Section 2,3 and 4

Question 1

What does the Tannenbaum Schmidt Continuum tell you?

Answer 1

• Places managers on a scale ranging from an autocratic management style through to a more relaxed laizze faire approach.

Question 2

What are the 7 stages of the Tannenbaum Schmidt continuum?

Answer 2

-Tells,Sells,Suggests,Consults,Joins,Delegates and abdicates.
- Usually, a manager will decrease their authority the higher quality the workforce is and the importance of the decision.

Question 3

What is the point of the Blake Mouton Grid are the 4 stages of the grid?

Answer 3

• Lets managers assess their leadership style on concern for production and concern for people.
• Low Low is impoverished
• High Low is produce or perish
• Low High is country club
• High High is team leader

Question 4

What is the purpose of a decision tree?

Answer 4

• Combine probability and expected pay off on different project to decide which one will will be the most profitable.

Question 5

How to calculate expected value?

Answer 5

• EV= (Probability of outcome 1 X expected pay off of 1)+( Probability of outcome 2 X expected pay off 2)

Question 6

How to calculate net gain and what is it?

Answer 6

• NG= Expected value- Initial costs
• Net gain is the financial gain after initial costs of the decision has been subtracted.

Question 7

What are the advantages of using decision trees?

Answer 7

• Great for managers when backing up making decisions.
• Clear, visual way to analyse decisions

Question 8

Disadvantages of decision trees

Answer 8

• Decision trees are quantitative- based on numbers and ignored qualitative data like customer and employee thoughts on the decisions.
• Probabilities are very hard to predict so it may vary making the data unreliable.

Question 9

What is the marketing mix?

Answer 9

• These are the factors a firm takes into account when marketing a product

Question 10

What are the 7 Ps?

Answer 10

-Product
-Place
-Price
-Process
-Physical environment
-People
-Promotion

Question 11

What factors can effect the 7 Ps?

Answer 11

-Price- Competitors in the market can undercut your price.
-Promotion- If the business operates in a highly competitive market, they may need to spend more on promotion to help generate brand awareness.
-Process- If the business operates in a highly competitive market, the business may focus on bettering their process to retain customers.
-Product- Where the product is positioned on marketing mix.Price and quality.
- Physical environment- Needs to be unique.
Competitors influence the marketing mix significantly.

Question 12

Why are examples of reasons businesses need to change their marketing mix?

Answer 12

-To increase competitiveness like improving quality, new methods of promotion, reassess methods of production.
- Technological advances such as widespread internet usage has completely transformed distribution channels also with digital downloads on video games.
-Social factors such as ageing population.
-New laws such as new standard of helmets for workers can increase costs.

Question 13

What does the product life cycle consist of?

Answer 13

• Development
• Introduction
• Growth
• Maturity
• Decline

Question 14

What is the development phase in the product life cycle?

Answer 14

• Research and development
• Market research
• Costs are high and there aren’t any sales to cover the cost.
• Has a high failure rate due to not enough demand and cannot make the product cheaply enough.

Question 15

What is the introduction phase in the product life cycle?

Answer 15

• Product is launched
• Often promotes the product heavily but needs the resources and demand to do this.
• Initial price of the product may be high to cover high costs and will attract early adopters.
• Competition may be limited if it’s innovative.

Question 16

What is the growth phase of the product life cycle?

Answer 16

• Sales grow fast with new and existing customers.
• Product is often improved and developed.
• Competitors may be attracted to the market, promotion shows difference in competitors products.

Question 17

What is the maturity phase in the product life cycle?

Answer 17

• Sales reach a peak and profitability increase because of fixed costs of development has been paid for.
• At market saturation sales may begin to drop, depending on the product.
• Use of extension strategies used to stay in maturity phase such as decreasing price and more promotion.

Question 18

What is the decline phase of the product life cycle?

Answer 18

• Product doesn’t appeal to the customer anymore. Sales fall rapidly and profits decrease.
• On other hand, product can stay profitable if promotional costs are reduced enough.
• If sales carry on falling the product is withdrawn or sold to another business(divestment)

Question 19

What is sampling?

Answer 19

The collection of quantitative and qualitative data used on a small group, usually the businesses target market.

Question 20

What are the benefits of sampling?

Answer 20

• Can help choose marketing decisions and reduce the risk
• Useful insight into target market
• Quick and flexible to use

Question 21

What are the drawbacks of sampling?

Answer 21

• The biggest risk is a sample is unrepresentative of the population, only in a small group.
• Risk of Bias
• Can be ineffective if customer trends and tastes change frequently.

Question 22

What is a simple random sample?

Answer 22

• Names picked randomly from a list

Question 23

What is a stratified sample?

Answer 23

• Population is divided into groups and people are selected randomly from each group. The number of people from a group is proportional to each group

Question 24

What is a Quota Sample?

Answer 24

• People are picked who fit into a category(eg. a mum between age 30-40).
• Businesses use this to get direct opinions from their target market.

Question 25

What is the formula for Price elasticity of demand?

Answer 25

- % change in quantity demanded/% change in price - For price elastic products, the % change in demand is greater than the % change in price and price inelastic vice versa.

Question 26

When is a product considered elastic or inelastic?

Answer 26

- If the price elasticity is greater than 1 then that product is price elastic which therefore sales will more than likely drop if a change in price eg. Jewellery. - If the price elasticity is less than 1, its price inelastic eg. Milk and petrol. - So a product with -0.5 elasticity is inelastic while a product with -1.5 is elastic.

Question 27

What are some factors on whether a product is inelastic or elastic?

Answer 27

- Necessary products like milk with always be price inelastic, the milk market as a whole will usually stay steady. However, if competitors lower their prices then milk firms may become elastic. - Businesses try to create differentiation on their products to create brand loyalty which will make the product more inelastic. - The availability of alternatives is another. The internet has made this much easier to make products elastic. - Items costing a greater proportion of consumer incomes tend to be more elastic. Consumers who see an increase of 10% in a chocolate brand won't be too bothered.

Question 28

How does price elasticity of a product help the business make decisions?

Answer 28

- It can help a business see if they should lower or increase their prices. - Income elasticity helps a manufacturer see what will happen if sales grow or shrink which will see if they want to sell domestically or abroad.

Question 29

What is the formula for income elasticity of demand?

Answer 29

- % change in quantity demanded/ % change in real income

Question 30

What is income elasticity of demand?

Answer 30

- Normal goods such as fruits and milk have a positive income elasticity of demand that's less than -1. This means as income rises, demand rises. - Luxury goods have a positive income elasticity of more than 1. This means that demand for luxury goods grows faster than the increase in income.

Question 31

What is added value?

Answer 31

-It is increasing the difference between the cost of raw materials and selling price. - Can be achieved by decreasing raw material costs or increasing selling price.