business theories and models

• Taylor's Management theory suggests that' employees should be submissive and specialise in one task (hard approach) and the main motivator of the workforce is financial rewards (this encourages Piece rate payments). Taylor suggest an autocratic leadership style is best.
• Herzberg two factor theory states that if hygiene factors such as pay, good relationships and good environment is not present the employees will be demotivated but they are not the things that motivate employees. The things that do motivate is opportunities for promotions, job enlargement, job enrichment and empowerment.
• Mayo's Human Relation school theory suggest that workers have social needs that need to be met. When employees feel part of a team and have an interest in each other productivity will grow. This encourages businesses to have a personnel department so that the employees feel heard and part of the company.
• Maslow's Hierarchy of needs suggest that : not every employee is motivated by the same thing and what they are motivated by can change at different stages of their career.

  
• Market mapping is the process of using a graph to plot competitors and their products to understand competitor behaviour and spot a gap in the market

  
• SWOT analysis stands for strengths weaknesses opportunities and threats. It is used to analyse a business and its position within the market place.
• The product life cycle shows the sales performance of a product over time. There are four phases; introduction, growth, maturity and decline.
• Porter's five forces model looks at how competitive a market is based on the power of suppliers, buyers, new entrants, substitutes and competition between existing firms.
• A SWOT analysis looks at the internal and external factors affecting a business or brand. Strengths and weaknesses are internal while opportunities and threats are external.
• Risk is when the probabilities of the possible outcomes are known (such as when tossing a coin or throwing a dice); uncertainty is where the randomness of outcomes cannot be expressed in terms of specific probabilities.
• Added value is the difference between what a business spends to produce its goods or services, and the price that customers are prepared to pay. (e.g Brand name, Customer service, extra features)
• Market segmentation involves dividing up a large market into smaller groups with similar needs and wants so they can be targeted more effectively
• Price elasticity of demand is a measurement of the change in the demand for a product in relation to a change in its price.

  
• Income elasticity of demand describes the sensitivity to changes in consumer income relative to the amount of a good that consumers demand

  
• Distribution channels are the paths that products and services take on their way from the manufacturer or service provider to the end consumer.
• Types of Distribution Channels

  • Direct
  • Indirect
  • Hybrid
• Direct channel


  Allows the consumer to make purchases from the manufacturer
• Direct channel


  • May mean lower costs for consumers because they are buying directly from the manufacturer
• Indirect channel


  Allows the consumer to buy the goods from a wholesaler or retailer
• Indirect channels


  • Typical for goods that are sold in traditional brick-and-mortar stores
• Hybrid distribution channels


  Use both direct channels and indirect channels
• Hybrid distribution channels


  • A product or service manufacturer may use both a retailer to distribute a product or service and may also make sales directly with the consumer
• The Boston Matrix is a model which helps businesses analyse their portfolio of businesses and brands.
• Boston Matrix - High market share + High market growth = Star
• Boston Matrix- High Market share + Low market growth = Cash cow
• Boston Matrix - Low market share + Low market growth = problem child / dog
• Boston Matrix - High market share + Low market growth = Question Mark
• A hierarchical or ‘tall’ structure has many leaders and layers of management. This includes a long chain of command and a narrow span of control.
• advantages of tall organisational structure -

  • Areas of the business are closely managed
  • Managers have tight control over employees
  • Excellent progression opportunities
• disadvantages of tall organisational structure - There is slow communication due to a long chain of command

  • Employees may be demotivated due to lack of autonomy
  • Organisational changes can be slow to implement
• A horizontal or ‘flat' structure is an organisational structure with only a few layers of management. In a flat structure, managers have a wide span of control with more subordinates, and there is usually a short chain of command.
• advantages of flat organisational structure -

  • Less layers leads to better communication
  • More autonomy and responsibility for employees
  • Employees may feel more motivated, therefore being more productive
• disadvantages of flat organisational structure

  • Lack of progression opportunities
  • Higher workloads for managers
  • Managers have more subordinates
• Autocratic Leadership - A style of leadership where the leader makes all the decisions and is not open to suggestions.
• Democratic leadership - A leader consults team but still makes the final decision
• Paternalistic leadership- leader is seen as a farther figure and makes decisions that are in the best interest of the group
• Laissez-faire leadership - leaders allow team to make decisions and take responsibility for their own actions
• An entrepreneur is a person who spots opportunity who spots initiative and willingness to take risks in order to potentially benefit from rewards.
• A leader is a person who can inspire and motivate others
• Entrepreneurs may struggle to become a leader as they may struggle in- Delegation, Lack of trust, loss of autonomy