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Marketing
Marketing is based on the importance of
customers to a business and has two
important principles:
1. All company policies and activities should be
directed toward satisfying customer needs.
2. Profitable sales volume is more important than
maximum sales volume.
. . . to best use these principles, a small
business should:

Determine the needs of their customers through
market research

Analyse their competitive advantages to develop
market strategy

Select specific markets by target marketing

Determine how to satisfy customer needs by
identifying a market mix (price, place, product,
promotion)
Market research

Successful marketing requires timely and relevant
market information.
research program (questionnaires)  uncover
dissatisfaction or possible new products or services

Market research will also identify trends that affect
sales and profitability. Population shifts, legal
developments, and the local economic situation
should be monitored to quickly identify problems and
opportunities. It is also important to keep up with
competitors' market strategies.
BCG matrix
%
„Question marks“
high
„Stars“
10
low
Market growth
25
„Dairycows“
-5
10
high
„Troubled products“
1
Relative market share
low
0,1
BCG matrix
10 12 14 16 18 20
„Stars“
C
„Question marks“
B
C
B
„Troubled products“
6
8
„Dairycows“
0 2 4
Market growth (%)
C - costs
B - benefits
C
10 x
B
C
1x
Relative market share
B
0,1 x
GE matrix
investment, growth
selective access,
earnings
„run dry“, leave
medium
3,67
2,33
low
Attractive market
high
5
1
5
strong 3,67
medium 2,33
Competitive position
weak
1
X
disadvantages of portfolio analyses:
1. too much attention is devoted to market
growth,
2. the results are sensitive to rating and
weigh,
3. often is Ø valuation of partial
characteristics levels,
4. there is not respect the synergy among two
and more business branches.
… identification of occasions to firm growth
Velikost
Amount
of sales
prodejů
(mil.
(mil. Kč)
CZK)
diverzifikační
diversify growth
růst
integrační
integrating growth
růst
intenzivní
intensive
growth
růst
starting
výchozí
stav
position
čas
time(roky)
(years)
intensive growth
= development of current business branches
by own sources
integrating growth
= development of current business branches
thanks to integration with other market subjects
diversify growth
= implementation and development of new
business branches (diversification concentrated,
horizontal, conglomerate)
Managing the Marketing Mix – 4 „P“
Every marketing program contains
four key components:

Products and Services - product strategies
may include concentrating on a narrow
product line, developing a highly specialized
product or service, or providing a productservice package containing unusually highquality service.
Managing the Marketing Mix – 4 „P“

Promotion - Promotion strategies include
advertising and direct customer interaction.
Good salesmanship is essential for small
businesses because of they have limited ability
to spend on advertising.
Managing the Marketing Mix – 4 „P“

Distribution (Place) - The manufacturer and
wholesaler must decide how to distribute
their products.
Working through established distributors or
manufacturers' agents generally is easiest for
small manufacturers.
Managing the Marketing Mix – 4 „P“

Price - The right price is crucial for maximizing
total revenue. Generally, higher prices mean
lower volume and vice-versa; however, small
businesses can often command higher prices
because of their personalized service.
ORGANIZATIONAL
STRUCTURE
What does organizing mean?
Deciding,
who will do each of the tasks that must be
performed, and
who will be responsible for seeing, that tasks
get done properly.
Aim of organization - OSCAR
O = Objectives – identifying of goals of individuals, parts
of firms,
S = Specialization – advantages of division of labour,
C = Coordination – adjusting of activities of people and
necessary resources,
A = Authority – rules, discipline and realisation of
partial processes,
R = Responsibility – connected with authority.
Organizational structure
of enterprise
The aim of organisation is to define and
effectively use planed activities of people to
achieve objectives and other needs of the
company.
Form of coordinating of activities to achieve
objectives of organisation is
organizational structure.
Organization chart
= diagram that shows how work is divided
and where authority lies.
Basic organization structures
1) Formal structures – are specified by organisation
systems and charts:
a) Departmentional organisation – defines the way of
firm structure,
b) Process organisation – characterize configuration
of working processes (process = systematic
connection of activities) in organisation.
2) Informal structure – spontaneous existence in the
group of people with shared interest, friendship,
sympathy, unofficial channels of communication and
contacts.
Departmentalization:
what it is and why it´s necessary


Department – group or section of people
working together in a specific area.
Departmentalization – process of
establishing departments.
Departmentalization
= subdivision of work activities into units
within the organisation:





Product departmentalization
Geographic departmentalization
Customer departmentalization
Process departmentalization
Functional departmentalization
Building the organizational
structure
Hierarchy of objectives:
Depends on the size and complexity of the firm.
Broader goals of profitability, sales, market share,
services are broken down into objectives of:





Division
Factory
Department
Work group (team)
Individual worker
Authority and responsibility



Delegation – act of assigning of a
manger´s activities to subordinates.
Authority – power to act and make
decisions in carrying out assignments.
Responsibility – obligation of a
subordinate to perform assigned duties.
Organizational structures:

1. „unit“ (or departmentional) structures

2. processional structures
1. „Unit“ (or departmentional)
organizational structures
1. Organization structures according
to the coordination of activities
a) functional structures
b) product (divisional) structures
c) others (customer, service, technology)
1a. Functional structures
They are based on functional
specialization of departments.
In one department there are cumulated
the same function activities
(department of research, production,
finance, accounting, controlling).
1a. Functional structures
Advantages:
 effectiveness of joint work and specialisation of
experts,
 short communication channels,
 flexibility with problems solutions.
Disadvantages:
 competence conflicts between main departments,
 dangerous of different directives and instructions,
 problems with responsibility.
Example of functional structure:
Cheif Executive
Officer
Purchuase
Contruction
Production
Sale
1b. Product structures
Based on product specialization.
In each structure unit there are
cumulated the same or similar
products, services or technological
activities.
They are often in division units →
divisional structure.
1b. Product structures
Advantages:
 complex management (coordination of preproduction, production and after production stages),
 development of internal business activities,
 fast reaction on changes in the market.
Disadvantages:
 danger of non-coordinated competition for sources
and markets,
 tendency of diversion from business strategy of the
company,
 demanding for top management,
 difficulties with integration of information and
control systems.
Example of divisional structure:
Chief
Executive
Officer
Chief of
personel dpt.
Chief of
marketing dpt.
Division
FOOD
Division
SPECIAL CHEMISTRY
Chief of
financial dpt.
Chief of quality
dpt.
DiviSION
CLEANSERS
Divize
TABLE FAT, OIL
Research and development
Research and development
Research and development
Research and development
Marketing
Marketing
Marketing
Marketing
Manufacture
Manufacture
Manufacture
Manufacture
Sale
Sale
Sale
Sale
Finance
Finance
Finance
Finance
1c. Other structures
Coordination according to :
 customers departmentation,
 territorial or geographical grouping,
 grouping by services.
2. Structures by authority
and responsibility:
a) line structures
b) staff structures
c) mixed structures:
 Line-staff structures
 Goal oriented structures
(matrix structures)
2a. Line structure
It is the organisation structure based on a
direct flow of authority from the chief
executive to subordinates.
It is the oldest and simplest form of
organisational structure. Decision can be
made quickly, because manager can act
without consulting anyone.
2a. Line structure
Advantages:
 decreasing of competence conflicts,
 clear relationships between subordinated and higher
department,
 transparency of the whole system,
 better possibility of control.
Disadvantages:
 danger of working overloading of top managers,
 long communication channels between managers,
 non-flexibility of organisation, slow reaction on
changes.
2a. Line structure
Chief
Executive
Officer
Chief of factory 1
Chief of factory 2
Chief of factory 3
Operations
manager
Supervisor of
plnt A
Supervisor of
plnt B
Supervisor of
plnt C
Supervisor of
plnt D
2b. Staff structures
Staff organisation supplements the line
organization by providing advice and
specialized services.
Staff structure cannot exist separately, but
only in combination with other
organization structure!!!
2c1. Line-and-staff structure
It combines the direct flow of authority
(present in the line organization) with staff
departments that serve, advise and support
the line departments.
It has a clear chain of command from the
top downward, but it also includes various
auxiliary groupings of people who come
under the heading of staff.
2c1. Line-and-staff structure
Advantages:
 unloading for lines,
 better quality of decision,
 wide use,
 staff function are good help for performance of the line
function.
Disadvantages:
 conflicts of competence between the lines and staffs,
 dangerous of isolation of staff places,
 dangerous of uncontrollable growth of staff
departments.
2c1. Line-and-staff structure
Chief
Executive
Officer
PR
Chief of Sale dpt.
Chief of
Technical dpt.
Chief of financial
dpt.
Chief of manufacture
dpt.
Law
services
Research and
development
Accounting
Production
management
Purchase
Tech. Devel.
IS/IT
Plant 1
Sale
SMD
Financial
planning
Plant 2
Statistics
Secretary
Secretary
Secretary
Secretary
SMD - site manufacture development
2c2. Matrix structure
Organisation with familiar vertical lines of
authority, orders are always set down the
chain of command, and decisions are always
passed upwards.
Too often different departments in an
organisation have conflicting needs or
priorities that can only be resolved by a
higher-level executive, who may well have a
dozen more important things to worry about.
2c2. Matrix structure
Advantages:
 increasing innovation ability and flexibility of the
organisation,
 pushing decision making downwards,
 team work and limited risk of mistakes.
Disadvantages:
 danger of loss because of insufficient
communication between departments and teams,
 high working stress,
 non - ambiguous relationships of subordination,
 difficult structure.
2c2. Matrix structure
Chief
Executive
Officer
Research and development
Marketing
Manufacture
Finance
Manager of
project A
Manager of
project A
Manager of
project A
personal assurance of projects A, B, C by choosing form functional departments of research,
development, marketing, manufacture and finance ….
3. Organization structures according
to centralisation and decentralisation
a) centralized structures – little amount of
authority is delegated to subordinates,
b) decentralized structures – great amount of
authority is delegated to subordinates.
4. Organization structures according
to shape or span of control
a) flat structures – wide span structures,
b) tall structures – narrow span structures.
4a. Flat structures
Enterprise has got less organisation levels with more
subordinates. There is more decentralised management
with higher requirements for independence, self-reliance
and higher quality of labour.
4b. Tall structures
The enterprise has got more organisation levels with less
subordinated departments.
Generally there is a centralized management.
5. Organization structures based
on time duration
a) Temporary structures (with limited duration) –
existence of structural organisation and
configuration has got time limited duration
(e.g. team work),
b) With unlimited duration – expected long term
duration of these structures.
There is a tendency to use more temporary
structures to achieve more flexible enterprises
(team work, project teams, amoebas)
xxx Tendences of development of
organization structures
A) Hole structures
B) Network structures
C) Virtual enterprises
D) Intra-entrepreneurship
Definition of outsourcing

Outsourcing is work done for a company
by another company or people other than
the original company's employees.

Outsourcing entails purchasing a product
or process from an outside supplier rather
than producing this product or process inhouse.
- from external suppliers it is cheapaer
=> outsourcing
Hole structures keep the activities with
the highest value added, as research,
construction, design, technology,
marketing, production, sale,
but other activities and services rent
from some other firm.
What you can do by
outsourcing?
Examples:
Security
Transport
Accounting
Auditing
Cleaning
xxxA. „Hole“ enterprise for production
of track
Chierf
Executive
Research, development,
construction
Marketing
Motors
Sale
Assembly
Subdelivery:
Clutch, gear
Axle,
brakes
Electric
componets
When to use outsourcing?
 the price is lower than the internal costs,
 it is not possible to transport and store the products,
 the supplier is able to ensure a higher quality,
 internal production is associated with various risks
(safety etc.),
 there is no experience with management of a similar
type of production.
When is not outsourcing
advantageous?
 the price is higher than the internal supply,
 it is possible to transport and store the products,
 free manufacturing capacities are available,
 capital is available,
 know-how and patents are available.
xxxB. Network structures
The enterprises are connected together and
participate on individual stages – preproduction,
production and after production stage.
From outside they figure as independent, but the
product can be made only with the cooperation.
Example of network structure
Distribution
Production
(part 1)
Production
(Part 3)
Production
Completion
(Part 2)
Research
Výzkumand
a
Development
vývoj
Regional
bank
Management and
administration
xxxC. Virtual organisation
- Flexible variant of network organisation.
It does not have a fixed structure, it changes
according to the objectives and activities.
- It is a free organisation of firms for limited time,
on some purpose for realisation of specific
purchase order.
Virtual organisation
It is a form of firm cooperation
(consortium), when firms enter to the
alliance to combine their limited
possibilities and connected their
research, production, sale or other
potential.
xxxD. Intra - entrepreneurship
- Simulation of market situation and business
conditions inside the firm.
- Firm is divided in SBU (= Strategic Business Units)
with high autonomy. There is „firm in the firm“. SBU
behaves as independent, sovereign firms with
defined customers, competitors, mission,
objectives, plans and have self-management,
resources.
- They are responsible for their business results
(profit, loss) but they are also limited with central
management and its strategy.
Organization structure - SBU
Top management
Sector
goods
Sector
systems
Group
SBU
Division
Division
Sector
energy
Group
Division
Division
SBU
Sector
international
services
Group
Division
Departmental
SBU
Division
Departmental
SBU
Division
2. Process organization
PROCESS – system connection of activities.
Example – material orders
ACTION – system connection of individual activities.
Example – material orders
ACTIVITY – basic element of business process,
which is possible to clasify from the point of view of
costs, which are spent for this activity.
Example – discharge of pallets with material by the
fort-lift track
Process organization
Purchase
and order
Suppliers
Plan of
supply
Store of
material
Material flow
Plan of
production
Production
Plan of
sale
Customer´s
order
Store of
products
Customer
Flow of information