customers perceive the product)
What is market positioning?
- Market positioning refers to the consumer’s perception of a brand or product in relation to competing brands or products.
- A market map/positioning map can be used to identify a range of positions a product can take in a market, using 2 dimensions important to customers.
Possible dimensions for a market/positioning map?
- Low price/high price
- Basic quality/high quality
- Necessity/luxury
- Low volume/high volume
Advantages and disadvantages of market/positioning maps?
+ spot gaps in market
+ analyse competitors
- gap doesn’t = demand
- dependant on reliability of research
Importance of market positioning to a business?
- Known identity allows business to target certain demographics.
- Helps staff understand what is expected by customers from their service.
- effective positioning conveys why the company is better than others.
Difference between empowerment and delegation
- empowerment worker as authority to manage and scope to decide what task
- delegation passing authority down
Methods of financial reward systems
- piecework
- commission
- profit share
- performance related pay
