2. business management- management process

Question 1

what are the 4 key business functions

Answer 1

Operations

Marketing

Finance

Human Resources

Question 2

what is operations

Answer 2

*Refers to the business processes that involve transformation or, more generally, ‘production’.
*Operations refers more specifically to the processes involved in turning raw materials and resources into outputs of finished goods or products.

Question 3

operations functions

Answer 3

• manufacturing
• provision of services
• other value adding
• supply chain management
• inventory management

Question 4

interdependence between the functions/

Answer 4

Interdependence refers to the mutual dependence that the key functions have on one another. This means that the various business functions work best when they work together.

Question 5

what are standardised goods

Answer 5

are those that are mass produced, usually. Standardized goods are on an assembly line uniform in quality and meet a predetermined level of quality.

Question 6

types of goods

Answer 6

1. standardised goods
2. customised goods
3. intermediate goods
4. non-perishable goods
5. perishable goods

Question 7

intermediate goods

Answer 7

are finished goods that have been manufactured and but are then used in further manufacturing or processing.

Question 8

what are customised goods

Answer 8

are those that are varied according to the needs of customers.

Question 9

what are perishable goods

Answer 9

have only a short life span as they are consumed quickly
Operations must manage:
very short lead times (distribution that is as quick and effective as possible)
appropriate and robust packaging and cold storage processes both through production and distribution.

Question 10

what are non-perishable goods

Answer 10

are that are durable and unlikely to decay or ‘go off’.
Operations must manage:
implement effective inventory management strategies and be highly responsive to market demand in order not to overproduce.

Question 11

what are services

Answer 11

*Services are intangible products and only exist while thy are being performed, although the effects may endure for long after the competition of the service.

*A service organisation will transform other businesses inputs into services.

*Services cannot be stored, and the customer may need to be present when the service is being delivered.

Question 12

production process

Answer 12

1. inputs
2. process/transformation
3. outputs

Question 13

types of inputs

Answer 13

Types of inputs include:
*Material
*Capital equipment.
*Labour
*Information from a variety of sources
*Time
*Money

Question 14

transformed resources

Answer 14

Transformed resources are those inputs that are changed or converted in the operations process; they are transformed by the operations process.

Transformed resources include:

*materials: the basic elements used in the production process.
*information: the knowledge gained from research, investigation, and instruction, which results in an increased understanding.
*customers: customers become transformed resources when their choices shape inputs.

Question 15

Transforming resource

Answer 15

Transforming resources are those inputs that carry out the transformation process. They enable the change and value adding to occur.

The two main transforming resources are:
*human resources: the people that are employed by the business.
*facilities: the plant (factory or office) and machinery used in the operations process.

Question 16

transformation process

Answer 16

The term ‘transformation’ implies physical changes, but today it also includes the conversion of resources into services.

*the transformation process varies from business to business.

*It is often useful to look at the transformation process in a manufacturing business separately from the process in a service-based business because the transformation processes in manufacturing are far more visible and more easily quantified.

Question 17

how does the transformation process differ between manufacturing and service businesses?

Answer 17

*Outputs of the services cannot be physically held in stock.

*Service businesses rely heavily on interaction with the customer in determining the output.

Example: a service of tutoring – cannot hold stock and relies on interactions of things like knowledge/expertise
Compared to a clothing manufacturing store, can be stocked of things like t shirts, jeans. Does not reply on customer interaction

Question 18

outputs

Answer 18

*Are the end result of the operations process
*For manufacturing operations, outputs are represented by finished goods (tangible) example: finished water bottle
*For service operations, outputs are not as visible (intangible) and take into consideration

Question 19

Factors useful in assessing outputs:

Answer 19

1. The quality of customer service on delivery E.g is the education good
2. The guarantees or warrantees provided by the business
3. The amount of warranty claims on a good
4. The after sales service delivered by the business

Question 20

customer service

Answer 20

Customer service refers to how well a business meets and exceeds the expectations of customers in all aspects of its operations.

How the business communicates and interacts with the customers

‘pre-sale’ when sales staff can answer queries and provide advice before purchase
‘post-sale’ when a business can follow up a customer to ensure they are satisfied.

*The personal relationship between the buyer and the seller
*Based on product knowledge and expertise and the interaction between personalities
*Bad customer service can result in customers not wanting to go there. May go to a different branch

Question 21

warranties

Answer 21

A warranty is an agreement and a period of time when a manufacturer must repair or replace a product that has broken down after purchase

It is the legal obligation of the business to either repair the item or refund its cost to the consumer

It is an extension of the service offered by the business. Once the financial transaction has occurred, the warranty ensures the relationship still exists

If the product doesn’t do what it is supposed to, the customer is entitled to inform the manufacturer and have the problem fixed.

Question 22

quality managament (refers to? its role? approaches?)

Answer 22

Refers to those processes that a business undertakes to ensure consistency, reliability, safety and fitness of purpose of product.
The process of measuring the quality of a product or service during the operations process.
Its role is to determine any issues that need to be rectified and how improvement can be achieved

Approaches include:
1. quality control — inspection, measurement and intervention
2. quality assurance — process to ensure quality and application of international quality standards
3. quality improvement — total quality management and continuous improvement

Question 23

sequencing and scheduling

Answer 23

Scheduling and sequencing tools are used to identify all steps in the transformation process and organise them into the most efficient order to complete.

Sequencing refers to the order in which activities in the operations process occur

Scheduling refers to the length of time activities take within the operations process

Two tools to determine the most efficient and effective sequence of tasks are:

1. critical path analysis (sequencing)
2. Gantt charts (scheduling)

Question 24

Gantt charts (scheduling)

Answer 24

*Gantt charts are used for any process that has several steps and involves a number of different activities that need to be performed
*They help a manager to plan the steps needed to complete a task and to specify the time required for each task

They outline:
-the activities that need to be performed
-the order in which they should be performed
-(in relation to the other activities)
-how long each activity is expected to take
- how long the whole project should take

*They are easy to understand and quick for managers to read

Question 25

critical path analysis (sequencing)

Answer 25

*A network diagram or critical path diagram is used to show the order and sequence of tasks that need to be completed for one certain project

It shows:
-What tasks need to be done
-How long they take and;
-What order is necessary to complete those tasks

*It helps to prioritise tasks that are happening simultaneously

Question 26

what is critical path analysis

Answer 26

*The critical path is the path that takes the longest time because it is the minimum time it takes to fully complete the job (all tasks/steps)

Question 27

what is finance

Answer 27

*Is concerned with recording and summarizing financial transactions into a series of reports that can be easily interpreted.

*Determines the amount of money the business has earned after its expenses have been paid and how much money can be allocated to spending.

*Construct financial reports and budgets. These reports provide crucial information about the past, current and future financial position.

Question 28

what is marketing

Answer 28

*Is about meeting the needs and wants of consumers through provision of products (both goods and services) at prices that the market is prepared to pay.

*Looks at all aspects of buying and selling e.g. analysis of why people buy, to pricing, product development, promotion and distribution.

*Marketers attempt to maximize the earning capacity of their businesses through sales.

Question 29

what does marketing involve

Answer 29

*Connecting the business with its target market
*Identifying consumer needs
*Conducting market research to understand consumer needs
*Designing activities designed to price, promote and distribute products to present and potential customers

Question 30

marketing roles

Question 31

establishing marketing objectives

Answer 31

*Marketing objectives are the realistic and measurable goals to be achieved through the marketing plan

*Three common marketing objectives include:
– increasing market share
– expanding the product range
– maximising customer service
* Considered the most important step in the marketing planning process → gives marketing strategies meaning and direction

Question 32

establishing marketing objectives: 1: increasing market share

Answer 32

*Market share refers to the business’s share of the total industry sales for a particular product
*Increasing market share is important because ↑ market share = ↑ customers = ↑ sales = ↑ profitability

Question 33

establishing marketing objectives: 1: expanding the product range

Answer 33

Refers to the total range of products offered by a business is referred to as the business’s product mix

Business chooses to expand its product range to maintain and increase consumer interest in the brand = ↑ customers = ↑ sales = ↑ profitability

Opens up other possibilities for business growth and expansion by allowing business to adapt to changes in customers’ tastes and preferences

New products may also enhance the reputation of the business

Each different item in a product mix should satisfy the needs of different target markets

Question 34

establishing marketing objectives: 1: maximising customer service

Answer 34

Building a personalised relationship between the business and the customer

Sharing expertise/product knowledge and attending to the needs of the customer  customer loyalty

High levels of customer service will result in improved customer satisfaction = ↑ customers = ↑ sales = ↑ profitability

establishes a sound customer base with the possibility of repeat purchases = reduces costs associated with obtaining new customers

Question 35

finance functions

Answer 35

• financial planning
• preparing and analysing financial statements
• cash flow management
• profitability management

Question 36

marketing functions

Answer 36

• market segmentation
• positioning
• product design
• setting prices
• promotion
• distribution

Question 37

what are human resources

Answer 37

• Deals with the people the business employs and the issues arising from their employment.
• It covers all aspects of employment resourcing and includes the acquiring, developing, maintaining and motivating of staff in addition to those processes involved when staff members leave the business — separation.

Question 38

human resource functions

Answer 38

• Acquisition
• training and development
• Maintenance
• separation
• employment contracts
• resolving workplace disputes

Question 39

What is a target market and what are the 3 types?

Answer 39

a group of customers with similar characteristics who presently, or who may in the future, purchase the product.
The target market is that part of a market on which the business will focus its marketing activities.

when selecting a target market:
the mass marketing approach,
the market segmentation approach or the niche market approach.

Question 40

What is mass marketing, provide example

Answer 40

Approach seeks a large range of customers.

The business develops a single marketing mix and directs it at the entire market for the product.

Seller mass-produces, mass-distributes and mass-promotes one product to all buyers

One type of product with little or no variation → one promotional program aimed at everyone → one price → and one distribution system used to reach all customers

Few products today are marketed to the mass market.

e.g red energy, water

Question 41

What is segment marketing and what are the 4 elements within it?

Answer 41

Market segmentation is when the total market is subdivided into groups of people who share one or more characteristics based on four elements or dimensions

-demographic
-geographic
-pyschographic
-behavioural

Question 42

what is demographic segment marketing? provide example:

Answer 42

Process of dividing the total market according to features of a population
Easy to measure demographics- commonly used among marketers.

For example:
Powerade and Pump have as their core market 18- to 24-year-old males who are engaged in athletics.

Question 43

what is geographic segment marketing? provide example:

Answer 43

Process of dividing the total market according to geographic locations.
Businesses may divide the consumer market into regions because different geographical locations have different needs, tastes and preferences

For example:
Local: Kosher stores in Northern Sydney, halal stores in South West Sydney
National: European vs. Australian cars (car driving sits differently)
Global: McDonald’s  McCurry (no beef products), KFC (Asia  rice)

Question 44

what is psychographic segment marketing? provide example:

Answer 44

Process of dividing the total market according to personality characteristics, motives, opinions, socioeconomic group and lifestyles.
Focuses on why people behave the way they do
This method of segmentation is difficult to measure

For example:
Rebel Sport: aimed at sports people, different types of sporting products and clothes

Question 45

what is behavioural segment marketing? provide example:

Answer 45

Process of dividing the total market according to the customers’ relationship to the product
By understanding what customers want from the product, marketers can design their product to satisfy the needs of their target market

For example:
Telstra, Optus and Vodafone all offer consumers choice in mobile phone plans. Choice is based on call usage/data allowance. The choice the consumer makes is reflected in how they use the phone. Data allowance is now becoming the differentiation with mobile plans.

Question 46

why segmentation approach to marketing?

Answer 46

Segmentation allows the business to better satisfy the wants and needs of a targeted group, because the business can:
- use its marketing resources more efficiently
- better understand the consumer buying behaviour of the target market
- collect data more effectively and make comparisons within the target market over time
- refine marketing strategies used to influence consumer choice.

Question 47

what is niche marketing? provide examples

Answer 47

*The niche market, is an extension of the market segmentation approach, that is a narrowly selected target market segment
*In a sense, it is a segment within a segment, or a ‘micro market’
e.g a certain car model or gluten free biscuits

Question 48

What are primary and secondary markets?

Answer 48

• The primary target market is the market segment at which most of the marketing resources are directed.
• A secondary target market is usually a smaller and less important market segment.

Question 49

What are the 7 P’s marketing mix?

Answer 49

Place
Price
Promotion
Physical Evidence
People
Product
Process

Question 50

What 7 things do you need to consider with products (not the 7 P’s)

Answer 50

• Product name
• Positioning – refers to the image that a product has in the mind of the consumer
• Quality standard
• Warranty features
• Design style
• Branding – symbols and logos
• Packaging – physical appearance

Question 51

What is product packaging? Give examples of stores packaging

Answer 51

The physical appearance of how the good is presented to the consumer

It is the final moment a business can influence the purchasing decision of a consumer

Packaging of a product must appeal to its target market

e.g
Some businesses use black or white to promote prestige  David Jones
Other business have remained consistent in the manner in which they package their products which promotes an image of timelessness  Tiffany and Co

Question 52

what are the benefits of packaging (product)

Answer 52

Packaging preserves the product
Protects the product from damage or tampering
Attracts consumers’ attention
Divides the product into convenient units
Assists with the display of the product
Makes transportation and storage easier
Shape of packaging can also make consumers association the shape with the product → Coca Cola bottle

Question 53

what is refered to with branding (product)

Answer 53

Refers to a name, term, symbol, design or any combination of these that identifies a specific product and distinguishes it from its competition
The brand must have appeal to its target market and ideally be recognised by its core customers
Businesses undergoing change often rebrand themselves → creates a new image in the mindset of consumers

Question 54

what are the benefits to branding (product)

Answer 54

Businesses gain repeat sales because consumers recognise the business’s products
Easier to introduce new products onto the market because consumers are already familiar with the business’s existing brands
Promotion of one product indirectly promotes all other similarly branded products
Encourages customer loyalty. This has the added benefit to the business of being able to charge a higher price for the product.

Question 55

what is referred to with price in marketing? effects of low and high prices

Answer 55

• Price refers to the amount of money a customer is prepared to offer in exchange for a product
• Price set too high could mean lost sales unless superior benefits are offered
• Price set too low may give customers the impression that the product is cheap/low quality
• Pricing methods and strategies must be aligned with marketing objectives, marketing mix and economic conditions
• Many businesses have difficulty in selecting the ‘correct’ price for their product.
• Price too high – may result in lost sales
• Price too low – may give the impression that the product is ‘cheap’ and ‘nasty’

Question 56

There are 3 methods for calculating price: include formula

Answer 56

Cost-based: a pricing method derived from calculating the total cost of producing or purchasing a product and then adding a mark-up for profit. See below picture as an example.
Cost + (Cost X Mark- up percentage) = Price

Market-based: a method of setting prices according to the interaction between the levels of supply and demand — whatever the market is prepared to pay.

Competition-based: choosing a price that is either below, equal to or above that of the competitors.

Question 57

what is a pricing method and what are pricing methods dependant on?

Answer 57

• Once the basic price has been set using the preferred pricing method(s) price in then aligned with its pricing strategy.
• Pricing strategies dependant on:
• marketing objectives
• the life cycle of the product
• the market for the product
• the degree of product differentiation
• the level of economic activity
• They are often short term in nature and implemented to achieve a specific marketing objective.

Question 58

what are the 4 pricing methods (Sam Loves Picking Pimples)

Answer 58

skimming
loss leader
penetration
price points

Question 59

what is the price method of skimming

Answer 59

Businesses essentially ‘skims the cream’ off the market.
The price of the product is set at the higher end of the market  it is generally the introduction stage of its life cycle.
Consumers are more willing to pay a high price for a product’s novelty features because of the prestige or status that ownership gives.
The objective is to recover the costs of research and development as quickly as possible, before competition enters the market.

Question 60

what is the price method of loss leader

Answer 60

• A popular product is sold at a financial loss or below cost price
• To attract increased numbers of consumers through the store
• Objective is to attract customers → once in the store, consumers are likely to purchase other products
• Business can recover the loss on the low-price item from the sale of the other items or services that the consumer buys
• Australian based supermarkets selling popular groceries below cost in the short-term to attract increased customers i.e. half-price weekly specials – common household groceries

Question 61

what is the price method of penetration? give an advantage and disadvantage

Answer 61

A business charges the lowest price possible for a product → price is set deliberately below the businesses competitors
Immediately creates a point of difference between the business and its competitorsAims to quickly achieve a large market share for a product → 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

Advantage: wide appeal to price conscious consumers
Disadvantage: it is more difficult to raise prices significantly than it is to lower them

Question 62

what is the price method of price points

Answer 62

• Price points (or price lining) is selling products only at certain predetermined prices
• Used mainly by retailers, especially clothing stores and boutiques
  – E.g. a jeweller may offer a line of watches priced at $55, $75 and $95
• Business chooses a limited number of key prices or price points for selected product lines regardless of cost at wholesale
• The store would not apply a fixed mark-up to the products
• Easier for the customer to find the type of product they need
• Easier for the business to encourage the customer to ‘trade up’ to a more expensive model.