Theme 1 Flashcards
Methods of differentiation
- reputation
- customer service
- value for money
- product features
Factors leading to a change in demand - non-price
- price of substitutes
- alternative brands
- price of compliments
- changes in consumer income
- trends in fashion and tastes
- marketing, advertising and branding
- population structure/demographics
- time of year
- weather and climate
- external shocks
Factors leading to a change in supply - non-price
- cost of production
- introduction of new technology
- indirect taxes e.g., VAT
- government subsidies
- external shocks
Factors influencing PED
- availability of substitutes
- frequency of purchase
- necessities
- luxury goods
Factors influencing YED
Luxury goods - income increase = demand increase
Normal goods - income increase = demand increase
Inferior goods - income increase = demand decrease
FAC
Function
Aesthetic
Cost
Types of promotion
- personal selling
- direct marketing
- sponsorship
- public relations (PR)
- below-the-line marketing
- above-the-line marketing
Sales promotions
- BOGOFF
- point of sale
- special events
- samples/giveaways
- money-off coupons
- price discounts
Digital communications
- online adverts
- viral strategies
- consumer generate content
- social media
- ‘advergaming’
- mobile communications
Ways to build a brand
- USP/differentiation
- advertising
- sponsorship
- social media
Pricing strategy depends on…..
- the product/service itself
- competitors in the market
- aims and objectives of the business
Types of pricing
- cost plus
- price skimming
- penetration
- predatory
- competitive
- psychological
4-stage distribution channel
Manufacturer
|
Wholesaler (B2B)
|
Retailer (B2C)
|
Consumer
3-stage distribution channel
Manufacturer
|
Retailer
|
Consumer
2-stage distribution channel
Manufacturer
|
Consumer
Staff as a cost
- cost of recruitment
- cost of training
- cost of paying minimum wages
- cost of paying staff salaries and wages
- cost of staff welfare
- cost of redundancy
Decentralised structure
Where a business divides up the organisation of its business into areas. The business will have seperate budgets for each area.
Centralised structure
Where a business has its organisation of management and administration at one central head office. The business has one central shared budget.
Tall structure
- lots of promotional opportunities
- slow decision making
- work shared = less stress
- everyone knows their place in the hierarchy, very organised
Flat structure
- wide span of control
- short chain of command = quick information flow
- so quick decision making
- e.g., restaurants and web design companies
Matrix structure
- in a business where there is more than one product or more than one project running at one time this is suitable.
- e.g., car manufacturers
- flexible = staff can jump in and out of different job roles (variety for them)
Taylor’s scientific management
- workers motivated if they are paid as per their output.
- breaking down complex tasks into simpler ones.
- standardising work processes, providing workers with clear instructions + training to maximise efficiency
Pro - improved training = job satisfaction + better performance
Con - workers may disengage if they are reduced to work in a machine like system = mistakes
Mayo’s human relations
- importance of social factors in the workplace:
COMMUNICATION
MOTIVATION
JOB SATISFACTION - these improve productivity, job satisfaction, relationships between employer-employees.
Pro - better communication = reduces misunderstandings/conflicts
Con - limited application = businesses that encourage independence and autonomy for employees might not be able to use it.
- time-consuming
Maslow’s hierarchy of need
5 tiers of human needs:
SELF-ACTUALISATION = morality
ESTEEM = confidence, respect for others
LOVE/BELONGING = friendship, family
SAFETY = job security, safe working conditions
PHYSIOLOGICAL = access to clean water and food
Pro - higher employee satisfaction = increased productivity + lower turnover rates
Con - expensive in offering employee perks
Herzberg’s two factor theory
Hygiene factors:
- pay fair wages/salaries
- offering excellent working conditions
- offer employment contracts which provide job security
Motivating factors:
- build a recognition and rewards culture.
- offer opportunities for growth and development.
- provide challenging work which requires problem solving.
These two types of factors work together to bring about employee motivation and job satisfaction
Pro - motivation = increased productivity, less labour turnover
Con - recognition and rewards culture could be expensive depending on whether the rewards are financial or not.
Financial motivation methods
- Piece work (paid per finished item/unit)
- Commission (% of the unit price or per unit sold)
- Bonus
- Profit share (annual dividend based on profits made)
- Performance related pay (e.g., excellent = 10% bonus on pay)
Non-financial motivation methods
- Delegation (given more responsibilities)
- Consultation (involved in discussions with management)
- Empowerment (employee gets authority to delegate)
- Team working
- Flexible working
- Job enrichment (higher responsibility + greater variety of tasks)
- Job rotation (one task to another)
- Job enlargement (more tasks of the same responsibility)
Autocratic leadership
- when management make decisions with little or no input from employees
- management dictate work methods and processes
Democratic leadership
- allows employees to help make decisions.
- the leader’s role is to decide which staff members get to contribute to the decisions that are made.
Paternalistic leadership
- A leader makes the right decisions for the employees they are responsible for.
- There is a dominant authority figure who expects loyalty and trust from their employees.
Laissez-faire leadership
- Employees can carry out activities and make decisions freely.
- Very relaxed work environment = little direction and guidelines.
- The leader is still ultimately responsible for the decisions made.
Barriers to entrepreneurship
- Entrepreneurial capacity (the ability to use entrepreneurial skills to create a widespread development of entrepreneurial mind-sets which benefits individuals and society)
- Access to finance
- Lack of training/know-how
- Fear of failure
- Lack of confidence
Entrepreneurial characteristics
- creativity
- hard-work
- resilience
- initiative
- self-confidence
- risk-taking
Entrepreneurial skills
- communication
- team working
- problem solving
- organisation
- numeracy
- IT skills
Non-financial motives for setting up a business
- independence
- flexibility
- ethical reasons
- social purpose
- personal challenge
Opportunity cost
Can be measured as the cost of foregoing the next best alternative.
Trade-off
less of one is exchanged for more of another or a compromise.
How to move from an entrepreneur to leader
- learning to delegate
- trusting others
- listen to others
- be less reactive
- development emotional intelligence:
SELF-AWARENESS
SELF-MANAGEMENT
SOCIAL AWARENESS
RELATIONSHIP MANAGEMENT
