L4M2 - DEFINING BUISNESS NEEDS Flashcards
DEFINING BUISNESS NEEDS
what types of purchase is there ?
Straight Re-buy - An organisation decides to repurchase a product or service without making any changes.
Modified re-buy - organisation decides to repurchase a product or service, but there are some changes to spec
New purchase - organisation is acquiring a product or service for the first time.
Explain Total cost of ownership & whole life costing
intro - r+d
growth - rapid sales
maturity - sales start to slow
decline - sales low, product or service withdrawn.
Explain kraljic matrix
Non-critical purchases;
Leveraged
HIGH VALUE LOW RISK -
Bottleneck purchases;
Strategic HIGH IMPACT HIGH RISK -
Explain Business cases types of buys
INTRO - EXPLAINING THE NEED FOR NEW OR MODIFIED REBUY.
LONG TERM STRATERGY - HOW DOES ALIGN WITH LONG TERM GOALS
BUISNESS REQUIREMENTS - HOW ARE THESE REQUIRMENTS CRITICAL FOR SUCCESS TO THE ORGANISATION
What is Breakeven analysis
FIXED COST / CONTRIBUTION = BREAKEVEN
SHOE MANUFACTURE
Fixed Costs: £20,000 (includes rent,
salaries, etc.).
Variable Cost per Unit: £10 (includes raw materials, and labour, etc.).
Selling Price per Unit: £20
£20,000 divided by £20 − £10 = 2,000 units to break even
What is markup and margin
Markup = percentage of the cost added margin = profit.
Markup
price - cost to make / Cost = markup percentage
36 -18/18 = 1.00 (100%)
Margin
18 x 1.00 = 36
What is Cost plus pricing
this is where a company determines the cost of producing a product or service, and then adds a markup (profit margin) to establish the selling price.
Explain zero-based budgets and purpose of budgets
Zero-Based Budgeting is an approach where budgets are built from scratch for each period, with no consideration of the previous budget. Every expense must be justified, and budgets start at zero.
What are the types of market data
What are direct costs
Direct costs for a florists : flowers, ribbons, wrapping paper
What are indirect costs
Indirect costs for a florist: heating, lighting, business, rates.
What is benchmarking
Benchmarking is measuring of an organization’s products, services and practices
against a recognized leader in the studied area
Performance Improvement:
- Identifying areas for improvement and implementing best practices can lead to enhanced overall
performance.
Competitive Advantage:
- Benchmarking against industry leaders helps organisations stay competitive and innovative.
I
Informed Decision-Making: - Data-driven insights from benchmarking support informed decision-making and strategic planning.
Continuous Learning:
* Benchmarking encourages a culture of continuous learning and improvement within an organisation.
Increased Efficiency:
* Adopting best practices identified through benchmarking can lead to increased efficiency and cost savings
what is the supplier preferencing model
HOW DOES YOUR SUPPLIER PREFRENCE YOU ? HOW DO THEY SEE YOUR BUISINESS TO THEM ?.. DO YOU HAVE A GOOD REPUTATION.
DO YOU MATTER TO THEM AND DO YOU HAVE ANY CONTINGENCY.
MODEL:
NUSIANCE: SMALL ORDERS, DEMAND ALOT OF ATTENTION…HAVE A CONTINGENCY INCASE THEY WALK AWAY.
STRATEGIC - REDUCE PRICING TO KEEP CUSTOMER OR FIND WAYS TO ADD VALUE.
DEVELOP - MAY BECOME BIGGER IN THE FUTURE, WILL INVEST MORE RESOURCES SUCH AS HOLDING TOOLS ETC.
EXPLOIT - SUPPLIERS SEEK TO CHANGE PREMIUM
Explain Categories of cost entries.
what is open book costing ?
costs of production or service provision is shared openly between the buyer and the
supplier.
what is the segmentation model
Leverage - COST ESTIMATING, VALUE ANALYSIS
strategic - continuous improvement
low impact - COMPETITVE B IDS
critical projects - WHOLE LIFE COSTING
