Chapter 1: Business processes and marketing concept Flashcards
1
Q
How is a company defined?
A
A sociotechnical system that provides goods and services
2
Q
What does “socio” in sociotechnical mean?
A
Organisatino of people
3
Q
What does “technical” mean in sociotechnical?
A
with certain techniques, know-how and processes behind it
4
Q
What is the main goal of companies?
A
They are purpose-oriented and create added value that arises from the difference between their input and output
5
Q
What is the definition of a benefit?
A
A good’s ability to satisfy a specific need of the consumer
6
Q
What is the definition of an object’s value?
A
The benefit expected to stream from it. (“The expression of a product’s importance for satisfying the subjective needs)
7
Q
What is the definition of a process or a value added chain?
A
More complex products or services require more processing stages
Every element of a value chain can be subdivided into individual activities
8
Q
What is a system?
A
Set of organized elements with qualities linked by relations
9
Q
What is a value creation network and a meta-system?
A
The organisation’s objective is a lasting, stable, efficient and cooperative integration and coordination of the labor services provided
==> This requires a “meta-system” of communication, events, decisions and actions
10
Q
What are transation costs?
A
Costs that arise from using the market
There are interfaces, frequently technical transitions, between the individual value-creation stages.
How a value chain is divided between organizations and how extensive the value-creation of a company is, or how much of the value chain it covers, depends mostly on the relationship between transaction and organisation costs.
11
Q
What is included in the general term “managing”? What is the main task?
A
Companies but also entire value chains must be organised meaning deliberately shaped.
This is included in the general term “managing”
12
Q
How does the management cycle look like?
A
A cycle of preview and planning, organisation, management, coordination followed by controlling.
13
Q
What is the definition of management?
A
Reflexive design praxis of value creation system
14
Q
What is another task of management?
A
Management must ensure cohesion of the stakeholders (be alligned with their expectations!)
15
Q
What is the tripple bottom line?
A
The triple bottom line is a business concept that states that firms should commit to measuring their social and environmental impact in addition to their financial performance.
16
Q
What are the three pillars of the tripple bottom line?
A
The three pillars of the triple bottom line are people, planet, and profit.
17
Q
Tripple bottom line: What does “social” stand for?
A
Social (people): This pillar focuses on the social impact of a business, including its impact on employees, customers, and the community.
18
Q
Tripple bottom line: What does “economic” stand for?
A
Economic (Profit): This pillar focuses on the financial performance of a business, including its revenue, expenses, and profitability.
19
Q
Tripple bottom line: What does “Natural” stand for?
A
Natural (Planet): This pillar focuses on the environmental impact of a business, including its use of resources and its impact on the environment.
20
Q
What are enviornments?
A
Space of possibilities (opportunities and threats)
21
Q
A company acts in an environments.
Which contexts are included here?
A
- Economic context
(supplier relations, demand markets) - social/political context
(local structure, political interests, legal framework resulting from it.)
And the natural context
(natural resources, locaction etc.)
22
Q
What does the constantly changing environment mean for the company and management?
A
Since the environment changes constantly, e.g. costumers’ needs, management has to solve a twofold problem: on one hand, it must create a certain value as well and cheaply as possible (effectively and efficiently), which requires standardization and stabilization
On the other, it must constantly react to changes in the environment and remake itself, which requires differentiation and disrupting routines
This often generates conflicts
23
Q
What are the challanges through changes in its different environmental spheres and stakeholders?
A
- legal circumstances can alter the resources of a company if properties it owns get desingated for building thorugh a change in zoning and thus become more valuable
- a societal change in values can lower demand for products or even label them as ethically questionable
- globalisation of markets leads to new competitors and a company has to reposition itself
==> corporate management constantly faces new challenges and has to communicate, reflect, convince, stabilize, intervene and make decisions in a stream of events
24
Q
What are stakeholders? How are they important?
A
Environment also includes stakeholders
A company can survive only if it is legitimized by all stakeholders and is considered attractive, so that they continue to support the company.
The task of management here is to ensure the cohesion of stakeholders and balance interests
25
Which stakeholders are there?
State, investors, customer, employees, NGOs, Media, Competitors, suppliers and partners
26
How is a model defined?
Can be though of as a simplified image of complex reality
27
Why are management models developed?
Management models are developed to organize those complex relationships, present them neatly and give all actors involved in corporate decision-making an orientation framework.
28
How is the SGMM defined?
Formal orientation model with the main objective of offering company decision-makers an orientation in their work
29
What is special about the 4th generation of the SGMM?
In the 4th generation of the SGMM the reflective shaping of collective vallue-creation systems based on the dividion of labor has priority
30
Which two points are also important in the 4th generation of the SGMM?
- An understanding of company limits is necessary (in the age of flexible outsourcing, because companies nowadays reconfigure themselves along the value chain)
- Maintaining the decision-making ability and the balance between integration and differentiation
31
Which key categories does the 4th generation model include?
- environment
(possibility space)
- organisation
(value-creation system)
management
(reflective shaping practice)
32
What does the environment focus on?
- stakeholders (intermediate and customer markets)
- and the organisation of the value-creation system with
==> customer processes
==> performance processes
==> and innovation processes
33
How important are the stakeholders for the existence of the company?
A company can only exist if all of the relevant stakeholders cooperate.
==> They form a primary orientation framework for management and were therefore depicted in the outer circle in several generations of the SGMM.
34
How are stakeholders defined?
organization-relevant representatives of different environmental spheres or discourses
35
What can companies offer stakeholders for their continued participation?
In return for their continued participation in the company, management can offer stakeholders the opportunity to share in
- added value
(for exmples wages for employees, interest for investors, membership fees in NGOs, dividends for shareholders, taxes for the state)
- the image
(for example if a company contributes to the appeal of a location as a brand)
- The continued development of the company and the expertise exchange
(for example if a joint-research center for the industry is run with a competitor)
36
What are the classic environmental spheres?
- natural environment
- social environment
- economic environment
37
Are the environments equally important for every company?
No, the environments have varying relevance, according to context and the company's problem or objective.
A market-oriented management is concerned primarily with the economic environment, especially demand-driven markets and supplier markets.
38
What is the definitio of sustainable development?
development that meets the needs of the present without compromising the ability of future generations to meet their own needs
==> Characterised by not using more resources that it generates or which can be regenerated
39
What is the relevance of sustainability of an enterprise?
Sustainability is always, explicitly or implicitrly, the subject and aim of the enterprise.
40
What does it mean that sustainability is a "intergenerational" concept?
It is about future generations not having less but, ideally, more resources and courses of action available to them
41
How is sustainability related to the tripple-bottom line?
In terms of a tripple-bottom-line, sustainability is mainly applied to the three main environmental spheres: economy, society and nature.
42
What is social responsible leadership?
Can be defined as sustainable management with the objective of a balance between the value demands of internal and external stakeholder society.
==> Social responsible leadership (or CSR, corporate social Responsability) meaning responsible acting, presupposes that the effects of a company's actions on different environmental areas are recognized, assessed in a general way and lead to action consequences.
43
What are examples for Sustainable development goals (SDGs)?
- no poverty
- zero hunger
- good health and well-being
- quality education
- gender equality
- clean water and sanitation
- affordable and clean energy
- decent work and economic growth
- industry, innovation and infrastructure
- reduced inequalities
- sustainable cities and communities
- responsible consumption and production
- climate action
- life below water
- life on land
- peace, justice and strong institutions
- partnerships for the goals
44
What are the three horizons of meaning?
Management in the sense of a reflective shaping practice traditionally refers to three horizons of meaning:
- Normative
- Strategic
- And operational
horizons of meaning.
45
What is normative management concerned with?
Concerns itself with questions of long-term corporate objectives, values and norms that should inform actions in a company and wit the underlying objective, which it is supposed to achieve in society and in the economy
The decision of normative management are often subsumed under a so-called mission statement
46
What is the objective of a mission statement (normative management)?
Its objective is securing the long-term legitimacy of the enterprise, meaning the relevant stakeholders continue to view it as necessary and useful, so it can stay in business.
47
Who is responsible for the normative management?
The owner, in the sense of an owner-strategy, or the board of directors is responsible for that.
48
Who shapes the strategic management? How is it different depending on the country?
Is often shaped at the intersection of the board of directors and the executive board.
But there are differences depending on a country's corporate governance tradition, in Germany the supervisory boad is traditionally not an organizing body that influences the strategy or takes an active part in discussions ==> a two-tier corporate governance system, where it is mostly the executive board that shapes strategy.
In Switzerland by contrast the board of directors is responsible for company management and thus for strategy (one-tier system) It can delegate tasks to the executive board, but it has clearly defined inalienable responsibilities that include shaping strategy
49
What is the objective of every corporate strategy?
The preservations of a company's competitive edge and viability is the objective of every corporate strategy
==> it concentrates on securing and developing profit potentials
50
Who deals with operational management?
The actors on every level of a company deal with operational management.
50
Which two perspectives are there i strategic management?
- Potentials can exist in the form of resources (for example core competencies) in the sense of an inside-out perspective
- or in the form of external resources that are exploited in the environment (positive image of a well-established bran) in the sense of an outside-in perspective
51
What is the objective of operational management?
It s objective is economic viability or securing a sufficient added value.
==> Success and liquidity, or cash flow along with depending on the role, sub-targets such as optimizing stock, are the target indicators of this.
52
What are important planning tools for operational management?
Important planning tools include budget planning and process management for example, for optimum management of performance or production, as well as marketing plans for the ideal application and the coordination of marketing tools.
53
What is the relevance of business processes? Why are they called primary processes?
People as part of the company system produce goods and services with machines in a process and market them to create added value, which is then available to compensate stakeholders for their cooperation or resources they provided.
Without business processes, the company does not create added value and thus cannot compensate it s stakeholders or motivate them to contribute further.
==> This is why several authors call business processes primary processes.
Organisational value creation is the central shaping focus of management in practice.
54
What are support processes?
Providing infrastrucutre, personell or finances enables and supports business processes and can be understood as support processes
55
What is the definition of a process?
A collection of activities that takes one or more kinds of input and creates an output that is of value to the customer.
- The input is derived directly from the supplier or from the wholesale market
- The output is delivered to markets or directly to customers.
56
What is important in processes?
In the process, it is especially important not to miss important developments and changes, whis is why management should always keep an eye on secondary procurement (Beschaffungsmarkt) markets and secondary sales markets.
57
What are the three economic goals of business processes?
1) Perceived customer value
2) added value
3) company value
58
How can contributions to business processes' objectives be structured?
Contributions to business processes' objectives can be structured by management's different levels of meaning.
59
Contribution to business processes' objectives: Normative level
Raises the question of what meaning the goods and services of a company have for society.
==> If goods and services provided by business processes are no longer seen as meaningful, the company loses it s legitimacy and thus stakeholder support ot governmental conessions
60
Which values must be considered on normative level?
On a normative level,
○ primary added value (meaning goods and services rendered such as produced foods or for a political party enforcing common interest)
○ And additional value (such as an organisation's contribution to a location's image)
must be considered.
61
What is concession?
If you make a concession to someone you agree to let them do or have something
62
Contribution to business processes' objectives: Strategic level
The contributions of business processes to developing resources, such as generating new competencies (internal resources) or opening and securing market positions in the form of image in target markets (external resources) for example.
63
Contribution to business processes' objectives: Operational level
concerned with objectives that manifest themselves in fiscla parameters (steuerlich)
The basis for a company's or an organisation's profits is that customer value is created, which leads to the customer's willingsness to pay for the goods and services and thus to company profits.
==> These can be direct reimbursements in the form of sales revenue or indirect reimbursements in the form of subsidies for a public service for example.
64
What is the definition of demand specific customer value?
The relative perceived value of a product or service compared to the relative perceived cost of a product or service from the customer's perspective
65
What does customer benefit result from?
Results from a juxtaposition (Nebeneinanderstellung) of needs or expectations and the meeting of those expectations through a product or service.
66
What does Quality (from customer perspective) result from?
Quality results from the juxtaposition.
==> There is high quality if the individual expectations are met or exceeded which according to the concept of confirmation leads to customer satisfaction.
67
How does a customer asses customer satisfaction?
The customer assesses customer satisfaction by comparing it to the expected satisfaction provided by alternative offers.
==> From this, relative (meaning compared to alternatives) perceived customer satisfaction follows.
68
Which costs have to be considered for the customer cost?
For customer cost, the material cost (e.g. purchase price) and the intangible cost (e.g. waiting time) have to be considered.
69
What does the relative perceived customer benefit lead to?
The relative perceived customer benefit lead to so-called behavioral outcomes.
70
What does behavioral outcome include?
- willingness to pay
- and other behaviours and actions such as
recommendations, customer loyalty, repeat purchases or readiness to complain.
71
How is customer value determined from the company's view?
From the company's point of view, customer's value is determined by the turnover achievable from them or the value of the positive behavioral outcomes deducting the customer-specific costs e.g. market-cultivation costs (customer equity)
72
What is the definition of added value?
The difference between the value of the input and the value of the output of business processes.
If one deducts the cost for the input factors (intermediate consumption) from the total customers' sales revenue, one gets the added value of a company.
From the added value one can then deduce the company value
73
What does the distribution of added value mirror?
The Distribution of added value also mirrors the importance of the resources and stakeholders.
74
How do you calculate the added value?
The intermediate consumption cost is deduced from the turnover.
The net added value is determined by deducing the necessary depreciations (Abschreibung).
==> The sum of all added value of every company in a country is equivalent to the gross domestic product according to the national account (production account).
75
How do stakeholders and shareholders calculate the value of a company?
Stakeholders calculate the value of a company from their perspective; from their potential added-value shares.
==> Therefore shareholders measure the company value by the total cash value of future dividends (or the achievable discounted free cash flow).
76
What does the amount of added value depend on?
The amount of added value mainly depends on a company's ability to maximize the customers' willingness to pay for its output by
- its quality,
- its image
- and the sensible integration into a general problem solution (effectiveness: doing the right things)
- and to produce goods and services cost effectively (efficiency: doing things right)
77
What question is asked when creating the performance process?
How do I provide the performance?
i.e. what is my product/service range (what do I outsource), what kind of production do I use, how do I manage performance with IT
78
Which processes support the performance process?
Those performance processes are supported by customer processes and innovation processes.
79
What does the customer process include?
Reputation process/branding process
Customer acquisition process
Customer retention process
80
What question is asked when creating a reputation/branding process?
How can I build a reputation (i.e. trust, affinity)? Use of branding?
81
What question is asked when creating a strategy for customer acquisition?
How do I acquire customers? E.g. winning new customers or enticing customers away from the competition
82
What question is asked when creating a strategy for customer retention?
How do I create customer loyalty? E.g. preventing customers leaving (lock-in) or solidarity strategy (bonus programs)
83
What question is asked when creating an innovation process?
How do I put new customer requirements into practice or how do I use new technologies (pull or push)? How do I design the development process?
84
How does the performance process for physical goods vs. for services look like?
Physical goods:
Procurement market --> Transformation --> Sales Market
Service chain:
Customer --> Service activity --> customer processed
85
What is the objective of performance processes?
The objective of performance processes is to provide the actual products of a company.
86
What is the definition of a product?
As a performance that is geared for satisfying needs and produces a benefit for customers.
87
How can performance processes be depicted as?
Performance processes can be depicted as so-called added-value chains.
Every stage of the added-value-vhain created added value independently.
88
What are transaction interfaces?
There are so-called transactio interfaces between the stages of the added-value chain where products or services are committed from one technically defined "processing stage" to the next.
If the product or service comes from another company a contract is necessary to secure the transaction spot.
=> therefore transaction often work via a market with standardized contracts.
Accordingly so-called transaction costs arise for negotiating, executing and reviewing such transactions
89
What is the objective of customer processes?
The objective of customer processes is the long-term creation of customer value.
It is NOT about making short-term profit based on selling in the sense of transactional marketing
==> It is about the long-term satisfaction of customer needs in a longer-term customer process in the sense of relational marketing.
90
In which sub-processes can customer processes can be divided to?
- branding or reputation processes
- customer acquisition
- and customer retention
91
Which two sales effects are there in the customer process?
Often, in the management of marketing tools (for example when designing advertising), we differentiate between image or brand effect and tactical sales effect.
==> Eventhough the targeting of the two forms of marketing tool application is different, they influence each other.
Tactical, short-term measures also have an effect on the long-term image.
It is important to keep the brand attractive for important customers at all times.
==> every company has to bring their brands up to date and make it relevant even for commited customers who always buy their products.
92
What is the definition of a brand?
A symbol or a name that has a monopoly position for a specific use in the consumer's mind.
"Brands are notions in the stakeholders' minds that assume an identificatio and differentiation function and influence the decision behaviour"
Brand name products are products the consumer spontaneously connects with a particular need. Brands have to be created through winning the customer's trust and through long-term oriented marketing.
93
What are the requirements for a brand?
A clear positioning and long-term oriented, integrated marketing are requirements for a brand.
94
What is a brand made up of?
- a logo or a trademark
- a brand claim
- and brand content (quality or value charge)
95
What does the value contribution of a brand consist of?
The value contribution of a brand consists of a "unique set of associations" with functional and emotional components, which are strengthened by the interaction between the consumer and the brand by developing a definite brand identity.
96
What is the brand design a result of?
Of
- a brand essence (the brand's essence: for example a luxury brand)
- the core brand identity (for example reliability)
- and the extended brand identity (for example a particular lifestyle)
==> The sum of the advantages and disadvantages of those brand associations is the market value.
97
What are important determinants of a brand?
- Brand awareness
- Brand loyalty
- Assumed or perceived quality
- Brand associations
- Brand availability
- Perceived purchase risk
- Brand satisfaction
Other brand assets like patends, trademarks, channel relationship etc.
98
By which two dimensions is a brand's strength measured?
A brand's strength is measured by two dimensions: brand awareness and brand profile
99
How can the customer acquisition process can be depicted?
Can be depicted in impacts models like the AIDA model.
According to this common model, customer acquisition goes from
- the first step of attracting attention
- to raising interest,
- which leads to a deepened evolution phase generating a deeper interest (Desire)
- that finally leads to purchasing (Acquisition)
100
Which is more costly, aquiring or retaining customers?
The general rule of thumb is that acquiring a new customer is comparatively more costly (up to nine times more costly) that retaining an existing costumer.
101
What does customer retention include?
Customer retention includes supporting the customer during the usage phase and making sure the desired customer value is reached and is recognized by the customer to create loyalty and willingness to repeat the purchase.
102
What are the innovation processes about?
Innovation processes are about the constant renewal of products, performance processes and markets
103
Through what do product innovations become necessary?
They become necessary through change in demand or needs, through emerging substitute or competing products or changes in the environment, such as regulations.
104
Which phases are part of the life cycle?
- Introduction phase
- growth phase
- maturity phase
- saturation phase
- decline phase
105
What happens in the introduction phase?
○ In the Introduction phase, first customers buy the product that is still largely unknown.
○ During this phase, the positioning of the product is shaped.
○ If, for example, a new service is priced too low, it hardly ever reaches a quality image later.
If it's positioned too high, the market penetration may not be successful enough
106
What does the introduction phase require and why?
Due to the small quantity of sales, this phase requires
high investments in production,
opening new markets
and positioning
107
What happens in the growth phase?
○ Sales rise rapidly due to new customers and higher consumption or because of early replacement demand
○ Here it is vital to assure quality during rapid growth for sufficient cost optimization
○ During escalating sales, excessive costs may be not be taken into account, and that will have an effect, at the latest during the next phase
108
What happens in the maturity phase?
○ Growth rates decrease and competition intensifies
○ Maximum profits have already been achieved
○ It is now important to manage costs and ensure continued optimum growth
109
What happens in the saturation phase?
○ Sales decline
○ Competition has permanently shifted from a quality and positioning competition into a cutthroat and cost competition
110
What happens in the decline phase?
○ Only those who thanks to optimum cost structures or reserves from earlier years have enough leeway for a relaunch (meaning relaunching products with modifications like new design, new image etc.) will survive.
○ After a severe decline fundamental innovation is required
111
Companies functions differentiate: they take on different functions in added-value chains.
Which functions are there?
- Layer player
- integrator
- market maker
- orchestrator
112
What is a layer player?
A company can restrict itself to delivering one value-adding stage for different added-value chains as a specialist (layer player).
113
What is positive about being a layer player?
As a specialist, a company can generate specialization advantages in terms of economics of scale.
It can produce cheaper and often higher-quality goods or services.
114
What is the downside of being a layer player?
However a specialist runs the rish of being outdone by other companies if it does not have an end-customer market.
(A call center for example can always be replaced by a company's internal call center)
115
What is an ingregrator?
A company can also focus on being in control of every value-adding stage of a value-creation process as an integrator.
==> This is often the case with traditional companies of an industry.
116
What is positive about being an integrator?
It can influence the optimization of continuous performance and generate so-called economies of scope
The company can also save transaction costs because it does not have to negotiate complex contracts with suppliers and consumers.
117
What is the downside of being an integrator?
It runs the risk of having to accept cost disadvantages due to a lack of specialization
118
What is a market maker?
A company can restrict itself to comining different performance elements of a value-creation process as a market maker. (AutoScout 24 or Car4you)
119
What is positive about being a market maker?
Market makers focus the flood of information and lower the transaction costs for the market partners.
They create added value for the involved partner by communication information and providing access to other value-creation processes
120
What is the downside of being a market maker?
There is risk of the company being passed over, meaning customers turning directly to the supplier.
121
What is an orchestrator?
Does many things in it s added value chain itself like an integrator. However it buys several products and services.
Example: manufacturer of electric motorcycles who buys the frame, the electric motor, the wheels etc. from different suppliers.
122
What is positive about being an orchestrator?
Because orchestrators always buy from specialists, they can gain quality and cost advantages compared to producing components themselves.
123
What are the downsides of being an orchestrator?
If a key supplier drops out at short notice though production can come to a standstill.
Also transaction costs arise, contract negotiations with suppliers can be tedious and expensive.
124
What is market innovation?
Companies can concentrate on new markets with market innovation.
Example: a rope factory that used to produce classic industry ropes and cables for ski lifts, but has nos focused on a new market in the architectural area with design ropes.
In another example new forms of market cultivation follow from social media.
125
Which two definitions can Marketing have?
Marketing can be defined as a function and as a management philosophy.
126
What is marketing as a function?
As a function:
Marketing is concerned with the implementation of business activities that guide the stream of goods and services from the producer to the consumer or user.
127
What is marketing as a management philosophy?
It's the "conscious market oriented behavior for the whole enterprise".
By the term marketing we understand the planning, coordination and control of all of the business activities aimed at current and potential markets.
Corporate objectives are supposed to be achieved through constant satisfaction of customer needs.
==> According to this approach, marketing is so fundamental that it cannot be seen as a seperate function.
128
What is a marketing concept?
a proven means of planning and designing a marketing approach.
"A conclusive, integrated action plan" that is guided by the intended marketing objectives, selects appropriate strategies to realize them and determines the necessary marketing tools on their bases (originally on marketing concept).
129
What are the stages of the marketing concept?
- Market analysis
- Marketing strategy
- Product design and performance
- Designing marketing tools
- Marketing controlling and innovation
130
Where should marketing objectives stem directly from?
Marketing objectives should stem directly from the normative level (mission statement and vision) or from the strategy (definition of business areas and strategic resources, such as core competencies)
131
What has to be considered for a marketing strategy in the form of a decision for individual target markets or positioning?
The marketing strategy in the form of a decision for individual target markets or a positioning also has to be geared to the business strategy and especially to strategic resources.
132
What do strategies on the operational level have to be geared towards?
On the operational level, specific processes like advertising planning have to be geared to management tools, such as annual budgets.
