Download Revision 2015 Half Yearly Exam

Business Studies Revision 2015 Half Yearly Exam
Multiple Choice
Marketing approach, sales approach, production approach
The Marketing approach stage one was from 1960’s – 1980’s. The marketing
approach focuses on finding out what customers want via market research and
then satisfying that need. For the first time, most Australian families had
discretionary income, more income than was needed to obtain the necessities of
life. There was a shift in emphasis to the development of a marketing concept.
Sales approach was from 1920’s – 1960’s. After world war 1 technology
allowed production to become more efficient and productive. High quality massproduced goods came to the market. An increase in the number of businesses
increased over all competition and businesses could no longer rely on selling
everything it produced. Production approach was from 1820’s – 1920’s. The
production approach focused on the production of goods & services. The
production approach focused on producing goods and services the mentally at
the time was "we make it they will buy it". Until world war 1 business’ put their
efforts into making the goods and services.
Factors enhancing productivity in the workplace
Business will want to build up their employees with increased training to keep
them up to date with the latest rules and regulation. This will enhance the
productivity in the workplace to make sure that production is quicker to keep
the consumers and suppliers happy.
Revision of SWOT Analysis
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. A SWOT
analysis involves the identification and analysis of the internal strengths and
weaknesses of the business, and the opportunities in, and threats from, the
external environment. It provides the information needed to complete the
situational analysis and gives a clear indication of the business’s position
compared with its competitors. The marketing plan should be modified to reflect
this information.
Advantages/disadvantages of Outsourcing
Outsourcing involves the use of external providers to perform business activities.
The theory behind outsourcing is that when a service is performed by an
external provider that specialises in a particular business function, it will do so at
a lower cost and with a greater effectiveness than the same task done within the
business hierarchy. Business process outsourcing is a term that captures a range
of outsourced business processes including:
- Operations such as manufacturing, value-adding manufactures, design,
merchandising, sourcing, distribution and logistics -
Human resources including employee remuneration, employee
counselling, pensions, data management, training and development, and
travel and expenses management
Critical Path Analysis
A critical path analysis (CPA) is an appropriate scheduling tool for use in an
operation that involves a series of repeated tasks. It is a flow diagram that shows
the interrelationship of tasks. The critical path time period is the shortest path
taken to complete the whole project.
Market segmentation (Geographic, Psychographic etc)
Market segmentation involves dividing the total market into segments. Once the
market has been segmented, the marketing manager selects one of these
segments to become the target market.
Demographic segmentation is the process of dividing the total market
according to particular features of a population, including the size, age, sex,
income, cultural background and family size. Due to the ease with which these
demographic variables can be measured, their use is widespread amongst
marketers.
Geographic segmentation is the process of dividing the total market according
to geographic locations. Businesses may divide the consumer market into
regions because consumers in different geographical locations have different
needs, tastes and preferences. Consequently, the marketing mix may differ from
one geographic region to another.
Psychographic segmentation is the process of dividing the total market
according to personality characteristics, motives, opinions, socioeconomic group
and lifestyles. When segmenting a market according to psychographic variables,
a business would research a consumer’s brand preferences, favourite music,
radio and television programs, reading habits, personal interests and hobbies,
and values.
Behavioural segmentation is the process of dividing the total market according
to the customers’ relationship to the product. This includes customers’
knowledge of, attitude towards, use of, or benefits sought from the product. A
total market, for example, may be divided into users and nonusers.
Quality control, quality assurance
Quality control is all about inspection, measurement and intervention. Quality
assurance is all about application of international quality standards.
JIT, LIFO,FIFO
Last in first out (LIFO) - In businesses applying a LIFO approach, the business
would apply cost on a last-in-first-out basis, meaning the stock bought last would
assume to have been sold first. This would give the following cost: The last group
of 500 phones would be assumed to have sold first. Therefore, 500 of the phones
would attract a cost of $120 each for a total cost of $60 000.
First in first out (FIFO) - In businesses that apply a FIFO approach, the business
would apply cost on a first-in-first-out basis, meaning the stock bought first
would assume to have been sold first. This would give the following cost: The
first group of 1000 phones would be assumed to have sold first. Therefore, 1000
of the phones would attract a cost of $100 each for a total cost of $100 000.
Just in time (JIT) - One means of managing stock is to apply a just-in-time (JIT)
approach, which aims to overcome the problem of end-of-period stock valuation:
a lean production method. This is because a JIT approach aims to have the
business make only enough products to meet demand. A JIT approach also
allows retailers to display a wider range of products, as they need to store less
and can order in response to consumer demand.
Factors influencing Customer Choice
Marketers closely examine the behavior of customers (consumers) to
understand what motivates an individual to purchase a particular product —
customer choice (buying behavior). They want to know why the customer selects
one product and rejects another. As well, businesses try to influence customer
choice by modifying their marketing strategies to appeal to the customer’s
motives.
Marketing Strategy (4 P’s – price, product, etc)
Price - Selecting the ‘correct’ price — the amount of money a customer is
prepared to offer in exchange for a product — can sometimes be difficult. The
major pricing decision is whether to set a price above, below or about even with
the competitors’ price.
Product - A promotion strategy details the methods to be used by a business to
inform, persuade and remind customers about its products. The main forms of
promotion include advertising, personal selling and relationship marketing, sales
promotion, publicity and public relations.
Price/distribution - This element of the marketing mix deals with the channels
of distribution: the ways of getting the product to the customer. This process
usually involves a number of intermediaries or ‘go betweens’, such as the
wholesaler or retailer. Apart from the retailer, the other intermediaries are often
invisible; that is, the customer knows little about their role and operation.
Product - This element of the marketing mix involves much more than just
deciding which product to make. The business also needs to determine such
features as the product’s quality, packaging/labeling, design, brand name and
guarantee. The product is a combination of all these variables.
Example of quality control in Operations
Quality control (QC) reduces problems and defects in the product by using
inspections at various points in the production process. In the first instance, a
business needs to have defined quality standards and parameters. These
standards need to be broadly applied across the range of products and
processes. Once the standards have been set, a range of tests needs to be
designed to assess the quality of products and processes against the standards.
Pricing strategies
Price skimming - occurs when a business charges the highest possible price for
the product during the introduction stage of its life cycle. Some consumers are
willing to pay a high price for a product’s novelty features because of the prestige
or status that ownership gives. Early purchasers (adopters) of innovative
electronic equipment fall into this category.
Price penetration - occurs when a business charges the lowest price possible
for a product. The strategy aims to quickly achieve a large market share for a
product — sometimes called ‘mass-market pricing’. The objective is to sell a
large number of products during the early stages of the life cycle and thus
discourage competitors from entering the market or from taking market share
from existing businesses.
Loss leader - is a product sold at or below cost price. For a special promotion,
many businesses, especially retail stores, deliberately sell a product at a loss to
attract customers to the shop. Although the business makes a loss on this
product, it hopes that the extra customers will buy other products as well.
Price points - (or price lining) is selling products only at certain predetermined
prices. This pricing strategy is used mainly by retailers, especially clothing stores
and boutiques. The business chooses a limited number of key prices or price
points for selected product lines. For example, a jeweler may offer a line of
watches priced at $55, $75 and $95 regardless of how much they cost at
wholesale.
Transformed Resources
Transformed resources are those inputs that are changed or converted in the
operations process; they are transformed by the operations processes.
Transformed resources are also considered the resources that give the
operations process its purpose or goal. The transformed resources are:
 Materials
 Information
 Customers
Cost Leadership
Cost leadership involves aiming to have the lowest costs or to be the most pricecompetitive in the market. There are input costs, processing or transformation
costs and the costs of getting products to markets. There are also costs
associated with inventory management and quality management. It should be
clear from the table that there are numerous sources of cost that are incurred
when undertaking operations processes. Therefore, an intrinsic aspect of
strategic operations management involves cost leadership.
Short Answer
Advantages /Disadvantages of Inventory (Know 2 of each)
Advantages
 Consumer demand can be met when stock is available. This may prevent
the consumer from seeking to buy from an alternative business. This is a
risk reduction strategy.
 If a particular product line runs out, an alternative can be offered, thereby
generating income for the business instead of a lost sale.
 It reduces lead times between order and delivery.
 Stocks give the opportunity for a business to generate immediate
revenue. It is very hard to generate revenue from partially transformed
inputs.
 Stocks can be distributed to distribution centres, which then rapidly
transport the products to places as indicated by demand.
 A store of stock allows the business to promote use of products in nontraditional or even new markets
 Older stock can be sold at reduced prices and thereby encourage cash
flow and also attract sales of other products.  Stocks are an asset and are of value to the business, reflecting well on the
balance sheet.  Making products in bulk may reduce costs as there are economies of scale
in purchasing inputs. This could be cheaper than the cost of holding the
stock once it is made.
Disadvantages
Despite there being many advantages of holding stock, the trend is to hold as
little stock as possible and to adopt a ‘make-to-order’ approach. That is, there are
many perceived disadvantages of holding stock. These include:
 The costs associated with holding stock , including storage charges,
spoilage, insurance, theft and handling expenses.
 The invested capital, labour and energy cannot be used elsewhere as it
has been used to create the stock  The cost of obsolescence, which can occur if stock remains unsold. Corporate Social Responsibility – include examples
Refers to open & accountable business actions based on respect for people,
society & the broader environment. It involves doing more than just complying
with laws & regulations. CSR places value not only on profitability but rather
meeting community concerns & social expectations.
 McDonalds sponsoring grass roots programs and giving back to the
community They want to deliver valuable benefits to the wider
community. We want to help children live a more balanced, active and
enriched lifestyle. Their sponsorships must reflect a grassroots and
community focus.
 Toms Shoes- One for One, supplies a new pair of shoes for a child in need
for every shoe purchase, given over 35 million pairs in over 70 countries
since 2006
Examples of illegal marketing practices
The following are illegal under the Competition & Consumer Act (CCA enforced
by the Australian Competition and Consumer Commission (ACCC)
- Deceptive & Misleading advertising
 Fine print: Important conditions are written in small print which is hard
to read
 Before & after advertisements: When ‘before’ images are worsened & ‘after’
images enhanced
 Tests & Surveys: Making unsubstantiated (not backed up) claims e.g
claiming 9/10 doctors recommended a product, when a survey was never
conducted
 Country of Origin: “made in Australia” & “product of Australia” have two
distinct meanings
 Packaging: the size & shape of the package giving a misleading impression
of the contents
 Special offer: when a product is advertised as a special offer for a limited
period, when in fact the offer is continuously available.
 Bait & Switch advertising: advertising a few products at reduced prices to
attract customers. When the advertised products quickly run out,
customers are directed to higher priced items
 Dishonest advertising: ads should not use words that are deceptive or
claim a product has some unique quality when it does not. Also price
reductions, specials or free-gift offers must all be genuine
- Price discrimination
 Setting different prices for a product in different markets. The difference
in price is possible because of either markets that are geographically
separated or product differentiation within the one market
 The CCA prohibits price discrimination if the discrimination reduces
competition. This means that a business cannot give favoured treatment
to some customers while denying it to others.
- Implied conditions
 Are the unwritten terms of a contract. These conditions are assumed
to exist regardless of whether they are mentioned or written into a
contract.
 It is a breach of the law to suggest a product has a particular
characteristic that it does not have. E.g new car has a certain fuel
consumption when it does not
- Refunds & Exchanges


There is no obligation to offer a refund if the customer simply changed
their mind, found a cheaper price or damaged the good after it was
bought.
It is also important to display accurate sign regarding “refunds” &
“exchanges”. Signs such as “no refunds given” or “no refunds on sale
items” are meaningless. A more accurate sign would read “no refunds
given if you change your mind” or “no refunds or exchanges unless your
purchase is defective”.
Factors influencing consumer choice
Psychological influences
- Perception
 What a person perceives which may differ from reality
 Customers will not normally purchase a product that they perceive as
inferior.
 The perception customers have of products is often the result of
advertising that has tried to create a certain “image”
- Motives
 A reason that makes an individual do something.
 Main motives include comfort, health, safety, pleasure, and
cleanliness.
- Attitudes
 A persons overall feeling about an object
-
Personality & Self-image
 Personality is the collection of all the behaviours and character tics
that make up that person
 It influences the types of brands a person buys
 Self-image refers to how people view themselves. We reinforce tis
image through our purchases (You are what you buy)
-
Learning
 Customers have direct experiences of many new products.
 Learning refers to changes in a persons behaviour caused by
information or experiences
 E.g. learning occurred the first time a customer tried Coca-Cola.
 Successful marketing strategies can help assist customer learning
which encourages brand loyalty
Sociocultural influences
- Social Class
 Often referred to as socioeconomic status (Education, occupation,
income)
 High socioeconomic status usually reflects willingness to buy products
that are perceived as prestigious or that convey status.
-
Culture and Subculture


Culture is all the learned values, beliefs & behaviours shared by a
society.
Culture influences buying behaviours as it determines what people
wear, what they eat & where they live
-
Family & Roles
 Roles within a family and wider community influence buying
behaviour.
 Children are influencing many household decisions (approx. 70% of
all household spending is influenced by 8-12 year olds)
-
References (peer) groups
 A group of people with whom a person closely identifies, similar
values and beliefs
 A customers buying behaviour may change to match the rest of the
groups beliefs and attitudes
 E.g friend tells you of a bad experience at a store and it changes your
buying behaviour there.
Economic influence
 Economic forces have a major impact on both businesses & customers.
 Economies do not always experience growth. Rather, economic activity
fluctuates from boom to recession.
- Boom
 A boom is a period of low unemployment & rising incomes.
 Businesses & customers are optimistic about the future.
 Businesses increase their production & try to increase their market share
via their promotional efforts.
 The marketing campaign during such a phase is usually large.
- Recession
 A recession sees unemployment reach high levels & incomes fall
substantially.
 Customers & businesses lack confidence in the economy.
 Customers & businesses usually decrease their spending levels.
 There is much more caution & pessimism amongst customers & they are
usually more price-conscious. Customers look for value & products that
are long-lasting. Marketing plans should stress the value & usefulness of a
product.
Government influences


The government will utilise policies that expand or contract the level of
economic activity. These policies influence business activity & customers’
spending habits.
The influence of government regulations has a direct impact on the
marketing plans of a business. Regulatory forces consist of laws that can
influence business behaviour.
Ethical Criticisms of marketing
Critics of marketing argue that industry does not always adopt ethical practices.
They believe it lacks a strong code of professional conduct. The main criticisms
of marketing include:
Creation of needs – materialism
 Materialism refers to a persons desire to constantly acquire possessions.
Critics feel that most businesses use powerful promotional strategies to
convince customers to buy what the firm wants to sell.
Stereotypical images of males/females
 In most ads it ends up being the male who uses the power tools & the female
preparing the meals.
Use of sex to sell products
 Advertisers use sex appeal to suggest that buying a particular product will
increase the attractiveness or charm of the user.
Product Placement
 The use of advertising in entertainment is a promotional strategy known as
product placement. It is usually done in a subtle manner. Eg: an Omega watch
on a celebrities arm.
Marketing managers should remember that businesses exist because of their
customers. Dishonest or unethical marketing will eventually drive customers
away.
Truth & accuracy in advertising
False or misleading advertising is unethical and illegal. Terms such as “great
value” or “low fat” can be interpreted in different ways. The term “special” can
mean that a product is being sold at a cheaper price than normal. However, a
marketer may interpret the word special to mean a product has some unique
characteristics. If the marketer uses this word to purposely mislead the
customers, than it would be classified as unethical behaviour.
The four main unethical marketing practices include:
(1) Untruths due to concealed facts
(2) Exaggerated claims
(3) Vague statements
(4) Invasion of privacy
Untruths due to concealed facts
An advertised product may not make a consumer more successful or wealthy.
However, the unethical practice of concealed facts – some information which is
purposefully omitted – can harm the trust customers have in regards to a
product.
Exaggerated claims
Exaggerated claims (puffery) cannot be proved. A claim that a certain shampoo
or toilet paper is superior to any other on the market cannot be confirmed.
Vague statements
Another type of unethical advertising practice is the use of vague statements –
using words so ambiguous that the consumer will assume the advertiser’s
intended message. For example, “helps” is a common weasel word. As in “helps
fight against”. Although some marketers regard such statements as acceptable,
others do not.
Invasion of privacy
The recent growth in online advertising is raising a number of ethical issues with
the most serious being the tracking of web users & using this information to
target them with adverts.
Marketing Strategies
Marketing strategies are the actions undertaken to achieve the business’s
marketing objectives via the marketing mix;
The marketing mix refers to the combination of the four P’s
 Product (Quality of the product, packaging, brand name & guarantee)
 Price (choosing the “correct” price. Deciding whether to set a price above,
below or even with competitors price)
 Promotion (Strategies that deal with methods used by a business to inform &
remind customers about its product)
 Place (getting products to the customer)
Extended Marketing Mix
 People (Using appropriately qualified and trained employees, also refers to
the quality of interaction between the customer and those within the
business who will deliver the service.)
 Processes (Refers to the flow of activities that a business will follow in its
delivery of a service. Businesses need to ensure that their processes and
procedures are customer friendly and that they satisfy their customers
needs)
 Physical Evidence (Refers to the environment in which the service will be
delivered. It includes the location of where the service is being provided and
materials need to carry out the service.)
Operations- Performance Objectives
Performance objectives are goals that relate to the transformation process.
These objectives are set to ensure that the business becomes more efficient,
Productive & profitable. The six main performance objectives include:
 Quality
 Flexibility
 Speed
 Customisation
 Dependability
 Cost
Business Report
Operation/Global Marketing Strategies
Essay
Global Factors In Operations Management
OR
Balance between Companies being Profit Driven Vs. CSR