The Firm

Question 1

Define production

Answer 1

The process of transferring inputs from human and physical resources into outputs wanted by customers

Question 2

What are some of the different types of transformation?

Answer 2

Physical - manufacturing
Location - transportation
Exchange - retailing
Storage - warehousing

Question 3

Give some examples of inputs

Answer 3

Natural resources
Labour
Capital
Information
Entrepreneurship

Question 4

What is a core service?

Answer 4

Delivers what the customer wants correctly, on time and competitively priced

Question 5

What is a value added service?

Answer 5

Builds relationships with the customer and are more difficult for competitors to copy

Question 6

Give some examples of environmental influences

Answer 6

• Economic
• Technological
• Social
• Political/Legal

Question 7

What are the three levels of business environment?

Answer 7

• Internal (marketing, production, finance, personnel, R&D)
• Micro (suppliers, customers, competitors, intermediaries, other stakeholders)
• Macro (external forces e.g. economic)

Question 8

What is a value or supply chain?

Answer 8

• Members of the environmental set who currently add value to the end customer
• Value is added during the transformation processes
• May be multiple firms in value chain

Question 9

An open objective…

Answer 9

cannot be measured. Good for external

Question 10

A closed objective…

Answer 10

can be measured. Good for internal

Question 11

Core competencies are…

Answer 11

the collective learning in the organisation

Question 12

Why do core competencies give a firm its key competitive advantages

Answer 12

• They provide potential access to a wide variety of markets
• They make a significant contribution to the perceived customer benefits of the end product
• They are difficult for competitors to imitate

Question 13

What are the four stages of a product’s life cycle?

Answer 13

Introduction - sales low, development and promotion costs high, if speed of introduction low may be dropped.
Growth - faster sales and profit growth, end of period competitive shakeout.
Maturity - sales peak, saturation, survivors battle using product enhancement and marketing campaigns
Decline - new technology makes product obsolete, sales fall

Question 14

What are the limitations of the product life cycle?

Answer 14

• May have a different demand pattern
• Your marketing activities may force a product into a life cycle stage
• Difficult to predict which stage a product is in
• An unconventional strategy can be successful

Question 15

Weaknesses of a portfolio approach

Answer 15

• It can be difficult to measure and predict market share/growth
• Firms can be too quick to drop healthy, mature businesses because they see them as dogs
• Attempts to create a new question mark or star can fail because it takes a company away from its core competencies