Primary methods of market research (5)
1)questionnaires
2)surveys
3)focus groups
4)Interviews
5)Consumer panels
Secondary methods of market research (5)
1)Internet
2)Local newspapers
3)Official publications
4)Industry magazines
5)Government websites
Reasons why consumers sometimes need protecting from exploitation (7)
1)Product may not be fit for purpose
2)Products may not meet their description
3)When buying goods online
4)Misleading prices
5)Weights and measured to make sure they aren’t being over charged
6)Some consumers are particularly vulnerable e.g. pensioners
7)Oligopolies and monopolies have market power over consumers and need to be regulated
What is the difference between a manager and a leader?
Managers: Control and direct the workforce to follow the principles or values that have been established by the leaders.
Leaders: May perform similar functions to managers, but in addition they also inspire and motivate the workforce. They consider long-term strategy, the challenges facing the business and how to overcome them.
Define autocratic leadership
An autocratic leadership style is one where the manager sets objectives, allocates tasks and insists on obedience.
Define bureaucratic leadership
Controls w, tight limits on decision-making and has many guidelines and restrictions. Used when leadership skills cannot be developed in subordinates, subordinates need to be closely controlled, a high labour turnover is not too much of a disadvantage and when it is important to back up every decision with relevant paperwork. Employee participation is not actively encouraged.
Define Laissez-faire leadership
A laissez-faire type of leadership occurs when the leader has minimal input, leaving much of the running of the business to the staff, allowing them to carry out activities freely within broad limits.
Define democratic leadership and give 5 features/characteristics of this leadership style
Democratic leadership styles encourage participation by employees in the decision making process:
* A democratic leader delegates a great deal, discusses issues, acts upon advice and explains the reasons for decisions.
* Democratic leadership means running a business or a department on the basis of decisions agreed among the majority.
* Can be persuasive - leader makes a decision and then persuades others in the organisation that it is a good idea.
* Can be consultative - leader consults others prior to making a decision and takes account of their views.
* Good communication skills are required to lead democratically
Define paternalistic leadership
These leaders are similar to autocratic leaders in that they make all
the decisions and do not involve employees in the process. However, paternalistic leaders may attempt to persuade the employees that the decisions made are in the best interests of all concerned. Paternalistic leaders will consider the views and welfare of the employees.
Define external economies of scale
The advantages of scale that benefit a whole industry and not just an individual business,
Outline the Boston matrix
- A technique which allows businesses to analyse (1) their product portfolio (1) with the use of a matrix.
- Products are categorised according to market growth and (relative) market share. (1)
- Products are placed into one of four categories – stars, cash cows, dogs and problem children. (1)
1) Stars – high market growth/relatively high market share.
2) Cash Cows – low market growth/relatively high market share.
3) Dogs - low market growth/relatively low market share.
4) Problem children - high market growth/relatively low market share.
Benefits of the Boston matrix
- Clear guidance is provided for the management of each of the four categories in terms of the approach to investment and support of brands or products. Appropriate examples: for example, using money coming into the business from ‘cash cows’ to invest in the
development of ‘star products’. - It is an important model for allocating resources to the right areas in order to achieve success in the future.
- It is very simple to use and explain, as there are only two dimensions and four quadrants.
- It helps firms to design a strategy that will combine their competitive strengths with the market opportunities available.
- It has been used successfully by many firms over a long period of time in helping to manage wide ranging product portfolios.
- Market growth and relative market share are available to the company making it relatively easy to construct.
Drawbacks of the Boston Matrix
- Some of the terminology of the four quadrants might be considered MISLEADING. For example, the term ‘dog’ tends to suggest something undesirable that should be removed from the firm’s business portfolio. However a ‘dog’ in a niche position is still likely to be quite profitable to the business. However, it is classified as a ‘dog’ because it has limited growth potential.
- Some argue that the Boston matrix is **TOO SIMPLISTIC **and that relative market share and market growth rate are too narrow when trying to measure a firm’s competitive strength. While market share is one of those factors there are many others that also need to be
considered – such as, brand equity, retailer relationships, logistics, financial support, product line, customer loyalty, and so on. - It is only a snapshot of the current position and has NO PREDICTIVE VALUE. In some cases, relative market share could be a reasonable measure of competitive strength – probably in a low growth market (that is, for the cash cows and the dogs) – but is probably going to be far less effective in the high-growth markets, where the competitive
situation (and therefore market shares) are far more dynamic. - It is based on a series of ASSUMPTIONS. For example – market share can always be gained by investing in marketing and gains in market share will always generate cash surpluses. These assumptions are not always true.
Two features of an SME
- A business that has fewer than 250 employees.
- A business that has an annual turnover of less than 50 million euros.
what are the main components of a business plan?
1)The overview or executive summary
2)The marketing plan
3)The operations plan
4)The human resource plan
5)The financial plan
Define what is meant by a business plan
A statement that outlines the way in which a business will attempt top achieve its objectives - giving a clear idea of its operations and direction
What is the overview or executive summary ?
a description of the business idea. This overview of the business will briefly describe the business opportunity that is to be exploited.
What is the marketing plan?
Important part of any business plan based on both field and desk research. Market research carried out needs, if possible, to establish the size of the market, the needs of the customers and the level of competition. When market research findings have been examined then the marketing plan can be prepared.
What is the operations plan?
Include details of where the business will be located, production methods and any equipment needed. Plus, information on the costs of production and where the business will buy supplies may be included.
What is the human resources plan?
The number of employees and the skills, experience and qualifications they require will be outlined. Any management team will also be identified.
What us the financial plan?
A variety of forecasting will be necessary:
* a sales forecast indicating potential revenues
* a cash flow forecast for the first 12 months
* a profit and loss and balance forecast for the
end of the first year
* a break-even analysis.
In addition, information on where the finance for starting and running the business will come from, indicating the available start-up capital as well as any potential borrowing.
Advantages of making a business plan
(+)Helps to convince banks and lending institutions of its ability to pay back loans – cash flow forecast – without one, obtaining finance from banks, etc. is less likely.
(+)Highlights strengths and identifies possible problems which can then be dealt with in advance.
(+)Helps them think ideas through – giving a clear idea of direction and operation. May help to identify difficulties that may occur and allow the business to deal with them before they become a problem.
(+)Useful as a monitoring tool – e.g. compare actual performance with forecasts in the business plan.
Disadvantages of business plan
(-)May succeed if the product or service proves so popular that sales are very high, and profits are made consistently.
(-)May succeed without one if a small, easily managed business e.g. window cleaner.
(-)No business can be guaranteed success however good the business plan.
(-)External factors may make the business successful even if business plan not drawn up – economic upturn, change in the law/government policies.
(-)It is time consuming and expensive to put together a business plan, this time and money could be better spent on starting the business
(-)an inaccurate business plan with unachievable objectives can give false hope, leading to failed investments. It can be hard to predict costs and revenues, these are only an estimate and so could be inaccurate, especially if they are over-optimistic about their idea
What is meant by competition?
Refers to the number of businesses in a market
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101 - Enterprise13
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102 - Business plans9
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103 - Markets33
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104 - Market research14
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Business structure - 1056
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Business location - 1061
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Business Finance - 10714
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Business revenue and costs - 1089
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Marketing - 1095
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The marketing mix - 1102
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Product - 1118
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Price - 1126
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Promotion - 1134
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Place - 1145
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Finance - 117-12219
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Human resources 123-13358
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formulas18
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2023 exam questions45
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Key terms24
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Other106
