Business Paper 1

• Product and Market Orientation


  Product orientationAn inward looking approach to new product development where the key focus is on what products can be made and the production process

  Market orientationAn outward looking approach to new product development where the key focus is on what products the consumer wants
• Market research (Primary & Secondary)


  Primary market researchInvolves the collection of first hand data that did not exist before and therefore it is original data

  Secondary market researchResearch that has already been undertaken by another organisation and therefore already exists
• Market segmentation


  Demographic (Age, gender, race, religion, etc)

  Geographic (Where people live)

  Income

  Behavioural (Behavioural patterns)
• Market positioning


  Where a product is placed in the market relative to its competitors
• Demand


  If a change in demand is caused by a change in price this is shown by a movement along the demand curve

  If the change in demand is caused by a change in any other factor this is caused by a shift in the demand curve

  Left- Decrease in demand

  Right- Increase in demand

  
• Supply


  If a change in supply is caused by a change in price this is shown by a movement along the supply curve

  If the change in supply is caused by a change in any other factor this is caused by a shift in the supply curve

  Right- Increase in supply

  Left- Decrease in supply

  
• Market equilibrium


  That point in the middle of the curve at which demand is equal to supply. This is called the equilibrium point or equilibrium price
• PED


  (Always negative)Measures the responsiveness of demand after a change in price.% change of quantity of demand% change of price
• Percentage change


  differenceX 100original
• Elastic demand


  (Luxury)

  Price change leads to demand change

  *Price is flexible, like rubber band

  under -1
• Inelastic demand


  (Necessity)

  Price change doesn't lead to demand change

  *Price is not flexible, like rubber band Over -1
• Luxury and Necessity (PED)


  Elastic- Over 1

  Inelastic- Under 1

  
• YED


  (Positive or Negative)Measures how responsive demand is to a change in income% change of quantity of demand% change of income
• Inferior and Normal (YED)


  Inferior goods- Demand decreases when there is a RISE in income

  Usually, low budget products

  (Bellow 0)

  Elastic- Below -1

  Inelastic- Between -1 and +1

  Elastic- Above +1

  
• Design mix


  Businesses can use this to create products that fit into each category more

  
• Product lifecycle


  1) Research and Development

  2) Growth

  3) Maturity

  4) Decline or Extension Strategy

  
• Product Portfolio/ Boston Matrix

  
• Pricing strategies


  Price skimmingSetting a high initial price for a new product to get back costs

  Price penetrationSetting a low initial price for a new product to get a foothold in the market and gain market share

  Predatory pricingWhen prices are set low for a short period of time to force competitors out of the market (ILLEGAL)

  Cost plusWhen a percentage mark-up is added to the cost of producing a good or service to calculate the selling price

  Competitive pricingWhen prices are close aligned with

  Psychological pricingSetting a price for the product to entice the customer into making a purchase by making it sound cheaper than it actually is (99p, instead of £1)
• Promotion


  The activities designed to communicate with the market thereby increasing visibility and sales of a product. (revenue/profit)

  Above the line promotionCommunication in the media to not just targeted audiences (Advertising on TV)

  Below the line promotionThe business has direct control over the target or intended audience. (Sales promotion or Sponsorship)
• Branding


  Involves the creation of an identity for the business that distinguishes the firm from its competitors. (emotions/reputation)

  Hard brand attributesLinked to customer’s senses (e.g. logo)

  Soft attributesLinked to customer’s emotions creating brand personality Types
• Distribution


  The process of getting firms products to the market

  Short distribution channels are where the producer sells either directly to the customer or through a retailer

  Long distribution channels are where there is more than one intermediary (middle person) between the producer and the customer
• Marketting strategies (B2B/ B2C)


  Business to ConsumerMarketing mix is targeted towards consumers and their emotions

  Business to BusinessNot selling to public, just to another business, so no emotions involved
• Hard and Soft HR


  Soft HREmployees are seen as an asset, their motivation and engagement aids growth

  Hard HREmployees are seen as a cost, they need to be micromanaged to aid growth
• Types of fI lexible working


  Zero-hour contractThey are on call to work when you need them, however you do not need to give them work and they do not need to do work when asked

  Temporary employeesThis is where you are required to work on a flexible, temporary basis.

  Part timeWhen work is generally considered part-time when employers are contracted to work anything less than full-time hours.

  Multi skillingPromoting a wide range of skills and knowledge in workers to make them capable of working on multiple projects, even if these fall outside the definitions of the job description.
• Internal and External recruitment (pros & cons)


  Internal recruitment+ Costs less- Reduces talent pool

  External recruitment+ Selecting from more candidates- Increased costs
• Methods of selection


  Interviews

  Assessment centre (Group tasks)

  Test and Profiling (Psychometric testing of intelligence)
• Training


  Induction trainingIntroductory training for employees new to an organisation

  On-the-job trainingAn employee learns in the workplace from experienced employees

  Off-the-job trainingAny form of education that takes place outside of the workplace
• Organisational structure


  HierarchyStructure of the workforce within an organisation showing who is accountable to whom

  Chain of commandThe way authority and power are passed down the levels of hierarchy

  AuthorityThe power of an employee to instruct subordinates

  Span of controlWide span of control- If a manager has many subordinatesNarrow span of control- If they have few subordinates
• Motivation theories


  TaylorTaylor believed that workers were not capable of understanding their tasks and should follow strict rules on how to produce productsHe believed in the economic man, money is the key to motivation

  MayoMayo believed that workers must be seen as members of a group not as individuals.Workers have social needsMotivation can be I proved through paying interest into workers

  Maslow(Hierarchy of needs)Employees can be motivated when given the opportunity to move to the next level

  HerzbergJob satisfaction leads to motivationMotivating factors- Recognition and ResponsibilityHygiene factors- Pay and work conditions
• Leadership Styles


  AutocraticOne person controls all decisions

  DemocraticLeadership team shares responsibility of decision making

  PaternalisticLeader considers subordinates as extended family

  Laissez-fareOpposite of micromanaging

  TransformationalLeaders engage with all workforce to raise motivation
• Labour productivity


  A measure of output per unit of input in a given period.

  
  

  Output per period (units) / Number of employees at work
• Labour turnover


  The percentage of the workforce that leave a business within a given period (usually a year).

  
  

  Number of employees leaving/ Average number of employees X 100
• Labour retention


  The ability of a business to convince its employees to remain with a business.

  
  

  Total number of employees the end of the time period/ Total number of employees at the beginning of time period X 100
• Absenteeism


  When an employee consistently doesn't appear for work at their scheduled time

  Number of staff absent during period/ Number employed during period X 100

  OR

  Number of days taken off for unauthorised absence (during period)/ Total days worked by workforce over the period X 100
• Characteristics of an entrepreneur


  Opportunity spotter

  Creative

  Initiative

  Risk taker

  Positive thinker
• Intrapreneurship


  When employees in a larger organisation act in the same way as entrepreneurs
• Mission statement


  The overall reason for the business' existence
• Corporate objectives


  The medium to long term quantifiable targets to fulfil the mission statement
• Corporate Strategy


  The actions to be taken by the business to achieve the objectives.
• Examples of business objectives

  Survival

  Profit maximisation

  SMART Targets