Theme 1 Flashcards
What is motivation
The will or desire to work due to enjoyment of work itself
Why is motivation important
-increase retention, reduces recruitment costs, increases productivity
- improve reputations, 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
workers motivated by having social needs met
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
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 axis
X axis - quantity
Y axis - price
PED
(%change in QD)/(%change in price)
Factors affecting 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)
Interpreting values of YED
- Necessity (+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
Benefits of branding
- added value
- premium prices
- reduced PED
Types of branding
○ Manufacturer brand
○ Own-label brands
○ Generic brand
Manufacturer brand
created by the producers of goods/services.
Own-label brands
where the product are manufactured for the wholesalers/retailers.
Generic brand
where the products only contain the name of the product category
How to build a brand
USP/differentiation
advertising
sponsorship
social media
Changes in 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
USPs
PED
competition
strength of brand
stage in the product life cycle
costs and the need to make a profit
Distribution channels
- Four Stage Distribution Channel (traditional)
- Three Stage Distribution Channel
- Two Stage Distribution Channel
Four Stage Distribution Channel
producer, wholesaler, retailer, and consumer
Three Stage Distribution Channel
eliminates the wholesaler stage, with the producer selling directly to the retailer
Two Stage Distribution Channel
eliminates both the wholesaler and retailer stages, with the manufacturer selling directly to the end consumer
Stages of product life cycle
development
introduction
-growth
-maturity
-decline
What is the use 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 (botton left)
- rising star (top left)
- question mark ( top right)
- dogs ( bottom right)
boston matrix axis
Y axis - market growth rate
X axis - Relative market share
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
Marketing strategy for mass market
building brand awareness and appealing to a broad audience (Advertising campaign on TV and radio)
niche market
smaller groups of customers with specific needs and want. e.g organic food stores, luxury car dealerships
Marketing strategy for B2B
B2B marketing focuses on selling products to other businesses e.g. software companies selling to other businesses; manufacturers selling parts to other manufacturers
Marketing strategy for B2C
B2C marketing focuses on selling products/services directly to consumers e.g clothing retailers
How to develop customer loyalty
Customer service
Loyalty cards
Saver schemes
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)
-
Qualities of a flexible 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 an employee negotiates or 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 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
- usually specialist, expensive
- 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
+ve and -ve of limited company
+ shareholders limited liability
+ gain access to wider range of borrowing opportunities
- public financial information
- follow more expensive rules
+ve and -ve of unlimited company
+ dont have to disclose financial information
- legally no distinction between owners and business
-have to se their personal assets to pay debts or legal fees
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
What is psychological pricing
This pricing strategy takes into account the customer’s emotions, beliefs, and attitudes towards the product/service E.g. a business may set its prices at £9.99 instead of £10 as customers perceive the former as a better value
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
What is cost plus pricing
The business calculates the cost of production and then adds a markup to determine the final price
What is Price skimming
The business sets a high price for a new product/service when it is first introduced to the market
What is Penetration pricing
The business sets a low price for a new product/service when it is first introduced
What is predatory pricing
The business sets prices so low that it drives its competitors out of the market
What is competitive pricing
The business sets its prices based on its competitors’ prices
What is a public limited company
is a company that is able to offer its shares to the public. They don’t have to offer those shares to the public, but they can.
Disadvantages for a public limited company
Additional regulatory requirements
Higher levels of transparency required
More vulnerable to takeovers
Advantages for a public limited company
Better access to capital
Liquidity
Value of shares
Prestigious profile
What is an entrepreneur
individuals who spot business opportunities and seize them by taking on risks.
