tag:blogger.com,1999:blog-16820516669025052762024-03-16T00:59:20.077+07:00Business Studies Notes For IGCSEUnknownnoreply@blogger.comBlogger28125tag:blogger.com,1999:blog-1682051666902505276.post-17381867452829754532017-04-14T03:55:00.002+07:002017-05-17T21:42:29.593+07:00Business Studies Notes for IGCSE 2012 (All in one) in pdf<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="http://igbusinesss.blogspot.ru/2017/04/business-studies-notes-for-igcse-all-in.html" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;" target="_blank"><img border="0" height="170" src="https://3.bp.blogspot.com/-jt7mYrNuLpM/WRxd-8ELXTI/AAAAAAAAALA/0jgUO1thW-Q3aZZ4NQguAU8JFFWGeEI4ACLcB/s320/1.png" width="320" /></a><span style="font-size: 12pt;">Here
is a pdf file with all <b>Business Studies Notes</b> for IGCSE 2012 for you to download. The pdf files for separates chapters are also available. </span><br />
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<span style="font-size: 12pt; line-height: 115%;">HAPPY READING!</span><br />
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<b><span style="font-size: large;">Business Studies Notes (All in one)</span></b></div>
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Click on the <b>Pop-out </b>button on the upper right corner of the pdf file to have full view and to download or download it <b><a href="https://drive.google.com/uc?id=0B9bHdm7rrnQXRjhxMDZrSmpYdDg&export=download" target="_blank">HERE</a>.</b><br />
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<b><span style="font-size: large;">PDF by chapters: </span></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXdkV0dEVLTHRSNUU/view?usp=sharing" target="_blank">Chapter 1: The purpose of Business Activity</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXYXBsd1JuZkdRdUU/view" target="_blank">Chapter 2: Types of business activity</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXUUtZZDd6N1Y2S0k/view?usp=sharing" target="_blank">Chapter 3: Forms of business organisation</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXX3hiOWNVMjVQcnM/view?usp=sharing" target="_blank">Chapter 4: Government and economic influences on business</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXQ1RVNGQ3LUU0aDg/view?usp=sharing" target="_blank">Chapter 5: Other influences on business</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXRHVZRzRRdlZRbUE/view?usp=sharing" target="_blank">Chapter 6: Business costs and revenue</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXTXQyRW12RG9kR1E/view?usp=sharing" target="_blank">Chapter 7: Business Accounting</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXWjNZREpBMXNGdU0/view?usp=sharing" target="_blank">Chapter 8: Cash flow planning</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXR1NGTWttZmtBUU0/view?usp=sharing" target="_blank">Chapter 9: Financing business activity</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXVlRjd1BXNWpMLTA/view?usp=sharing" target="_blank">Chapter 10: Organisational Structure</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXMEFLaTlwanZicDA/view?usp=sharing" target="_blank">Chapter 11: Managing a business</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXYUpmZENOTGNRUVE/view?usp=sharing" target="_blank">Chapter 12: Communication in business</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXbjBGQnZxNHhFMUk/view?usp=sharing" target="_blank">Chapter 13: Motivation at work</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXSGQyN3d1S3hGMnM/view?usp=sharing" target="_blank">Chapter 14: Recruitment, Training, and human resources</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXdVo3a2VVeFBrRkU/view?usp=sharing" target="_blank">Chapter 15: Employee and employer associations</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXbmZXemhXdlhabnc/view?usp=sharing" target="_blank">Chapter 16: The market and marketing</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXN3JDR2JTM0t3blU/view?usp=sharing" target="_blank">Chapter 17: Market research</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXNGdtUlN6VF8zc2M/view?usp=sharing" target="_blank">Chapter 18: Presentation of information</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXaXVMLU1RSE5rVkU/view?usp=sharing" target="_blank">Chapter 19: The marketing mix: product and packaging</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXdjAxbFIwMTB5WDQ/view?usp=sharing" target="_blank">Chapter 20: The marketing mix: price</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXN3M3a21WTkxZazA/view?usp=sharing" target="_blank">Chapter 21: The marketing mix: promotion</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXc29JNWw2ZUl3SnM/view?usp=sharing" target="_blank">Chapter 22: The marketing mix: place</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXN2NsOUp0Z0RyZmM/view?usp=sharing" target="_blank">Chapter 23: Factors affecting production</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXdngxckpDa1VjQWs/view?usp=sharing" target="_blank">Chapter 24: Factors affecting location</a></b></div>
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<b><a href="https://drive.google.com/file/d/0B9bHdm7rrnQXRHZkb1F4ZGN1X28/view?usp=sharing" target="_blank">Chapter 25: Business in the international community</a></b></div>
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<div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Henry Lehttp://www.blogger.com/profile/14105891935285233426noreply@blogger.com26tag:blogger.com,1999:blog-1682051666902505276.post-26602651842510422402017-04-12T21:25:00.000+07:002017-07-07T21:22:18.083+07:00Biology Notes for IGCSE 2014 (All in one)<div dir="ltr" style="text-align: left;" trbidi="on">
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<a href="http://igbusinesss.blogspot.ru/2017/05/biology-notes-2014-all-in-one.html" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;" target="_blank"><img border="0" height="156" src="https://3.bp.blogspot.com/-LRaQ7QkZwWo/U0VacYnMiQI/AAAAAAAADrk/7ULs2dfAA1Y/s1600/biology+books.png" width="320" /></a><span style="font-family: "verdana" , sans-serif; font-size: 12pt;">Here is a pdf file with </span><b style="font-family: verdana, sans-serif;"><span style="color: #b45f06;">Biology Notes for IGCSE 2014</span></b><span style="font-family: "verdana" , sans-serif; font-size: 12pt;">.</span><br />
<span style="font-family: "verdana" , sans-serif; line-height: 18.4px;">The pdf files for </span><b style="font-family: verdana, sans-serif; line-height: 18.4px;"><span style="color: #38761d;"><a href="http://igbiologyy.blogspot.com/search/label/pdf" target="_blank">separate chapters</a></span></b><span style="font-family: "verdana" , sans-serif; line-height: 18.4px;"><a href="http://igbiologyy.blogspot.com/search/label/pdf" target="_blank"> </a>are also available. </span><br />
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<span style="font-family: "verdana" , sans-serif; line-height: 18.4px;">Source: <a href="http://igbiologyy.blogspot.ru/2014/04/biology-notes-all-in-one.html" target="_blank"><b>Biology Notes for IGCSE 2014</b></a></span></div>
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<span style="font-family: "verdana" , sans-serif; font-size: 12pt; line-height: 18.4px;"><b style="font-size: 12pt; line-height: 18.4px;">Biology Notes All in one</b></span></div>
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<span style="font-family: "verdana" , sans-serif;">Click on the <b>Pop-out</b> button on the upper right corner of the pdf file to have full view and to download or <b>download</b> it <a href="https://docs.google.com/uc?authuser=0&id=0B9bHdm7rrnQXbmh2dnVxQVBiWkk&export=download" target="_blank"><b>HERE</b>.</a></span></div>
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<span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b>By chapters</b></span><br />
<span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b><br /></b></span><span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b>1. <a href="http://igbiologyy.blogspot.com/2014/04/01-classification-of-living-things-pdf.html" target="_blank">Classification of living things</a> </b></span><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">or click </span><a href="https://docs.google.com/uc?authuser=0&id=0BxxY3nc7MoX5bGVveUVkYWgyZzQ&export=download" style="background-color: white; color: black; font-family: verdana, geneva, sans-serif; font-size: 14px; font-weight: bold; line-height: 21px; text-decoration-line: none;" target="_blank" title="">Here</a><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;"> to download</span></div>
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<span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b>2. <a href="http://igbiologyy.blogspot.com/2014/04/02-cells-pdf.html" target="_blank">Cells</a> <o:p></o:p></b></span><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">or click</span><strong style="background-color: white; font-family: verdana, geneva, sans-serif; font-size: 14px; line-height: 21px;"> <a href="https://docs.google.com/uc?authuser=0&id=0B6BwiBtA43FrdG9ZakpQVVNYQmM&export=download" style="color: black; text-decoration-line: none;" target="_blank" title="">Here</a> </strong><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">to download</span></div>
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<span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b>3. <a href="http://igbiologyy.blogspot.com/2014/04/03-enzymes.html" target="_blank">Enzymes</a> <o:p></o:p></b></span><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">or click </span><a href="https://docs.google.com/uc?authuser=0&id=0B6BwiBtA43FrUzhHalZkT3d2dEU&export=download" style="background-color: white; color: black; font-family: verdana, geneva, sans-serif; font-size: 14px; line-height: 21px; text-decoration-line: none;" target="_blank" title=""><strong>Here</strong></a><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;"> to download</span></div>
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<span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b>4. <a href="http://igbiologyy.blogspot.com/2014/04/04-plant-nutrition-pdf.html" target="_blank">Plant Nutrition<o:p></o:p></a> </b></span><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">or click</span><strong style="background-color: white; font-family: verdana, geneva, sans-serif; font-size: 14px; line-height: 21px;"><a href="https://docs.google.com/file/d/0B6BwiBtA43FrWGxGeEJGblpyWWc/view" style="color: black; text-decoration-line: none;" target="_blank" title=""> Here </a></strong><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">to download </span></div>
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<span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b>5. <a href="http://igbiologyy.blogspot.com/2014/04/05-animal-nutrition-pdf.html" target="_blank">Animal Nutrition</a> <o:p></o:p></b></span><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">or click</span><strong style="background-color: white; font-family: verdana, geneva, sans-serif; font-size: 14px; line-height: 21px;"><a href="https://docs.google.com/uc?authuser=0&id=0B6BwiBtA43FrSXdvUTNfWVQ0ZVU&export=download" style="color: black; text-decoration-line: none;" target="_blank" title=""> Here </a></strong><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">to download</span></div>
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<span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b>6. <a href="http://igbiologyy.blogspot.com/2014/04/06-plant-transport-pdf.html" target="_blank">Plant Transport</a> <o:p></o:p></b></span><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">or click</span><strong style="background-color: white; font-family: verdana, geneva, sans-serif; font-size: 14px; line-height: 21px;"><a href="https://docs.google.com/uc?authuser=0&id=0B6BwiBtA43FrSUZ6YnljNkF4eXc&export=download" style="color: black; text-decoration-line: none;" target="_blank" title=""> Here </a></strong><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">to download </span></div>
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<span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b>7. <a href="http://igbiologyy.blogspot.com/2014/04/07-human-transport-pdf.html" target="_blank">Human Transport</a> <o:p></o:p></b></span><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">or click</span><strong style="background-color: white; font-family: verdana, geneva, sans-serif; font-size: 14px; line-height: 21px;"><a href="https://docs.google.com/uc?authuser=0&id=0B6BwiBtA43FrZjVPQjI4eVJ5Qms&export=download" style="color: black; text-decoration-line: none;" target="_blank" title=""> Here </a></strong><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">to download</span></div>
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<span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b>8. <a href="http://igbiologyy.blogspot.com/2014/04/08-respiration-pdf.html" target="_blank">Respiration</a> <o:p></o:p></b></span><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">or click</span><strong style="background-color: white; font-family: verdana, geneva, sans-serif; font-size: 14px; line-height: 21px;"><a href="https://docs.google.com/uc?authuser=0&id=0B6BwiBtA43FrRnFfT0pXbFNSY3c&export=download" style="color: black; text-decoration-line: none;" target="_blank" title=""> Here </a></strong><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">to download</span></div>
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<span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b>9. <a href="http://igbiologyy.blogspot.com/2014/04/09-coordination-and-response-pdf.html" target="_blank">Coordination</a> <o:p></o:p></b></span><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">or click</span><strong style="background-color: white; font-family: verdana, geneva, sans-serif; font-size: 14px; line-height: 21px;"><a href="https://docs.google.com/uc?authuser=0&id=0B6BwiBtA43FrdldYSUR3VW1WQzA&export=download" style="color: black; text-decoration-line: none;" target="_blank" title=""> Here </a></strong><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">to download</span></div>
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<span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b>10. <a href="http://igbiologyy.blogspot.com/2014/04/10-excrestion-pdf.html" target="_blank">Excretion</a> <o:p></o:p></b></span><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">or click</span><strong style="background-color: white; font-family: verdana, geneva, sans-serif; font-size: 14px; line-height: 21px;"><a href="https://docs.google.com/uc?authuser=0&id=0B6BwiBtA43FrVVBJVE1yNHNudkE&export=download" style="color: black; text-decoration-line: none;" target="_blank" title=""> Here </a></strong><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">to download</span></div>
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<span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b>11. <a href="http://igbiologyy.blogspot.com/2014/04/11-homeostasis-and-drugs-pdf_8.html" target="_blank">Homeostasis and Drugs</a> <o:p></o:p></b></span><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">or click</span><strong style="background-color: white; font-family: verdana, geneva, sans-serif; font-size: 14px; line-height: 21px;"><a href="https://docs.google.com/uc?authuser=0&id=0B6BwiBtA43FrR2ltTWFoTWY1bk0&export=download" style="color: black; text-decoration-line: none;" target="_blank" title=""> Here </a></strong><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">to download</span></div>
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<span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b>12. <a href="http://igbiologyy.blogspot.com/2014/04/12-reproduction-pdf.html" target="_blank">Reproduction</a> <o:p></o:p></b></span><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">or click</span><strong style="background-color: white; font-family: verdana, geneva, sans-serif; font-size: 14px; line-height: 21px;"><a href="https://docs.google.com/uc?authuser=0&id=0B6BwiBtA43FrM3Z1THRYTEhLRDQ&export=download" style="color: black; text-decoration-line: none;" target="_blank" title=""> Here </a></strong><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">to download</span></span><br />
<span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;"><br /></span></span><span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b>13. <a href="http://igbiologyy.blogspot.com/2014/04/13-inheritance-pdf.html" target="_blank">Inheritance</a> <o:p></o:p></b></span><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">or click</span><strong style="background-color: white; font-family: Verdana, Geneva, sans-serif; font-size: 14px; line-height: 21px;"><a href="https://docs.google.com/uc?authuser=0&id=0B6BwiBtA43FrNEgzXzVaUGI4MXM&export=download" style="color: black; text-decoration-line: none;" target="_blank" title=""> Here </a></strong><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">to download</span><br />
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<span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b>14.<a href="http://igbiologyy.blogspot.com/2014/04/14-ecosystem-pdf.html" target="_blank"> Ecosystem</a> <o:p></o:p></b></span><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">or click</span><strong style="background-color: white; font-family: Verdana, Geneva, sans-serif; font-size: 14px; line-height: 21px;"><a href="https://docs.google.com/uc?authuser=0&id=0B6BwiBtA43FrMDFUdEtiZldhcUU&export=download" style="color: black; text-decoration-line: none;" target="_blank" title=""> Here </a></strong><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">to download</span></div>
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<span style="font-family: "verdana" , "sans-serif"; font-size: 12pt; line-height: 18.4px;"><b>15. <a href="http://igbiologyy.blogspot.com/2014/04/15-human-and-ecosystem-biology-notes.html" target="_blank">Human and Ecosystem</a> </b></span><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">or click</span><strong style="background-color: white; font-family: Verdana, Geneva, sans-serif; font-size: 14px; line-height: 21px;"><a href="https://docs.google.com/uc?authuser=0&id=0B6BwiBtA43FrMDFUdEtiZldhcUU&export=download" style="color: black; text-decoration-line: none;" target="_blank" title=""> Here </a></strong><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;">to download</span><br />
<span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;"><br /></span><span style="background-color: white; font-family: "verdana" , "geneva" , sans-serif; font-size: 14px; line-height: 21px;"><br /></span></div>
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<div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Henry Lehttp://www.blogger.com/profile/14105891935285233426noreply@blogger.com3tag:blogger.com,1999:blog-1682051666902505276.post-82622473962319094882012-10-14T16:38:00.000+07:002017-04-14T05:39:22.935+07:00Introduction<div dir="ltr" style="text-align: left;" trbidi="on">
<a href="http://4.bp.blogspot.com/-UwlFL00A4Qs/U9n7YfoPS1I/AAAAAAAAAP8/WoVeh18ZUoM/s1600/bbook.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="200" src="https://4.bp.blogspot.com/-UwlFL00A4Qs/U9n7YfoPS1I/AAAAAAAAAP8/WoVeh18ZUoM/s1600/bbook.jpg" width="153" /></a>Hello, this is a summary of IGCSE Business Studies to help you understand the its core concepts more easily. As a student, I would like to share with you my experience since I am studying this subject right now. I am not a professional so please feel free to add comments and suggestions on how I should improve.<br />
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<span class="Apple-tab-span" style="white-space: pre;"> </span>This study guide is going to be about IGCSE Business Studies, Third Edition by Karen Borrington and Peter Stimpson. For more information, visit <a href="http://www.cie.org.uk/qualifications/academic/middlesec/olevel/subject?assdef_id=900">this page.</a> All credit goes to the authors.</div>
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<span class="Apple-tab-span" style="white-space: pre;"> </span>I hope you will enjoy this study guide and for me to be of help!</div>
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MrSpitfire </div>
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<b><a href="http://igbusinesss.blogspot.co.uk/2012/10/introduction.html" target="_blank">CONTENTS</a></b></div>
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<a name='more'></a><a href="http://igbusinesss.blogspot.co.uk/2011/03/chapter-one-purpose-of-business.html" style="font-family: georgia, utopia, "palatino linotype", palatino, serif;" target="_blank"><span style="color: #38761d;">Chapter 1: The purpose of Business Activity</span></a><br />
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<span style="color: #6aa84f; font-size: large;"><a href="http://igbusinesss.blogspot.co.uk/2011/03/chapter-two-types-of-business-activity.html" style="color: #00dfee; text-decoration-line: none;" target="_blank">Chapter 2: Types of business activity</a></span></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/03/chapter-three-forms-of-business.html" style="color: #00dfee;"><span style="color: #38761d; font-size: large;">Chapter 3: Forms of business organisation</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/03/chapter-four-government-and-economic.html" style="color: #00dfee; text-decoration-line: none;"><span style="color: #38761d; font-size: large;">Chapter 4: Government and economic influences on business</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/03/chapter-five-other-influences-on.html" style="color: #00dfee; text-decoration-line: none;" target="_blank"><span style="color: #38761d; font-size: large;">Chapter 5: Other influences on business</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/03/chapter-six-business-costs-and-revenue.html" style="color: #00dfee; text-decoration-line: none;"><span style="color: #38761d; font-size: large;">Chapter 6: Business costs and revenue</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/03/chapter-7-business-accounting.html"><span style="color: #38761d; font-size: large;">Chapter 7: Business Accounting</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/04/chapter-eight-cash-flow-planning.html"><span style="color: #38761d; font-size: large;">Chapter 8: Cash flow planning</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/04/chapter-nine-financing-business.html"><span style="color: #38761d; font-size: large;">Chapter 9: Financing business activity</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/04/chapter-ten-organisational-structure.html"><span style="color: #38761d; font-size: large;">Chapter 10: Organisational Structure</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/04/chapter-11-managing-business.html"><span style="color: #38761d; font-size: large;">Chapter 11: Managing a business</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/04/chapter-12-communication-in-business.html"><span style="color: #38761d; font-size: large;">Chapter 12: Communication in business</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/04/chapter-13-motivation-at-work.html"><span style="color: #38761d; font-size: large;">Chapter 13: Motivation at work</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/04/chapter-14-recruitment-training-and.html"><span style="color: #38761d; font-size: large;">Chapter 14: Recruitment, Training, and human resources</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/04/chapter-15-employee-and-employer.html"><span style="color: #38761d; font-size: large;">Chapter 15: Employee and employer associations</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/04/chapter-16-market-and-marketing.html"><span style="color: #38761d; font-size: large;">Chapter 16: The market and marketing</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/04/chapter-17-market-research.html"><span style="color: #38761d; font-size: large;">Chapter 17: Market research</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/04/chapter-18-presentation-of-information.html"><span style="color: #38761d; font-size: large;">Chapter 18: Presentation of information</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/05/chapter-19-marketing-mix-product-and.html"><span style="color: #38761d; font-size: large;">Chapter 19: The marketing mix: product and packaging</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/05/chapter-20-marketing-mix-price.html"><span style="color: #38761d; font-size: large;">Chapter 20: The marketing mix: price</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/04/chapter-21-marketing-mix-promotion.html"><span style="color: #38761d; font-size: large;">Chapter 21: The marketing mix: promotion</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/05/chapter-22-marketing-mix-place.html"><span style="color: #38761d; font-size: large;">Chapter 22: The marketing mix: place</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/05/chapter-23-factors-affecting-production.html"><span style="color: #38761d; font-size: large;">Chapter 23: Factors affecting production</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/05/chapter-24-factors-affecting-location.html"><span style="color: #38761d; font-size: large;">Chapter 24: Factors affecting location</span></a></h3>
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<a href="http://igbusinesss.blogspot.co.uk/2011/05/chapter-25-business-in-international.html"><span style="color: #38761d; font-size: large;">Chapter 25: Business in the international community</span></a></h3>
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<div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com36tag:blogger.com,1999:blog-1682051666902505276.post-89395827738672236952012-08-25T17:55:00.000+07:002017-04-14T05:06:52.222+07:00Chapter 1: The purpose of Business Activity<div dir="ltr" style="text-align: left;" trbidi="on">
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<b><span class="Apple-style-span" style="font-size: large;">The economics problem: needs and wants.</span></b></div>
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Basically, all humans have <b>needs </b>and <b>wants</b>. Needs are things we <b>can't </b>live without, while wants are simply our desires that we <b>can </b>live without. We all have <b>unlimited wants</b>, which is true, since all of us want a new PC, a car, new graphics card, etc. that we actually do not need to live. Businesses produce <b>goods </b>and <b>services </b>to satisfy needs and wants.</div>
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Although we have unlimited wants, there are not enough <b>resources </b>for everyone. Resources can be split into 4 <b>factors of production</b>, which are:</div>
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- <b>Land</b>: All natural resources used to make a product or service.</div>
<div>
<b> </b>- <b>Labour</b>: The effort of workers required to make a product or service.</div>
<div>
- <b>Capital</b>: Finance, machinery and equipment required to make a product or service.</div>
<div>
- <b>Enterprise</b>: Skill and risk-taking ability of the <b>entrepreneur</b>.</div>
<div>
<br /></div>
<div>
<b>Entrepreneurs </b>are people who <b>combine </b>these factors of production to make a product.<br />
<a name='more'></a></div>
<div>
<br /></div>
<div>
With these discussed, lets move on to the <b>economic problem</b>. The economic problem results from <b>limited resources </b>and <b>unlimited wants</b>. This situation causes <b>scarcity</b>, when there are not enough goods to satisfy the wants for everybody. Because of this, we will have to <b>choose </b>which wants we will satisfy (that will be of more benefit to us) and which we will not when buying things. For any choice, you will have to would have obtained if you didn't spend that money. For example, you would have got a book if you didn't buy the pen, or you would have a burger if you didn't buy the chips. Basically, item that you didn't buy is the <b>opportunity cost</b>. Make sure that the opportunity cost isn't higher than what you bought!</div>
<div>
<br /></div>
<div>
<b></b><br />
<blockquote>
<b>"Opportunity cost</b>: the next best alternative given up by choosing another item.<b>"</b></blockquote>
Here is a diagram showing the whole economic problem:</div>
<div>
<br /></div>
<div>
<br />
<a href="http://2.bp.blogspot.com/--CoO3y8A7lg/TXTl3xCEBrI/AAAAAAAAABw/7L-t6JA9Aqo/s1600/economicsproblem.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5581338584436442802" src="https://2.bp.blogspot.com/--CoO3y8A7lg/TXTl3xCEBrI/AAAAAAAAABw/7L-t6JA9Aqo/s400/economicsproblem.jpg" style="cursor: hand; cursor: pointer; display: block; height: 186px; margin: 0px auto 10px; text-align: center; width: 400px;" /></a></div>
<div>
<b>Division of labour/Specialisation</b></div>
<div>
<b><br />
</b></div>
<div>
Because there are limited resources, we need to use them the most efficient way possible. Therefore, we now use production methods that are as fast as possible and as <b>efficient </b>(costs less, earns more) as possible. The main production method that we are using nowadays is known as <b>specialization</b>, or division of labour.</div>
<div>
<br /></div>
<div>
<b></b><b></b><br />
<blockquote>
<b>"Division of Labour/Specialisation</b> is when the production process is split up into different tasks and each specialized worker/ machine performs one of these tasks.<b>"</b></blockquote>
<b></b><br />
<blockquote>
<b></b></blockquote>
</div>
<div>
<b>Pros:</b></div>
<div>
<ul>
<li><u>Specialized</u> workers are good at one task and increases efficiency and output.</li>
<li><u>Less time is wasted</u> switching jobs by the individual.</li>
<li><u>Machinery</u> also helps all jobs and can be operated 24/7.</li>
</ul>
<b>Cons</b></div>
<div>
<ul>
<li><u>Boredom</u> from doing the same job lowers efficiency.</li>
<li>No <u>flexibility</u> because workers can only do one job and cannot do others well if needed.</li>
<li>If one worker is absent and no-one can replace him, the production process <u>stops</u>.</li>
</ul>
<b>Why is business activity needed? (summary)</b></div>
<div>
- Provides goods and services from limited resources to satisfy unlimited wants.</div>
<div>
- Scarcity results from limited resources and unlimited wants.</div>
<div>
- Choice is necessary for scarce resources. This leads to opportunity costs.</div>
<div>
- Specialisation is required to make the most out of resources.</div>
<div>
<br /></div>
<div>
<b>Business activity:</b></div>
<div>
<ol>
<li>Combine factors of production to create goods and services.</li>
<li>Goods and services satisfy peoples wants.</li>
<li>Employs people and pays them wages so they can consume other products.</li>
</ol>
</div>
<a href="http://1.bp.blogspot.com/-gffFOBwOMqc/TXWvlV3oi-I/AAAAAAAAAB4/BJmzYxBGAmQ/s1600/businesscycle.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5581560369256106978" src="https://1.bp.blogspot.com/-gffFOBwOMqc/TXWvlV3oi-I/AAAAAAAAAB4/BJmzYxBGAmQ/s400/businesscycle.jpg" style="cursor: hand; cursor: pointer; display: block; height: 208px; margin: 0px auto 10px; text-align: center; width: 400px;" /></a><br />
<div>
<b>Business Objectives:</b></div>
<div>
All businesses have aims or objectives to achieve. Their aims can vary depending on their type of business or these can change depending on situations. The most common objectives are:</div>
<div>
<ol>
<li><b>Profit:</b> Profit is what keeps a company going and is the main aim of most businesses. Normally a business will try to obtain a <i><u>satisfactory level of profits</u></i> so they do not have to work long hours or pay too much tax.</li>
<li><b>Increase added value</b><b>:</b><b style="font-weight: normal;"> Value added is the difference between the price and material costs of a product. E.g. If the price when selling a pen is $3 and it costs $1 in material, the value added would be $2. However, this does not take into account overheads and taxes. Added value could be increased by working on products so that they become more expensive finished products. One easy example of this is a mobile phone with a camera would sell for much more than one without it. Of course, you will need to pay for the extra camera but as long as <u>prices rise more than costs</u>, you get more profit.</b></li>
<li><b>Growth: </b>Growth can only be achieved when customers are satisfied with a business. When businesses grow they create more jobs and make them more secure when a business is larger. The status and salary of managers are increased. Growth also means that a business is able to spread risks by moving to other markets, or it is gaining a larger market share. Bigger businesses also gain cost advantages, called <u>economies of scale</u>.</li>
<li><b>Survival:</b><b style="font-weight: normal;"> If a business do not survive, its owners lose everything. Therefore, businesses need to focus on this objective the most when they are: <u>starting up</u>, <u>competing with other businesses</u>, or in an <u>economic recession</u>.</b></li>
<li><b>Service to the community: </b>This is the primary goal for most government owned businesses. They plan to produce essential products to everybody who need them. </li>
</ol>
These business objectives can conflict because different people in a business want different things at different times.</div>
<div>
<br /></div>
<div>
<b>Stakeholders:</b></div>
<div>
Stakeholders are a person or a group which has interest in a business for various reasons and will be directly affected by its decisions. Stakeholders also have different objectives and these also conflict over time.</div>
<div>
<br /></div>
<div>
There are two 6 types of stakeholders, and these types can be classified into two groups with similar interests.</div>
<div>
<br /></div>
<div>
<b>Group 1: Profit/Money</b></div>
<div>
<ul>
<li><u>Owners:</u></li>
</ul>
<ol>
<li>Profit, return on capital.</li>
<li>Growth, increase in value of business.</li>
</ol>
<ul>
<li><u>Workers</u></li>
</ul>
<ol>
<li>High salaries.</li>
<li>Job security.</li>
<li>Job satisfaction.</li>
</ol>
<ul>
<li><u>Managers</u></li>
</ul>
<ol>
<li>High salaries.</li>
<li>Job security.</li>
<li>Growth of business so they get more power, status, and salary.</li>
</ol>
<b>Group 2: Value</b></div>
<div>
<ul>
<li><u>Customers</u></li>
</ul>
<ol>
<li>Safe products.</li>
<li>High quality.</li>
<li>Value for money.</li>
<li>Reliability of service and maintenance.</li>
</ol>
<ul>
<li><u>Government</u></li>
</ul>
<ol>
<li>Employment.</li>
<li>Taxes.</li>
<li>National output/GDP increase.</li>
</ol>
<ul>
<li><u>Community</u></li>
</ul>
<ol>
<li>Employment.</li>
<li>Security.</li>
<li>Business does not pollute the environment.</li>
<li>Safe products that are socially responsible.</li>
</ol>
</div>
<div>
So... That's the first chapter guys. I realised that doing summaries in this format takes so much time, so the next chapter I will do it more in note form, making this less of a study guide but a revision guide or summary. Chapter two coming out soon!</div>
<div>
<span class="Apple-style-span" style="color: #222222; font-family: "georgia" , "utopia" , "palatino linotype" , "palatino" , serif; font-size: 15px; line-height: 21px;">--------------------------------------------------------------------------------------</span><span class="Apple-style-span" style="color: #222222; font-family: "georgia" , "utopia" , "palatino linotype" , "palatino" , serif; font-size: 15px; line-height: 21px;">--------------------------------------------------------------------------------------</span></div>
</div>
<div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com113tag:blogger.com,1999:blog-1682051666902505276.post-56358117188047487652012-08-24T16:18:00.000+07:002012-08-20T18:37:14.226+07:00Chapter 2: Types of business activity<b><span class="Apple-style-span">Levels of economic activity</span></b><br />
<div>
<b><br />
</b><br />
<div>
In order for products to be made and sold to the people, it must undergo 3 different production processes. Each process is done by a different <b>business sector</b> and they are:</div>
</div>
<div>
<ul>
<li><b>Primary sector: </b>The <u>natural resources extraction</u> sector. E.g. farming, forestry, mining... <span class="Apple-style-span">(earns the least money)</span></li>
<li><b>Secondary sector: </b>The <u>manufacturing</u> sector. E.g. construction, car manufacturing, baking... <span class="Apple-style-span"><span class="Apple-style-span">(earns a medium amount of money</span>)</span></li>
<li><b>Tertiary sector: </b>The <u>service</u> sector. E.g banks, transport, insurance... <span class="Apple-style-span">(earns the most money)<a name='more'></a></span></li>
</ul>
Importance of a sector in a country:</div>
<div>
<ul>
<li>no. of workers employed.</li>
<li>value of output and sales.</li>
</ul>
<b>Industrialisation: </b>a country is moving from the primary sector to the secondary sector.</div>
<div>
<b>De-industrialisation:</b> a country is moving from the secondary sector to the tertiary sector.</div>
<div>
In both cases, these processes both earn the country more revenue.</div>
<div>
<br /></div>
<div>
<b>Types of economiess</b></div>
<div>
<b><br />
</b></div>
<div>
<b>Free market economy:</b></div>
<div>
All businesses are owned by the <b>private sector</b>. <b>No</b> government intervention.</div>
<div>
<br /></div>
<div>
<u>Pros:</u></div>
<div>
<ul>
<li>Consumers have a lot of <b>choice</b></li>
<li>High <b>motivation </b>for workers</li>
<li><b>Competition </b>keeps prices low</li>
<li><b>Incentive </b>for other businesses to set up and make profits</li>
</ul>
</div>
<div>
<u>Cons:</u></div>
<div>
<ul>
<li>Not all products will be available for everybody, especially the <b>poor</b></li>
<li>No government intervention means <b>uncontrollable </b>economic booms or recessions</li>
<li><b>Monopolies </b>could be set up limiting consumer choice and exploiting them</li>
</ul>
<div>
<b>Command/Planned economy:</b></div>
</div>
<div>
All businesses are owned by the <b>public sector</b>. <b>Total </b>government intervention. Fixed wages for everyone. Private property is not allowed.</div>
<div>
<u>Pros:</u></div>
<div>
<ul>
<li><b>Eliminates</b> any <b>waste</b> from competition between businesses (e.g. advertising the same product)</li>
<li><b>Employment </b>for everybody</li>
<li>All <b>needs </b>are met (although no luxury goods)</li>
</ul>
</div>
<div>
<u>Cons:</u></div>
<div>
<ul>
<li><b>Little motivation</b> for workers</li>
<li>The government might produce things people <b>don't </b>want to buy</li>
<li><b>Low incentive</b> for firms (no profit) leads to low efficiency</li>
</ul>
<div>
<b>Mixed economy:</b></div>
</div>
<div>
Businesses belong to both the private and public sector. Government controls <b>part</b> of the economy.</div>
<div>
<br /></div>
<div>
<b>Industries under government ownership:</b></div>
<div>
<ul>
<li>health</li>
<li>education</li>
<li>defence</li>
<li>public transport</li>
<li>water & electricity</li>
</ul>
<div>
<b><span class="Apple-style-span">Privatisation</span></b></div>
</div>
<div>
<span class="Apple-style-span">Privatisation involves the government selling national businesses to the private sector to increase output and efficiency.</span></div>
<div>
<span class="Apple-style-span"><br />
</span></div>
<div>
<span class="Apple-style-span"><u>Pros:</u></span></div>
<div>
<ul>
<li><span class="Apple-style-span">New <b>incentive</b> (profit) encourages the business to be more efficient</span></li>
<li><span class="Apple-style-span"><b>Competition</b> lowers prices</span></li>
<li><span class="Apple-style-span">Individuals have more <b>capital</b> than the government</span></li>
<li><span class="Apple-style-span">Business decisions are for <b>efficiency</b>, not <b>government popularity</b></span></li>
<li><span class="Apple-style-span">Privatisation <b>raises money</b> for the government</span></li>
</ul>
</div>
<div>
<span class="Apple-style-span"><u>Cons:</u></span></div>
<div>
<ul>
<li><span class="Apple-style-span"><b>Essential </b>businesses making losses will be <b>closed</b></span></li>
<li><span class="Apple-style-span">Workers could be made <b>redundant </b>for the sake of profit</span></li>
<li><span class="Apple-style-span">Businesses could become <b>monopolies</b>, leading to higher price</span></li>
</ul>
<div>
<span class="Apple-style-span"><b>Comparing the size of businesses</b></span></div>
</div>
<div>
<span class="Apple-style-span">Businesses vary in size, and there are some ways to measure them. For some people, this information could be very useful:</span></div>
<div>
<ul>
<li><span class="Apple-style-span"><u>Investors</u> - how safe it is to invest in businesses</span></li>
<li><span class="Apple-style-span"><u>Government</u> - tax</span></li>
<li><span class="Apple-style-span"><u>Competitors</u> - compare their firm with other firms</span></li>
<li><span class="Apple-style-span"><u>Workers</u> - job security, how many people they will be working with</span></li>
<li><span class="Apple-style-span"><u>Banks</u> - can they get a loan back from a business.</span></li>
</ul>
<div>
<span class="Apple-style-span"><b>Ways of measuring the size of a business:</b></span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span"><b>Number of employees.</b> Does not work on capital intensive firms that use machinery.</span></li>
<li><span class="Apple-style-span"><b>Value of output. </b>Does not take into account people employed. Does not take into account sales revenue.</span></li>
<li><span class="Apple-style-span"><b>Value of sales.</b> </span><span class="Apple-style-span" style="font-size: medium;">Does not take into account people employed.</span></li>
<li><span class="Apple-style-span"><b>Capital employed.</b> Does not work on labour intensive firms. High capital but low output means low effiency.</span></li>
</ul>
<div>
<span class="Apple-style-span">You <b>cannot </b>measure a businesses size by its <b>profit</b>, because profit depends on too many factors not just the size of the firm.</span></div>
<div>
<span class="Apple-style-span"><br />
</span></div>
</div>
<div>
<b><span class="Apple-style-span">Business Growth</span></b></div>
<div>
<span class="Apple-style-span">All owners want their businesses to expand. They reap these benefits:</span></div>
<div>
<ul>
<li><span class="Apple-style-span">Higher profits</span></li>
<li><span class="Apple-style-span">More status, power and salary for managers</span></li>
<li><span class="Apple-style-span">Low average costs (economies of scale)</span></li>
<li><span class="Apple-style-span">Higher market share</span></li>
</ul>
<div>
<span class="Apple-style-span"><b>Types of expansion:</b></span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span"><u>Internal Growth</u>: <b>Organic</b> growth. Growth paid for by owners capital or retained profits.</span></li>
<li><span class="Apple-style-span"><u>External Growth</u>: Growth by <b>taking over </b>or <b>merging </b>with another business.</span></li>
</ul>
<div>
<span class="Apple-style-span"><b>Types of Mergers (and main benefits):</b></span></div>
</div>
<div>
<span class="Apple-style-span"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span"><b>- Horizontal Merger: </b>merging with a business in the same business sector.</span></div>
<div>
<ul>
<li><span class="Apple-style-span">Reduces no. of competitors in industry</span></li>
<li><span class="Apple-style-span">Economies of scale</span></li>
<li><span class="Apple-style-span">Increase market share</span></li>
</ul>
<div>
<span class="Apple-style-span"><b>- Vertical merger:</b></span></div>
</div>
<div>
<span class="Apple-style-span"><u>Forward vertical merger:</u></span></div>
<div>
<ul>
<li><span class="Apple-style-span">Assured outlet for products</span></li>
<li><span class="Apple-style-span">Profit made by retailer is absorbed by manufacturer</span></li>
<li><span class="Apple-style-span">Prevent retailer from selling products of other businesses</span></li>
<li><span class="Apple-style-span">Market research on customers transfered directly to the manufacturer</span></li>
</ul>
</div>
<div>
<span class="Apple-style-span"><u>Backward vertical merger:</u></span></div>
<div>
<ul>
<li><span class="Apple-style-span">Constant supply of raw materials</span></li>
<li><span class="Apple-style-span">Profit from primary sector business is absorbed by manufacturer</span></li>
<li><span class="Apple-style-span">Prevent supplier from supplying other businesses</span></li>
<li><span class="Apple-style-span">Controlled cost of raw materials</span></li>
</ul>
<div>
<span class="Apple-style-span"><b>Conglomerate merger:</b></span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span">Spreads risks</span></li>
<li><span class="Apple-style-span">Transfer of new ideas from one section of the business to another</span></li>
</ul>
<div>
<b><span class="Apple-style-span">Why some businesses stay small:</span></b></div>
</div>
<div>
<span class="Apple-style-span">There are some reasons why some businesses stay small. They are:</span></div>
<div>
<ul>
<li><span class="Apple-style-span"><b>Type of industry the business is in:</b> Industries offering personal service or specialized products. They cannot grow bigger because they will lose the personal service demanded by customers. E.g. hairdressers, cleaning, convenience store, etc.</span></li>
<li><span class="Apple-style-span" style="font-size: medium;"><b>Market size: </b>If the size of the market a business is selling to is too small, the business cannot expand. E.g. luxury cars (Lamborghini), expensive fashion clothing, etc.</span></li>
<li><span class="Apple-style-span"><b>Owners objectives: </b>Owners might want to keep a personal touch with staff and customers. They do not want the increased stress and worry of running a bigger business.</span></li>
</ul>
<div>
<span class="Apple-style-span">Thats the end of chapter two! Chapter 3 coming soon!</span></div>
</div>
<div>
<span class="Apple-style-span" style="color: #222222; font-family: Georgia, Utopia, 'Palatino Linotype', Palatino, serif; font-size: 15px; line-height: 21px;">--------------------------------------------------------------------------------------</span><span class="Apple-style-span" style="color: #222222; font-family: Georgia, Utopia, 'Palatino Linotype', Palatino, serif; font-size: 15px; line-height: 21px;">--------------------------------------------------------------------------------------</span></div>
<div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com70tag:blogger.com,1999:blog-1682051666902505276.post-82448268471557564012012-08-23T16:19:00.000+07:002012-08-20T18:36:54.425+07:00Chapter 3: Forms of business organisationAlmost every country consists of two business sectors, the private sector and the public sector. Private sector businesses are operated and run by individuals, while public sector businesses are operated by the government. The types of businesses present in a sector can vary, so lets take a look at them.<br />
<div>
<br /></div>
<div>
<b><span class="Apple-style-span"><u>Private Sector</u></span></b></div>
<div>
<b><br />
</b></div>
<div>
<b>Sole Traders</b></div>
<div>
<b><br />
</b></div>
<div>
Sole traders are the most common form of business in the world, and take up as much as 90% of all businesses in a country. The business is owned and run by one person only. Even though he can employ people, he is still the <i>sole proprietor </i>of the business. These businesses are so common since there are so little legal requirements to set up:</div>
<div>
<ul>
<li>The owner must register with and send annual accounts to the government <b>Tax Office</b>.</li>
<li>They must register their business names with the <b>Registrar of Business Names</b>.</li>
<li>They must obey all basic laws for trading and commerce.<a name='more'></a></li>
</ul>
There are advantages and disadvantages to everything, and here are ones for sold traders:</div>
<div>
<br /></div>
<div>
<b>Pros:</b></div>
<div>
<ul>
<li>There are so few<b> legal formalities </b>are required to operate the business.</li>
<li>The owner is his own boss, and has <b>total control </b>over the business.</li>
<li>The owner gets <b>100%</b> of <b>profits</b>.</li>
<li><b>Motivation</b> because he gets all the profits.</li>
<li>The owner has <b>freedom</b> to change working hours or whom to employ, etc.</li>
<li>He has personal <b>contact</b> with customers.</li>
<li>He does not have to share information with anyone but the tax office, thus he enjoys complete <b>secrecy</b>.</li>
</ul>
<div>
<b>Cons:</b></div>
</div>
<div>
<ul>
<li>Nobody to <b>discuss</b> problems with.</li>
<li><b>Unlimited liability</b>.</li>
<li><b>Limited finance/capital</b>, business will remain small.</li>
<li>The owner normally spends <b>long hours</b> working.</li>
<li>Some parts of the business can be inefficient because of lack of <b>specialists</b>.</li>
<li>Does not benefit from <b>economies of scale</b>.</li>
<li>No <b>continuity</b>, no <b>legal identity</b>.</li>
</ul>
<div>
<b><br />
</b></div>
<div>
Sole traders are recommended for people who:</div>
</div>
<div>
<ul>
<li>Are setting up a new business.</li>
<li>Do not require a lot of capital for their business.</li>
<li>Require direct contact for customer service.</li>
</ul>
<div>
<br /></div>
<div>
<b>Partnership</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
A partnership is a group consisting of 2 to 20 people who run and own a business together. They require a <b>Deed of Partnership</b> or <b>Partnership Agreement</b>, which is a document that states that all partners agree to work with each other, and issues such as who put the most capital into the business or who is entitled to the most profit. Other legal regulations are similar to that of a sole trader.</div>
<div>
<br /></div>
<div>
<b>Pros:</b></div>
<div>
<ul>
<li>More <b>capital</b> than a sole trader.</li>
<li><b>Responsibilities </b>are <b>split</b>.</li>
<li>Any <b>losses </b>are <b>shared</b> between partners.</li>
</ul>
<div>
<b>Cons:</b></div>
</div>
<div>
<ul>
<li><b>Unlimited liability</b>.</li>
<li>No <b>continuity</b>, no <b>legal identity</b>.</li>
<li>Partners can <b>disagree</b> on decisions, slowing down decision making.</li>
<li>If one partner is <b>inefficient </b>or <b>dishonest</b>, everybody loses.</li>
<li><b>Limited capital</b>, there is a limit of 20 people for any partnership.</li>
</ul>
<div>
<br /></div>
<div>
Recommended to people who:</div>
</div>
<div>
<ul>
<li>Want to make a bigger business but does not want legal complications.</li>
<li>Professionals, such as doctors or lawyers, cannot form a company, and can only form a partnership.</li>
<li>Family, when they want a simple means of getting everybody into a business (Warning: Nepotism is usually not recommended).</li>
</ul>
<div>
Note: In some countries including the UK there can be Limited Partnerships. This business has limited liability but shares cannot be bought or sold. It is abbreviated as LLP.</div>
<div>
<br /></div>
<div>
<b>Private Limited Companies</b></div>
<div>
<b><br />
</b></div>
<div>
Private Limited Companies have separate legal identities to their owners, and thus their owners have limited liability. The company has continuity, and can sell shares to friends or family, although with the <b>consent of all shareholders</b>. This business can now make legal contracts. Abbreviated as Ltd (UK), or Proprietary Limited, (Pty) Ltd.</div>
<div>
<b><br />
</b></div>
<div>
<b>Pros:</b></div>
<div>
<ul>
<li>The sale of shares make <b>raising finance </b>a lot easier.</li>
<li>Shareholders have <b>limited liability</b>, therefore it is safer for people to invest but creditors must be cautious because if the business fails they will not get their money back.</li>
<li>Original owners are still able to <b>keep control</b> of the business by restricting share distribution.</li>
</ul>
<div>
<span class="Apple-style-span"><b>Cons:</b></span></div>
</div>
</div>
<div>
<span class="Apple-style-span"></span><br />
<div align="left" class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-align: left; text-indent: -18.0pt;">
</div>
<ul>
<li><span class="Apple-style-span"><span class="Apple-style-span" style="font-size: medium;"><span class="apple-style-span"><span style="font-family: Symbol;"><span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span></span><span class="apple-style-span"><span style="color: black; font-family: Georgia, serif;">Owners need to deal with many</span></span><span class="apple-converted-space"><b><span style="color: black; font-family: Georgia, serif;"> </span></b></span><span class="apple-style-span"><b><span style="color: black; font-family: Georgia, serif;">legal formalities</span></b></span><span class="apple-converted-space"><span style="color: black; font-family: Georgia, serif;"> </span></span><span class="apple-style-span"><span style="color: black; font-family: Georgia, serif;">before forming a private limited company:</span></span></span></span></li>
<span class="Apple-style-span"> </span></ul>
<div align="left" class="MsoListParagraphCxSpMiddle" style="margin-left: 72.0pt; mso-add-space: auto; mso-list: l0 level2 lfo1; text-align: left; text-indent: -18.0pt;">
<span class="Apple-style-span"><span class="Apple-style-span"><span style="font-family: 'Courier New';">o<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><b><span style="font-family: Georgia, serif;">The Articles of Association:</span></b><span style="font-family: Georgia, serif;"> This contains the rules on how the company will be managed. It states the rights and duties of directors, the rules on the election of directors and holding an official meeting, as well as the issuing of shares.<o:p></o:p></span></span></span></div>
<div align="left" class="MsoListParagraphCxSpMiddle" style="margin-left: 72.0pt; mso-add-space: auto; mso-list: l0 level2 lfo1; text-align: left; text-indent: -18.0pt;">
<span class="Apple-style-span"><span class="Apple-style-span"><span style="font-family: 'Courier New';">o<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><b><span style="font-family: Georgia, serif;">The Memorandum of Association:</span></b><span style="font-family: Georgia, serif;"> This contains very important information about the company and directors. The official name and addresses of the registered offices of the company must be stated. The objectives of the company must be given and also the amount of share capital the owners intend to raise. The number of shares to be bought b each of the directors must also be made clear.<o:p></o:p></span></span></span></div>
<div align="left" class="MsoListParagraphCxSpLast" style="margin-left: 72.0pt; mso-add-space: auto; mso-list: l0 level2 lfo1; text-align: left; text-indent: -18.0pt;">
<span class="Apple-style-span"><span class="Apple-style-span"><span style="font-family: 'Courier New';">o<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><b><span style="font-family: Georgia, serif;">Certificate of Incorporation:</span></b><span style="font-family: Georgia, serif;"> the document issued by the Registrar of Companies that will allow the Company to start trading.<o:p></o:p></span></span></span></div>
<div align="left" class="MsoNormal" style="text-align: left;">
</div>
<ul>
<li><span class="Apple-style-span"><span class="Apple-style-span">Shares cannot be freely sold without the <b>consent of all shareholders</b>.</span></span></li>
<span class="Apple-style-span">
<li><span class="Apple-style-span">The accounts of the company are <b>less secret</b> than that of sole traders and partnerships. <b>Public information</b> must be provided to the Registrar of Companies.</span></li>
<li><span class="Apple-style-span"><b>Capital</b> is still <b>limited</b> as the company cannot sell shares to the public.</span></li>
</span></ul>
<div>
<span class="Apple-style-span"><b>Public Limited Companies</b></span></div>
<div>
<span class="Apple-style-span"><br />
</span></div>
<div>
<span class="Apple-style-span">Public limited companies are similar to private limited companies, but they are able to sell shares to the public. A private limited company can be converted into a public limited company by:</span></div>
<div>
<ol>
<li><span class="Apple-style-span">A <b>statement</b> in the Memorandum of Association must be made so that it says this company is a public limited company.</span></li>
<span class="Apple-style-span">
<li><b>All accounts</b> must be made <b>public</b>.</li>
<li>The company has to apply for a <b>listing </b>in the <b>Stock Exchange</b>.</li>
</span></ol>
<div>
<span class="Apple-style-span">A <b>prospectus</b> must be issued to advertise to customers to buy shares, and it has to state how the capital raised from shares will be spent.</span></div>
</div>
<div>
<span class="Apple-style-span"><br />
</span></div>
<div>
<span class="Apple-style-span"><b>Pros:</b></span></div>
<div>
<ul>
<li><span class="Apple-style-span"><b>Limited liability.</b></span></li>
<span class="Apple-style-span">
<li><b>Continuity.</b></li>
<li>Potential to raise <b>limitless capital.</b></li>
<li><b>No restrictions </b>on transfer of shares.</li>
<li><b>High status</b> will attract investors and customers.</li>
</span></ul>
<div>
<span class="Apple-style-span"><b>Cons:</b></span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span">Many <b>legal formalities </b>required to form the business.</span></li>
<span class="Apple-style-span">
<li>Many <b>rules and regulations </b>to protect shareholders, including the publishing of <b>annual accounts</b>.</li>
<li>Selling shares is <b>expensive</b>, because of the commission paid to banks to aid in selling shares and costs of printing the prospectus.</li>
<li><b>Difficult to control</b> since it is so large.</li>
<li>Owners <b>lose control</b>, when the original owners hold less than 51% of shares.</li>
</span></ul>
<div>
<span class="Apple-style-span"><b>Control and ownership in a public limited company:</b></span></div>
</div>
<div>
<span class="Apple-style-span"><br />
</span></div>
<div>
<span class="Apple-style-span">The <b>Annual General Meeting (AGM)</b> is held every year and all shareholders are invited to attend so that they can elect their <b>Board of Directors</b>. Normally, Director are <b>majority shareholders</b> who has the power to do whatever they want. However, this is not the case for public limited companies since there can be millions of shareholders. Anyway, when directors are elected, they have to power to make important decisions. However, they must hire <b>managers</b> to attend to day to day decisions. Therefore:</span></div>
<div>
<ul>
<li><span class="Apple-style-span">Shareholders <b>own </b> the company</span></li>
<span class="Apple-style-span">
<li>Directors and managers <b>control </b>the company</li>
</span></ul>
<div>
<span class="Apple-style-span">This is called the <b>divorce between ownership and control.</b></span></div>
</div>
<div>
<span class="Apple-style-span">Because shareholders invested in the company, they expect <b>dividends</b>. The directors could do things other than give shareholders dividends, such as trying to expand the company. However, they might loose their status in the next AGM if shareholders are not happy with what they are doing. All in all, both directors and shareholders have their own <b>objectives</b>.</span></div>
<div>
<span class="Apple-style-span"><br />
</span></div>
<div>
<span class="Apple-style-span"><b>Co-operatives</b></span></div>
<div>
<span class="Apple-style-span"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span">Cooperatives are a group of people who agree to work together and pool their money together to buy "<b>bulk</b>". Their features are:</span></div>
<div>
<ul>
<li><span class="Apple-style-span">All members have equal rights, no matter how much <b>capital </b>they invested.</span></li>
<span class="Apple-style-span">
<li>All workload and decision making is <b>equally </b>shared, a manager maybe appointed for bigger cooperatives</li>
<li><b>Profits </b>are shared <b>equally</b>.</li>
</span></ul>
<div>
<span class="Apple-style-span">The most common cooperatives are:</span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span"><b>producer co-operatives</b>: just like any other business, but run by workers.</span></li>
<span class="Apple-style-span">
<li><b>retail co-operatives</b>: provides members with high quality goods or services for a reasonable price.</li>
</span></ul>
<div>
<span class="Apple-style-span"><b><span class="Apple-style-span">Other notable business organizations:</span></b></span></div>
</div>
<div>
<span class="Apple-style-span"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span"><b>Close Corporations:</b></span></div>
<div>
<span class="Apple-style-span"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span">This type of business is present in countries such as South Africa. It is like a private limited company but it is much quicker to set up:</span></div>
<div>
<ul>
<li><span class="Apple-style-span">Maximum limit of 10 people.</span></li>
<span class="Apple-style-span">
<li>You only need a simple <b>founding statement </b>which is sent to the Registrar of Companies to start the business.</li>
<li>All <b>members </b>are <b>managers </b>(no divorce of ownership and control).</li>
<li>A separate legal unit, has both limited liability and continuity.</li>
</span></ul>
<div>
<span class="Apple-style-span">Cons:</span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span">The size limit is not suitable for a large business.</span></li>
<span class="Apple-style-span">
<li>Members may disagree just like in a partnership.</li>
</span></ul>
<div>
<span class="Apple-style-span"><b>Joint ventures</b></span></div>
</div>
<div>
<span class="Apple-style-span"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span">Two businesses agree to start a new project together, sharing capital, risks and profits. </span></div>
<div>
<span class="Apple-style-span"><br />
</span></div>
<div>
<span class="Apple-style-span">Pros:</span></div>
<div>
<ul>
<li><span class="Apple-style-span">Shared costs are good for tackling expensive projects. (e.g aircraft)</span></li>
<span class="Apple-style-span">
<li>Pooled knowledge. (e.g foreign and local business)</li>
<li>Risks are shared.</li>
</span></ul>
<div>
<span class="Apple-style-span">Cons:</span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span">Profits have to be shared.</span></li>
<span class="Apple-style-span">
<li>Disagreements might occur.</li>
<li>The two partners might run the joint venture differently.</li>
</span></ul>
<div>
<span class="Apple-style-span"><b>Franchising</b></span></div>
</div>
<div>
<span class="Apple-style-span"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span">The <b>franchisor </b>is a business with a successful brand name that recruits <b>franchisees </b>(individual businesses) to sell for them. (e.g. McDonald, Burger King)</span></div>
<div>
<span class="Apple-style-span"><br />
</span></div>
<div>
<span class="Apple-style-span">Pros for the franchisor:</span></div>
<div>
<ul>
<li><span class="Apple-style-span">The franchisee has to <b>pay </b>to use the brand name.</span></li>
<span class="Apple-style-span">
<li><b>Expansion </b>is much <b>faster </b>because the franchisor does not have to finance all new outlets.</li>
<li>The <b>franchisee manages </b>outlets</li>
<li>All products sold must be <b>bought </b>from the <b>franchisor</b>.</li>
</span></ul>
<div>
<span class="Apple-style-span">Cons for the franchisor:</span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span">The <b>failure </b>of one franchise could lead to a <b>bad reputation </b>of the whole business.</span></li>
<span class="Apple-style-span">
<li>The franchisee <b>keeps </b>the <b>profits</b>.</li>
</span></ul>
<div>
<span class="Apple-style-span">Pros for the franchisee:</span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span">The chance of <b>failure </b>is much <b>reduced </b>due to the well know brand image.</span></li>
<span class="Apple-style-span">
<li>The franchisor pays for <b>advertising</b>.</li>
<li><b>All supplies </b>can be obtained from the franchisor.</li>
<li>Many <b>business decisions </b>will be made by the franchisor (prices, store layout, products).</li>
<li><b>Training </b>for staff and management is provide by the franchisor.</li>
<li>Banks are more willing to <b>lend </b>to franchisees because of <b>lower risks</b>.</li>
</span></ul>
<div>
<span class="Apple-style-span">Cons for the franchisee:</span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span"><b>Less independence</b></span></li>
<span class="Apple-style-span">
<li>May be <b>unable </b>to make <b>decisions </b>that would suit the local area.</li>
<li><b>Licence fee </b>must be paid annually and a <b>percentage </b>of the <b>turnover </b>must be paid.</li>
</span></ul>
<div>
<span class="Apple-style-span"><b><u><span class="Apple-style-span">Public Sector</span></u></b></span></div>
</div>
<div>
<span class="Apple-style-span"><b><u><span class="Apple-style-span"><br />
</span></u></b></span></div>
<div>
<span class="Apple-style-span"><b><span class="Apple-style-span">Public corporations:</span></b></span></div>
<div>
<span class="Apple-style-span"><b><span class="Apple-style-span"><br />
</span></b></span></div>
<div>
<span class="Apple-style-span"><span class="Apple-style-span">A business owned by the government and run by Directors <b>appointed by the government</b>. These businesses usually include the water supply, electricity supply, etc. The government give the directors a set of <b>objectives </b>that they will have to follow:</span></span></div>
<div>
<ul>
<li><span class="Apple-style-span"><span class="Apple-style-span">to keep <b>prices low </b>so everybody can afford the service.</span></span></li>
<span class="Apple-style-span">
<li><span class="Apple-style-span">to keep people <b>employed</b>.</span></li>
<li><span class="Apple-style-span">to <b>offer a service</b> to the <b>public </b>everywhere.</span></li>
</span></ul>
<div>
<span class="Apple-style-span"><span class="Apple-style-span">These objectives are expensive to follow, and are paid for by government <b>subsidies</b>. However, at one point the government would realise they cannot keep doing this, so they will set different objectives:</span></span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span"><span class="Apple-style-span">to <b>reduce costs</b>, even if it means making a few people redundant.</span></span></li>
<span class="Apple-style-span">
<li><span class="Apple-style-span">to <b>increase efficiency </b>like a private company.</span></li>
<li><span class="Apple-style-span">to <b>close loss-making </b>services, even if this mean some consumers are no longer provided with the service.</span></li>
</span></ul>
<div>
<span class="Apple-style-span"><span class="Apple-style-span">Pros:</span></span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span"><span class="Apple-style-span">Some businesses are considered <b>too important </b>to be owned by an individual. (electricity, water, airline)</span></span></li>
<span class="Apple-style-span">
<li><span class="Apple-style-span">Other businesses, considered <b>natural monopolies</b>, are controlled by the government. (electricity, water)</span></li>
<li><span class="Apple-style-span"><b>Reduces waste </b>in an industry. (e.g. two railway lines in one city)</span></li>
<li><span class="Apple-style-span"><b>Rescue</b> <b>important </b>businesses when they are failing.</span></li>
<li><span class="Apple-style-span">Provide <b>essential services </b>to the people (e.g. the BBC)</span></li>
</span></ul>
<div>
<span class="Apple-style-span"><span class="Apple-style-span">Cons:</span></span></div>
<ul>
<li><span class="Apple-style-span"><span class="Apple-style-span"><b>Motivation </b>might not be as high because <b>profit </b>is not an objective.</span></span></li>
<span class="Apple-style-span">
<li><span class="Apple-style-span"><b>Subsidies </b>lead to <b>inefficiency</b>. It is also considered <b>unfair </b>for private businesses.</span></li>
<li><span class="Apple-style-span">There is normally <b>no competition </b>to public corporations, so there is <b>no incentive </b>to improve.</span></li>
<li><span class="Apple-style-span">Businesses could be run for <b>government popularity.</b></span></li>
</span></ul>
<div>
<span class="Apple-style-span"><b>Municipal enterprises</b></span></div>
</div>
<div>
<span class="Apple-style-span"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span">These businesses are <b>run by local government authorities</b> which might be <b>free </b>to the user and financed by local <b>taxes</b>. (e.g, street lighting, schools, local library, rubbish collection). If these businesses make a loss, usually a government <b>subsidy </b>is provided. However, to reduce the burden on taxpayers, many municipal enterprises are being <b>privatised</b>. </span></div>
<div>
<span class="Apple-style-span"><br />
</span></div>
<div>
<span class="Apple-style-span">============================================================</span></div>
</div>
<div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com59tag:blogger.com,1999:blog-1682051666902505276.post-24294378272288306962012-08-22T11:06:00.000+07:002013-02-18T01:07:15.506+07:00Chapter 4: Government and economic influences on business<b><span class="Apple-style-span"><u>The impact of business activity on society</u></span></b><br />
<div>
<b><span class="Apple-style-span"><br />
</span></b></div>
<div>
<span class="Apple-style-span">All business activity has benefits and undesirable effects on society. These reasons are why governments want to have some control over business activity:</span></div>
<div>
<span class="Apple-style-span"><br />
</span></div>
<div>
<span class="Apple-style-span"><b>Possible benefits:</b></span></div>
<div>
<ul>
<li><span class="Apple-style-span">Production of <b>useful goods</b> to satisfy customer wants.</span></li>
<li><span class="Apple-style-span">Create <b>employment</b>/increases workers <b>living standards</b>.</span></li>
<li><span class="Apple-style-span">Introduction of new products or processes that <b>reduces costs </b>and <b>widen product range</b>.</span></li>
<li><span class="Apple-style-span"><b>Taxes </b>help finance public services.</span></li>
<li><span class="Apple-style-span">Business earn <b>foreign currency </b>in exports and this could be spent on imports.<a name='more'></a></span></li>
</ul>
<div>
<span class="Apple-style-span">Possible undesirable effects:</span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span">Business might <b>ruin </b>cheap but <b>beautiful areas</b>.</span></li>
<li><span class="Apple-style-span"><b>Low wages</b> and <b>unsafe working</b> conditions for workers because businesses want to lower costs.</span></li>
<li><span class="Apple-style-span"><b>Pollution</b></span></li>
<li><span class="Apple-style-span">Production of <b>dangerous </b>goods.</span></li>
<li><span class="Apple-style-span"><b>Monopolies</b></span></li>
<li><span class="Apple-style-span">Advertising can <b>mislead </b>customers.</span></li>
</ul>
<div>
<span class="Apple-style-span">Governments tend to pass laws that restrict <b>undesirable </b>activities while supporting <b>desirable</b> activities.</span></div>
</div>
<div>
<span class="Apple-style-span"><br />
</span></div>
<div>
<b><span class="Apple-style-span"><u>Governments and the economy</u></span></b></div>
<div>
<b><span class="Apple-style-span"><br />
</span></b></div>
<div>
<span class="Apple-style-span"><b>Government economic objectives:</b></span></div>
<div>
<span class="Apple-style-span"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span">Governments all have aims for their country, and this is what they are:</span></div>
<div>
<ul>
<li><span class="Apple-style-span">Low <b>inflation</b>.</span></li>
<li><span class="Apple-style-span">Low <b>unemployment</b>.</span></li>
<li><span class="Apple-style-span">Economic <b>growth</b>.</span></li>
<li><span class="Apple-style-span"><b>Balance of payments</b>.</span></li>
</ul>
</div>
<div>
<span class="Apple-style-span"><b>Low inflation:</b></span></div>
<div>
<span class="Apple-style-span"><br />
</span></div>
<div>
<span class="Apple-style-span">Inflation occurs when prices rise. When prices rise rapidly many bad thing could happen:</span></div>
<div>
<ul>
<li><span class="Apple-style-span">Workers wages <b>buy less</b> than before. Therefore their <b>real income </b>(how much you can buy with so much money)<b> </b>falls. Workers will be unhappy and demand for higher wages.</span></li>
<li><span class="Apple-style-span">Prices of <b>local </b>goods will <b>rise more</b> than that of other countries with lower inflation. People may start <b>buying foreign goods </b>instead.</span></li>
<li><span class="Apple-style-span">It would <b>cost more</b> for businesses to <b>start </b>or <b>expand </b>and therefore it does not <b>employ </b>as many people.</span></li>
<li><span class="Apple-style-span">Some people might be made <b>redundant </b>so that the business can cut costs.</span></li>
<li><span class="Apple-style-span"><b>Standards of living </b>will <b>fall</b>.</span></li>
</ul>
<div>
<span class="Apple-style-span">This is obviously why governments want to keep inflation as low as possible.</span></div>
</div>
<div>
<span class="Apple-style-span"><br />
</span></div>
<div>
<span class="Apple-style-span"><b>Low levels of unemployment:</b></span></div>
<div>
<span class="Apple-style-span"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span">When people are <b>unemployed</b>, they <b>want </b>to work but <b>cannot find</b> a <b>job</b>. This causes many problems:</span></div>
<div>
<ul>
<li><span class="Apple-style-span">Unemployed people do not work. Therefore <b>national output </b>will be <b>lower </b>than it should be.</span></li>
<li><span class="Apple-style-span">The government will have to pay for <b>unemployment benefits</b>. This is <b>expensive </b>and money cannot be use for other purposes.</span></li>
</ul>
<div>
<span class="Apple-style-span">If the level up unemployment is low, it will increase national output and improve standards of living for workers.</span></div>
</div>
<div>
<span class="Apple-style-span"><br />
</span></div>
<div>
<span class="Apple-style-span"><b>Economic growth</b></span></div>
<div>
<span class="Apple-style-span"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span">A country is said to grow when its <b>GDP </b>(Gross Domestic Product) is increasing. This is the total value of goods produced in one year. The standards of living tends to increase with economic growth. Problems arise when a country's GDP fall:</span></div>
<div>
<ul>
<li><span class="Apple-style-span">The country's output is falling, fewer workers are needed and <b>unemployment </b>occurs.</span></li>
<li><span class="Apple-style-span"><b>Standards of living</b> will fall.</span></li>
<li><span class="Apple-style-span">Businesses will <b>not expand</b> because they have less money to <b>invest</b>.</span></li>
</ul>
</div>
<div>
<span class="Apple-style-span">Economic growth is not achieved every year. There are years where the GDP falls and the <b>trade cycle </b>explains the pattern of rises and falls in national GDP.</span></div>
<div>
<span class="Apple-style-span"><br />
</span></div>
<a href="http://4.bp.blogspot.com/-UHm-ul-PqIU/TYW2Dy-BNhI/AAAAAAAAACA/ljBXFwRRVIk/s1600/trade%2Bcycle.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5586071089160730130" src="http://4.bp.blogspot.com/-UHm-ul-PqIU/TYW2Dy-BNhI/AAAAAAAAACA/ljBXFwRRVIk/s400/trade%2Bcycle.jpg" style="cursor: hand; cursor: pointer; display: block; height: 294px; margin: 0px auto 10px; text-align: center; width: 400px;" /></a><br />
<div>
The trade cycle has 4 main stages:</div>
<div>
<ul>
<li><b>Growth:</b> This is when GDP is rising, unemployment is falling, and the country has higher standards of living. Businesses tend to do well in this period.</li>
<li><b>Boom:</b> Caused by overspending. Prices rise rapidly and there is a shortage of skilled workers. Business costs will be rising and they are uncertain about the future.</li>
<li><b>Recession: </b>Because overspending caused the boom, people now spend too little. GDP will fall and businesses will lose demand and profits. Workers may lose their jobs.</li>
<li><b>Slump: </b>A long drawn out recession. Unemployment will peak and prices will fall. Many firms will go out of business.</li>
</ul>
<div>
After all of this happens the economy <b>recovers</b> and begins to grow again. Governments want to avoid a <b>boom</b> so that it will not lead to a recession and a slump. Currently, the government of China is spending a lot of money so that their economy would continue to grow and avoid a boom.</div>
</div>
<div>
<br /></div>
<div>
<b>Balance of payments</b></div>
<div>
<b><br />
</b></div>
<div>
<b>Exports </b>earn <b>foreign currency</b>, while <b>imports </b>are paid for by foreign currency (or vice versa). The difference between the <b>value</b> of exports and imports of a country is called <b>balance of payments</b>. Governments try to achieve a balance in imports and exports to avoid a <b>trade deficit</b>, when <b>imports</b> are higher than <b>exports</b>. Of course, the government will lose money and their <b>reservoir </b>of foreign currency will <b>fall</b>. This results in:</div>
<div>
<ul>
<li>If the country wants to import more, they will have to <b>borrow </b>foreign currency to buy goods.</li>
<li>The country's <b>currency </b>will now worth less compared to others and can buy less goods. This is called <b>exchange rate depreciation</b>.</li>
</ul>
<div>
<b><span class="Apple-style-span"><u>Government economic policies</u></span></b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Governments want to influence the national economy so that it would achieve their aforementioned <b>objectives</b>. They have a lot of power over business activity and can pass laws to try to achieve their goals. The main ways in which governments can influence business activity are called <b>economic policies</b>. They are:</div>
<div>
<ul>
<li><b>Fiscal Policy: </b>taxes and public spending.</li>
<li><b>Monetary policy: </b>controlling the amount of money in the economy through interest rates.</li>
<li><b>Supply side policies: </b>aimed at increasing efficiency.</li>
</ul>
<div>
<b>Fiscal policy</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Government spending could benefit some firms such as:</div>
<div>
<ul>
<li>Construction firms (road building)</li>
<li>Defense industries (Iraq war)</li>
<li>Bus manufacturers (public transport)</li>
</ul>
<div>
Governments raise money from <b>taxes</b>. There are <b>Direct taxes </b>on <b>income </b>and <b>Indirect taxes</b> on <b>spending</b>. There are four common taxes:</div>
</div>
<div>
<ul>
<li>Income tax</li>
<li>Profits tax</li>
<li>VAT (Value Added Tax)</li>
<li>Import tariffs</li>
</ul>
<div>
<b>Income tax</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Income tax is based on a percentage of your income. Income tax is usually <b>progressive</b>, meaning that the percentage of tax you have to pay rises with your income. Effects on business and individuals if there was a rise of income tax:</div>
<div>
<ul>
<li>People will have less <b>disposable income.</b></li>
<li><b>Sales fall</b> because people have less money to spend.</li>
<li>Managers will cut costs for more profit. Workers might be made <b>redundant</b>.</li>
<li>Businesses producing <b>luxury</b> <b>goods </b>will lose the most, while others producing <b>everyday needs </b>will get less affected.</li>
</ul>
<div>
<b>Profits tax or corporation tax</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
This is a percentage of the profit a business makes. A rise in it would mean:</div>
<div>
<ul>
<li>Managers will have less <b>retained profit</b>, making it <b>harder </b>for the business to <b>expand</b>.</li>
<li>Owners will get l<b>ess return on capital employed</b>. Potential owners will be <b>reluctant </b>to start their own business if the <b>profit margin</b> is too low.</li>
</ul>
<div>
<b>Indirect taxes</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
These taxes are a percentage on the price of goods, making them more expensive. Governments want to <b>avoid </b>putting them on <b>essential goods</b> such as foods. A rise it it would mean:</div>
<div>
<ul>
<li>The effect would be almost the same as that of an increase in income tax. People would <b>buy</b> <b>less </b>but they would still spend money on <b>essential goods</b>.</li>
<li>Again, <b>real incomes </b>fall. Costs will rise when workers demand higher wages.</li>
</ul>
<div>
<b>Import tariffs and quotas</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Governments put tariffs on imports to make local goods look more competitive and also to reduce imports. When governments put import tariffs on imports:</div>
<div>
<ul>
<li>Sales of local goods become <b>cheaper </b>than imports, leading to <b>increased sales</b>.</li>
<li>Businesses who <b>import raw materials </b>will suffer higher costs.</li>
<li>Other countries will <b>retaliate </b>by putting tariffs on the country's <b>exports</b>, making it less competitive.</li>
</ul>
<div>
<b>Quotas </b>maybe used to limit the amount of imports coming in.<br />
<br /></div>
</div>
<div>
<b>Monetary policy and interest rates</b></div>
<div>
<b><br />
</b></div>
<div>
Governments usually have to power to change <b>interest rates </b>through the central bank. Interest rates affect people who borrow from the bank. When interest rates rise:</div>
<div>
<ul>
<li>Businesses who owe to bank will have to <b>pay more</b>, resulting in less <b>retained profit</b>.</li>
<li>People are more reluctant to <b>start </b>new businesses or <b>expand</b>.</li>
<li>Consumers who took out loans such as <b>mortgages </b>will now have less <b>disposable income</b>. They will spend less on other goods.</li>
<li>Demand will <b>fall </b>for businesses who produces <b>luxury </b>or <b>expensive </b>goods such as cars because people are <b>less willing to borrow</b>.</li>
<li>Higher interest rates will <b>encourage </b>other countries to <b>deposit money </b>into <b>local banks</b> and earn <b>higher profits</b>. They will change their money into the local currency, increasing its demand and causing <b>exchange rate appreciation</b>.</li>
</ul>
<div>
<b>Supply side policies</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
These policies aim to make the countries economy more efficient so that they can produce more goods and compete in the international economy. In doing so their GDP will rise. Here are some policies:</div>
<div>
<ul>
<li><b>Privatisation: </b>Its aim is to use profit as an incentive to increase efficiency.</li>
<li><b>Improve training and education:</b> This obviously increases efficiency. This is crucial to countries with a big computer software industry.</li>
<li><b>Increase competition:</b> Competition causes companies to be more efficient to survive. Governments need to remove any monopolies.</li>
</ul>
<div>
<b>Government controls over business activity</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Government also influence major areas of business activity:</div>
<div>
<ul>
<li>what goods can be produced</li>
<li>responsibilities to employees and working conditions</li>
<li>responsibilities to consumers</li>
<li>responsibilities to the natural environment</li>
<li>location decisions</li>
</ul>
<div>
Undesirable effects created by business activity make governments want to control business activity: </div>
</div>
<div>
<ul>
<li><span class="Apple-style-span">Business might <b>ruin </b>cheap but <b>beautiful areas</b>.</span></li>
<li><span class="Apple-style-span"><b>Monopolies</b>.</span></li>
<li><span class="Apple-style-span">Advertising can <b>mislead </b>customers.</span></li>
</ul>
<div>
<b><span class="Apple-style-span"><u>Why government control business activity</u></span></b></div>
</div>
<div>
<b><br />
</b></div>
<div>
<b>Production of certain goods and services:</b></div>
<div>
<b><br />
</b></div>
<div>
Governments can pass laws to restrict and ban certain dangerous goods such as:</div>
<div>
<ul>
<li>Weapons like guns and explosives.</li>
<li>Drugs</li>
<li>Goods that harm the environment</li>
</ul>
<div>
<b>Consumer protection:</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Consumers are easily misled by advertising. It is because consumers lack the technical knowledge and advertising can be very persuasive. In the UK, these laws are passed to protect customers from being exploited by businesses:</div>
<div>
<ul>
<li><b>Weights and Measures Act:</b> to stop underweight goods being sold to customers.</li>
<li><b>Trade Descriptions Act:</b> all advertisements must be truthful.</li>
<li><b>Consumer Credit Act: </b>makes it illegal to not give customers their copy of the credit agreement to check how much money they really have.</li>
<li><b>Sale of Goods Act: </b>Makes it illegal to sell:</li>
</ul>
<div>
<span class="Apple-tab-span" style="white-space: pre;"> </span>- Goods which have serious flaws or problems.</div>
<div>
<span class="Apple-tab-span" style="white-space: pre;"> </span>- Products that are not fit for the purpose intended by the consumer.</div>
<div>
<span class="Apple-tab-span" style="white-space: pre;"> </span>- Products that do not function as described on their label or by the retailer.</div>
<ul>
<li><b>Consumer Protection Act: </b>Make false pricing claims illegal. Consumers can now sue producers or retailers if their products cause harm to them.</li>
</ul>
<div>
<b>Competition policy: Control of monopolies</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Monopolies could cause a lot of harm to an economy because there are nobody to compete against them:</div>
<div>
<ul>
<li>They exploit consumers with high prices.</li>
<li>They prevent new firms from starting up.</li>
<li>Monopolies are not encouraged to be efficient because there are no competitors.</li>
</ul>
<div>
In some countries, monopolies are banned and must be broken up into smaller firms. In the UK, monopolies can be investigated by the <b>Competition Commission</b>. This government body reports two main types of problems:</div>
</div>
<div>
<ul>
<li>Business decisions that are <b>against consumer interests</b>, such as trying to <b>eliminate all competitors</b>.</li>
<li>Proposed <b>mergers </b>or <b>takeovers </b>that will result in a monopoly.</li>
</ul>
<div>
<b>Protecting employees:</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Employees need protection in the following areas:</div>
<div>
<ul>
<li>Unfair discrimination</li>
<li>Health and safety at work</li>
<li>Unfair dismissal</li>
<li>Wage protection</li>
</ul>
<div>
<b>Protection against unfair discrimination:</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Often workers are discriminated in a job because of various reasons. There are laws that protect the employee from such reasons to be discriminated against:</div>
<div>
<ul>
<li><b>Sex Discrimination Act:</b> people of different genders must have equal opportunities.</li>
<li><b>Race Relations Act:</b> people of all races and religions mush have equal opportunities.</li>
<li><b>Disability Discrimination Act:</b> it must be made suitable for disabled people to work in businesses.</li>
<li><b>Equal Opportunities Policy:</b> That is what everything is all about.</li>
</ul>
<div>
The UK is currently working on an age discrimination act.</div>
</div>
<div>
<br /></div>
<div>
<b>Health and Safety at work:</b></div>
<div>
<b><br />
</b></div>
<div>
Laws protect workers from:</div>
<div>
<ul>
<li>protect workers from <b>dangerous machinery</b>.</li>
<li>provide <b>safety equipment and clothing</b>.</li>
<li>maintain reasonable workplace <b>temperatures</b>.</li>
<li>provide <b>hygienic </b>conditions and <b>washing </b>facilities.</li>
<li>do <b>not </b>insist on excessively <b>long shifts </b>and provide <b>breaks </b>in the work timetable.</li>
</ul>
<div>
Managers not only provide safety for their employees only because laws say so. Some <b>believe </b>that keeping employees safe and happy improves their <b>motivation </b>and keeps them in the business. Others do it because it is present in their <b>moral code</b>. They are then considered making an <b>ethical decision</b>. However, in many countries, workers are still exploited by employers.</div>
</div>
<div>
<br /></div>
<div>
<b>Protection against unfair dismissal</b></div>
<div>
<b><br />
</b></div>
<div>
Employees need protection from being dismissed unfairly. The following reasons for the employee to be dismissed is unreasonable:</div>
<div>
<ul>
<li>for joining a <b>trade union</b>.</li>
<li>for being <b>pregnant</b>.</li>
<li>when <b>no warnings </b>were given beforehand. </li>
</ul>
<div>
Workers who thing they have been dismissed unfairly can take their case to the <b>Industrial Tribunal </b>to be judged and he/she might receive compensation if the case is in his/her favour.</div>
</div>
<div>
<br /></div>
<div>
<b>Wage Protection</b></div>
<div>
<b><br />
</b></div>
<div>
Employers mus pay employees the same amount that has been stated on the <b>contract of employment</b>, which states:</div>
<div>
<ul>
<li>Hours of work.</li>
<li>Nature of the job.</li>
<li>The wage rate to be paid.</li>
<li>How frequently wages will be paid.</li>
<li>What deduction will be made from wages, e.g. income tax.</li>
</ul>
<div>
A <b>minimum wage </b>rate is present in many Western countries and the USA. There are pros and cons of the minimum wage:</div>
</div>
<div>
<br /></div>
<div>
<b>Pros:</b></div>
<div>
<ul>
<li>Prevents strong employees to exploit unskilled workers who could not easily find work.</li>
<li>Encourages employers to train unskilled employees to increase efficiency.</li>
<li>Encourages more people to seek work.</li>
<li>Low-paid workers can now spend more.</li>
</ul>
<div>
<b>Cons:</b></div>
</div>
<div>
<ul>
<li>Increases <b>costs</b>, increases <b>prices</b>.</li>
<li>Owners who cannot afford these wages might make employees <b>redundant </b>instead.</li>
<li>Higher paid workers want higher wages to keep on the same <b>level difference </b>as the lower paid workers. Costs will <b>rise</b>.</li>
</ul>
<div>
<b>Location of Industry</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
How governments want to locate businesses:</div>
<div>
<ul>
<li>They <b>encourage </b>businesses to move to areas with a high level of <b>unemployment</b>, or called <b>development areas</b>. </li>
<li>They <b>discourage </b>firms from locating in <b>overcrowded cites </b>or sites noted for their <b>natural beauty</b>.</li>
</ul>
<div>
How governments will influence the decisions of firms to locate:</div>
<ul>
<li>Businesses will be refused <b>planning permission</b> (permit to build in a place) if they wish to locate in overcrowded cities or beautiful areas. Building in these areas might be banned altogether.</li>
<li>Governments can provide <b>regional assistance</b>, such as <b>grants and subsidies</b> to encourage firms to locate in undeveloped areas.</li>
</ul>
<div>
<b><span class="Apple-style-span"><u>Governments can help businesses too</u></span></b></div>
</div>
<div>
<b><span class="Apple-style-span"><u><br />
</u></span></b></div>
<div>
<span class="Apple-style-span">Governments can help businesses to:</span></div>
<div>
<ul>
<li><span class="Apple-style-span">to encourage businesses to locate in poorer regions.</span></li>
<li><span class="Apple-style-span">to encourage enterprise by helping small businesses set up and survive.</span></li>
<li><span class="Apple-style-span">to encourage businesses to export.</span></li>
</ul>
</div>
<div>
<b>Regional Assistance:</b></div>
<div>
<ul>
<li>Governments want development to be spread evenly over the whole country.</li>
<li>Grants and subsidies can be used to attract firms to an area.</li>
</ul>
<div>
<b>Small firms</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Small firms are important for and economy because:</div>
<div>
<ul>
<li>They provide <b>most </b>of the <b>employment </b>because they are usually <b>labour intensive</b>.</li>
<li>Small firms operate in <b>rural </b>areas where unemployment tends to be high.</li>
<li>They can <b>grow </b>into very important businesses employing thousands of workers and producing output worth millions of dollars.</li>
<li>Provides more <b>choice</b> for customers. They <b>compete </b>against bigger companies.</li>
<li>They are often managed in a very <b>flexible </b>way, and is quicker to adapt to changing demands.</li>
</ul>
<div>
Governments help them by:</div>
</div>
<div>
<ul>
<li>Lower rates of <b>profits tax</b>, so they can have more <b>retained profit</b>.</li>
<li>Giving <b>grants </b>and <b>cheap loans</b>.</li>
<li>Providing <b>advice </b>and <b>information centres </b>to small firms.</li>
</ul>
<div>
<b>Exporting goods and services</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Why governments want businesses to export:</div>
<div>
<ul>
<li>Exports earn <b>foreign currency</b>, which can be use to buy imports.</li>
<li>More exports means more people needed to produce them, increasing <b>employment </b>and <b>standards of living</b>. </li>
<li>Successful exporters earn more money and have to pay more <b>profits tax</b>.</li>
</ul>
<div>
Governments can support exporters by:</div>
</div>
<div>
<ul>
<li>Encourage banks to lend to exporting businesses at <b>lower interest rates</b>.</li>
<li>Offering <b>subsidies</b> or <b>lower taxes </b>to firms. However, other countries would <b>retaliate</b> and there would be no overall advantage.</li>
<li>Trying to keep the <b>local currency</b> as <b>stable</b> as possible to make it easier for businesses to know how much they are going to make from exports.</li>
<li>Organising <b>trade fairs</b> abroad to encourage foreign businesses to buy the country's exports.</li>
<li>Offering <b>credit facilities</b>. This means that if a foreign customers refuses to pay for goods, the company could be compensated by the government.</li>
</ul>
<div>
<b>Businesses in the economic and legal environment</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Businesses could not ignore the power of the government in controlling business activity. <b>Multinationals</b> are an exception although normally businesses cannot afford to move to other countries. Government decisions create the <b>environment </b>in which businesses will have to <b>operate </b>and <b>adapt </b>to. The environment created by <b>legal </b>and <b>economic controls</b> are one of the <b>constraints </b>to managers when making decisions.</div>
<div>
<br /></div>
<div>
Whew! What a long chapter! I know there are a lot of redundant stuff but they are necessary for the text. Chapter 5 will be coming out next week!</div>
<div>
====================================================================</div>
<div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com53tag:blogger.com,1999:blog-1682051666902505276.post-78843238560647928512012-08-21T14:07:00.000+07:002017-04-13T19:47:27.226+07:00Chapter 5: Other influences on business<div style="text-align: left;">
<strong><span style="font-size: 130%;"><u>External constraints and constraints on business activity</u></span></strong></div>
<div align="left">
<span style="color: black;"><strong></strong><br />
Businesses cannot survive by neglecting the "real world", which includes <strong>influences</strong> that forces a business to make certain decisions or <strong>constraints</strong> that limits or controls actions. <strong>External constraints </strong>are things that businesses cannot control, these are:<br />
</span></div>
<ul>
<li><div align="left">
<span style="color: black;">Technological change: New products.</span></div>
</li>
<li><div align="left">
<span style="color: black;">Technological change: New production processes.</span></div>
</li>
<li><div align="left">
<span style="color: black;">Increased competition.</span></div>
</li>
<li><div align="left">
<span style="color: black;">Environmental issues.</span><br />
<a name='more'></a></div>
</li>
</ul>
<div align="left">
<span style="color: black;">Here is a table from the book giving examples and the possible impacts on business <span class="blsp-spelling-corrected" id="SPELLING_ERROR_0">activity</span>:</span></div>
<div align="left">
<span style="color: black;"></span></div>
<div align="left">
<span style="color: black;"></span></div>
<div align="left">
<span style="color: black;"></span></div>
<div align="left">
<span style="color: black;"></span></div>
<div align="left">
<strong><span style="color: black;"><u>Technological changes</u><br />
</span></strong></div>
<div align="left">
<span style="color: black;">Technological change bring about <strong>constant</strong> <strong>changes</strong> in consumer <strong>products</strong> and <strong>production</strong> <strong>processes</strong>. By using <strong>R&D</strong> to develop <strong>new</strong> <strong>products</strong>, companies could open up <strong>new markets</strong> and make huge amounts of money. Such companies include Microsoft, Sony and Apple. However, <strong>new</strong> products quickly <strong>replace</strong> <strong>old</strong> ones just like how <strong>machines</strong> are <strong>replacing</strong> <strong>workers</strong> in production processes. </span></div>
<div align="left">
<span style="color: black;">There are two general things a firm could do when facing technological change:</span></div>
<ul>
<li><div align="left">
<strong>Ignore</strong> the changes and operate in the "traditional and old fashioned way". However, they can only sell to a small and <strong>limited</strong> <strong>market</strong>.</div>
</li>
<li><div align="left">
<strong>Compete</strong> by <strong>welcoming</strong> changes and have an access to huge <strong>mass</strong> <strong>markets</strong>.</div>
</li>
</ul>
<div align="left">
Here are some pros and cons of technological change:<br />
<br /></div>
<div align="left">
<span class="Apple-style-span" style="-webkit-text-decorations-in-effect: underline; color: #0000ee;"><img alt="" border="0" height="366" id="BLOGGER_PHOTO_ID_5586524263044893858" src="https://1.bp.blogspot.com/-Ci2--kTXYTw/TYdSN_PkTKI/AAAAAAAAACI/DG7MSFuXkSs/s640/Techchange%2Bchart.jpg" style="display: block; margin: 0px auto 10px; text-align: center;" width="640" /></span></div>
<div align="left">
<strong>Pros:</strong></div>
<ul>
<li><div align="left">
New products encourage customers to <strong>buy more</strong>.</div>
</li>
<li><div align="left">
If a business comes up with a <strong>new product</strong> first, they gain a huge <strong>competitive advantage</strong>.</div>
</li>
<li><div align="left">
<strong>"High-tech" </strong>production methods make production more efficient.</div>
</li>
<li><div align="left">
<strong>Fewer workers </strong>are required.</div>
</li>
<li><div align="left">
New production methods can be adapted <strong>very quickly </strong>which gives businesses more <strong>flexibility </strong>in meeting consumer wants.</div>
</li>
<li><div align="left">
<strong>E-commerce </strong>opens up new markets and the <span class="blsp-spelling-corrected" id="SPELLING_ERROR_1">Internet</span> is a <strong>medium </strong>of <strong>advertising</strong>.</div>
</li>
</ul>
<div align="left">
<b>Cons:</b></div>
<ul>
<li>R&D is <b>expensive</b>, without guaranteed success.</li>
<li>Businesses that do not <b>develop new products </b>will fail, leaving workers unemployed.</li>
<li>New production methods and machines are <b>expensive</b>.</li>
<li>Workers will need retraining which is <b>expensive</b>. They might be reluctant to learn or fear that they will not do well. This could lead to a <b>fall </b>in <b>motivation</b>.</li>
<li>E-commerce lacks <b>personal </b>customer <b>service</b>.</li>
<li>Smaller businesses cannot <b>afford </b>these things.</li>
</ul>
<div>
<b>Introducing technological change successfully</b></div>
<div>
<b><br />
</b></div>
<div>
Workers and managers may <b>fear </b>change. Workers might think:</div>
<div>
<ul>
<li>Will I be able to operate the new machines?</li>
<li>Will I lose my job because the machines are more efficient?</li>
</ul>
<div>
<b>Older </b>workers are especially <b>afraid </b>of loosing out to <b>younger </b>and <b>better trained </b>workers. <b>Managers </b>also fear change, since recruiting technology experts will make them look more <b>inferior</b> in some way.</div>
</div>
<div>
<br /></div>
<div>
To make these changes work better, workers need to be <b>involved </b>in the changes. Workers might be told why the new machines are necessary and how they will be trained to use them, as well as letting them suggest ways to make work more efficient with the machines. It leads to more <b>opportunities </b>for trained and skilled staff and can lead to <b>new ideas </b>and products.</div>
<div>
<br /></div>
<div>
<b><u>Competition</u></b></div>
<div>
<b><br />
</b></div>
<div>
Most businesses have competitors. Most business decisions are based on:</div>
<div>
<ul>
<li>What competitors are <b>doing</b>?</li>
<li>How they might <b>react</b>?</li>
</ul>
<div>
When you develop a <b>successful </b>product, other businesses will undoubtedly <b>copy </b>you. Therefore, you will need to research and develop even more products, <b>keeping ahead </b>of them. Competition is a major influence on business activity.</div>
</div>
<div>
<br /></div>
<div>
<b><u>Environmental constraints on business activity</u></b></div>
<div>
<b><br />
</b></div>
<div>
There are two general opinions on caring about the environment:</div>
<div>
<br /></div>
<div>
<b>- Opinion A</b>: Keeping the environment clean is <b>too expensive</b>. We want to keep prices low and this is what <b>consumers want </b>too.</div>
<div>
<ul>
<li>Protecting the environment is too <b>expensive </b>and <b>reduce profits</b>.</li>
<li><b>Increased prices </b>mean <b>increased costs</b>.</li>
<li>Firms could become <b>less competitive </b>compared to others who are not environmentally friendly.</li>
<li><b>Governments</b> should pay to clean it up.</li>
</ul>
<b>- Opinion B</b>: Consumers are now starting to prefer businesses with <b>social responsibility</b>. Cleaner and more efficient machinery benefit the business in the long-run.<br />
<div>
<ul>
<li>Environmental issues affect us <b>all</b> and businesses have a <b>social responsibility </b>to deal with them.</li>
<li>Using up <b>scarce resources </b>leaves less for <b>future generations </b>and <b>raise prices</b>.</li>
<li>Consumers are becoming more <b>socially aware</b>. More now prefer firms that are environmentally friendly which could become an <b>marketing advantage</b>.</li>
<li>If a business damages the environment, <b>pressure groups </b>could protest and damage its <b>image</b> and <b>reputation</b>.</li>
</ul>
<div>
<b>Ways to make a business more environmentally friendly</b></div>
</div>
</div>
<div>
<b><br />
</b></div>
<div>
Governments make these business activities illegal:</div>
<div>
<ul>
<li>locating in <b>environmentally sensitive </b>areas.</li>
<li><b>dumping </b>waste products into waterways.</li>
<li>making products that cannot be easily <b>recycled</b>.</li>
</ul>
<div>
Manufacturers often complain that these laws raise prices. Therefore, <b>some </b>governments usually do not make these laws <b>strict </b>with the hope of increasing output and in turn <b>employment</b>.</div>
</div>
<div>
<br /></div>
<div>
<b>Financing penalties, including pollution permits</b></div>
<div>
<b><br />
</b></div>
<div>
<b>Pollution permits </b>are licences given to a business to pollute up to a certain level. If "dirty" businesses pollute over the permitted level, they either have to <b>buy permits </b>from "cleaner firms" or <b>pay heavy fines</b>. This encourages firms to be cleaner and <b>sell </b>their permits to dirtier companies for more <b>money</b>. Other penalties include <b>additional taxes</b>.</div>
<div>
<br /></div>
<div>
<b>Consumer action and pressure groups</b></div>
<div>
<b><br />
</b></div>
<div>
Consumers are becoming more <b>socially aware</b>, and many of them will stop buying goods from companies which pollute the environment, harming a business' <b>reputation and image</b>. Bad <b>publicity </b>means lower sales. If they want to keep their sales revenue up firms would have to adapt to more environmentally friendly production processes again.</div>
<div>
<br /></div>
<div>
<b>Pressure groups </b>are becoming very powerful nowadays. They can severely damage businesses that are not <b>socially responsible</b>. </div>
<div>
<br /></div>
<div>
These are their powers:</div>
<div>
<ul>
<li><b>Consumer boycotts</b></li>
<li><b>Protests</b></li>
<li><b>Blocking </b>waste pipes.</li>
</ul>
</div>
<div>
These are times when they are likely to take action:</div>
<div>
<ul>
<li>They have popular <b>public support</b> and has a lot of <b>media coverage</b>.</li>
<li>The group is <b>well organised </b>and <b>financed</b>.</li>
</ul>
<div>
These are times when they are less likely to take action:</div>
</div>
<div>
<ul>
<li>What a company is doing is <b>unpopular </b>but <b>not illegal</b>. (e.g. testing drugs on rats)</li>
<li>The <b>cost </b>of making the company cleaner is <b>more </b>than <b>losses </b>that could be made by losing image and sales.</li>
<li>The firm supplies other firms and not customers, <b>public support </b>will be less effective.</li>
</ul>
<div>
<b><span class="Apple-style-span"><u>Environmental issues and cost-benefit analysis</u></span></b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Governments are increasingly concerned about the <b>social </b>and <b>environmental effects </b>of business activity. They have started to use a new type of analysis on businesses and government proposals which will not only take into account <b>financial costs </b>but also <b>external costs</b>.</div>
<div>
<br /></div>
<div>
<b>Cost-benefit analysis </b>requires and awareness of <b>external costs </b>(costs to the rest of society) and <b>external benefits </b>(gains to the rest of society). Here are some examples.</div>
<div>
<br /></div>
<div>
<u>Decision: A new chemical plant will be built.</u></div>
<div>
<u><br />
</u></div>
<div>
<u><span class="Apple-style-span" style="-webkit-text-decorations-in-effect: none;"><a href="http://1.bp.blogspot.com/-eYwoW3oo6kY/TYdWEUNuAHI/AAAAAAAAACY/cT8LrqoepBg/s1600/External%2Bcosts.jpg"><img alt="" border="0" height="195" id="BLOGGER_PHOTO_ID_5586528494922104946" src="https://1.bp.blogspot.com/-eYwoW3oo6kY/TYdWEUNuAHI/AAAAAAAAACY/cT8LrqoepBg/s640/External%2Bcosts.jpg" style="display: block; margin: 0px auto 10px; text-align: center;" width="640" /></a><a href="http://3.bp.blogspot.com/-tbXE6rpSztg/TYdWEMoFnOI/AAAAAAAAACQ/08RCjJL5b5w/s1600/Private%2Bcosts.jpg"><img alt="" border="0" height="253" id="BLOGGER_PHOTO_ID_5586528492885220578" src="https://3.bp.blogspot.com/-tbXE6rpSztg/TYdWEMoFnOI/AAAAAAAAACQ/08RCjJL5b5w/s640/Private%2Bcosts.jpg" style="display: block; margin: 0px auto 10px; text-align: center;" width="640" /></a></span></u></div>
<div>
<b>Social costs </b>are worked out from <b>private costs </b>and <b>external costs</b>.</div>
<div>
<b>Social benefits </b>are worked out from <b>private benefits </b>and <b>external benefits</b>.</div>
<div>
<br /></div>
<div>
In other words: </div>
<div>
<ul>
<li><b>Social costs </b>= <b>private costs </b>+ <b>external costs</b>.</li>
<li><b>Social benefits</b> = <b>private benefits </b>+ <b>external benefits</b>.</li>
</ul>
<div>
Woohoo! Chapter five finished in one day!</div>
</div>
<div>
Chapter six coming soon!</div>
<div>
====================================================================</div>
<div class="blogger-post-footer">To see this page in 5 different dynamic views, click
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<strong><span style="font-size: 130%;"><u>Business costs</u></span></strong></div>
<div>
<br /></div>
<div>
All business activity involves some kind of cost. Managers need to think about the because:<br />
<ul>
<li>Whether costs are lower than revenues or not. Whether a business will make a profit or not. </li>
<li>To compare costs at different locations.</li>
<li>To help set prices.</li>
</ul>
There are two main types of costs, <strong>fixed </strong>and <strong>variable costs. </strong>Here are some types of costs:<br />
<ul>
<li><strong>Fixed costs = </strong>stay the same regardless of the amount of output. They are there regardless of whether a business has made a profit or not. Also known as <strong>overheads</strong>.</li>
<li><strong>Variable costs = </strong>varies with the amount of goods produced. They can be classified as <strong>direct costs </strong>(directly related to a product).</li>
<li><strong>Total costs</strong> = <strong>fixed + variable costs<a name='more'></a></strong></li>
</ul>
<strong><u><span style="font-size: 130%;">Break-even charts, comparing costs with revenue</span></u></strong><br />
<strong>Drawing a break-even chart</strong><br />
<strong><br /></strong>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://4.bp.blogspot.com/-Q2pMP2HJBUA/WO-ANtdTeUI/AAAAAAAAAKc/nVP3LPDDZww38HZwJy9COLPbJsswWEdgACLcB/s1600/03.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://4.bp.blogspot.com/-Q2pMP2HJBUA/WO-ANtdTeUI/AAAAAAAAAKc/nVP3LPDDZww38HZwJy9COLPbJsswWEdgACLcB/s640/03.png" width="640" /></a></div>
<div style="text-align: center;">
<strong><br /></strong></div>
<strong><span class="Apple-style-span" style="color: #0000ee; font-weight: normal;"></span></strong><br />
<div>
<strong>Uses of break-even charts</strong></div>
There are other benefits from the break-even chart other than identifying the breakeven point and the maximum profit. However, they are not all reliable so there are some disadvantages as well:<br />
<strong>Pros:</strong><br />
<ul>
<li>The expected profit or loss can be calculated at any level of output.</li>
<li>The impacts of business decisions can be seen by redrawing the graph.</li>
<li>The breakeven chart show the <strong>safety margin </strong>which is the amount by which sales exceed the breakeven point.</li>
</ul>
<strong>Cons:</strong><br />
<ul>
<li>The graph assumes that all goods produced are sold.</li>
<li>Fixed costs will change if the scale of production is changed.</li>
<li>Only focuses on the breakeven point. Completely ignores other aspects of production.</li>
<li>Does not take into account discounts or increased wages, etc. and other things that vary with <strong>time</strong>.</li>
</ul>
<strong>Break-even point: the calcultion method.</strong><br />
It is possible to calculate the breakeven point withought having to draw the graph. We need two formulas to achieve this:<br />
<ul>
<li>Selling Price - Variable Costs = Contribution</li>
<li>Break-even point = Total fixed costs/Contribution</li>
</ul>
<strong>Business costs: other definitions</strong><br />
There are other types of costs to be analysed that is split from fixed and variable costs:<br />
<ul>
<li><strong>Direct costs:</strong> costs that are directly related to the production of a particular product.</li>
<li><strong>Marginal costs:</strong> how much costs will increase when a business decides to produce one more unit.</li>
<li><strong>Indirect costs:</strong> costs not directly related to the product. They are often termed <strong>overheads</strong>.</li>
<li><strong>Average cost per unit</strong>: total cost of production/total output</li>
</ul>
<strong>Economies and Diseconomies of scale:</strong><br />
<strong>Economies of scale </strong>are factors that lead to a reduction in average costs that are obtained by growth of a business. There are five economies of scale:<br />
<ul>
<li><strong>Purchasing economies:</strong> Larger capital means you get discounts when buying bulk.</li>
<li><strong>Marketing:</strong> More money for advertising and own transportation, cutting costs.</li>
<li><strong>Financial:</strong> Easier to borrow money fro<img alt="Align Left" border="0" class="gl_align_left" src="https://www.blogger.com/img/blank.gif" />m banks with lower interest rates.</li>
<li><div align="left">
<strong>Managerial:</strong> Larger businesses can now afford specialist managers in all departments, increasing efficiency.</div>
</li>
<li><strong>Technical:</strong> They can now buy specialised and latest equipment to cut overall production costs.</li>
</ul>
However, there are <strong>diseconomies of scale </strong>which increases average costs when a business grows:<br />
<ul>
<li><strong>Poor communication:</strong> It is more difficult to communicate in larger firms since there are so many people a message has to pass through. The managers might loose contact to customers and make wrong decisions.</li>
<li><strong>Low morale:</strong> People work in large businesses with thousands of workers do not get much attention. They feel they are not needed this decreases morale and in turn efficiency.</li>
<li><strong>Slower decision making:</strong> More people have to agree with a decision and communication difficulties also make decision making slower as well.</li>
</ul>
<strong>Budgets and forecasts: looking ahead</strong><br />
Business also needs to think ahead about the problems and opportunities that may arise in the future. There are things to try to <b>forecast </b>such as:<br />
<ul>
<li>sales or consumer demands.</li>
<li>exchange rates appreciation or depreciation.</li>
<li>wage increases.</li>
</ul>
<div>
There are some forecasting methods:</div>
<div>
<ul>
<li>Past sales could be used to calculate the <b>trend</b>, which could then be extended into the future.</li>
<li>Create a <b>line of best fit </b>for past sales and extend it for the future.</li>
<li><b>Panel consensus</b>: asking a panel of experts for their opinion on what is going to happen in the future.</li>
<li><b>Market research</b>.</li>
</ul>
<div>
<b>Budgets</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
"Budgets are plans for the future containing numerical and financial targets". Better managers will create many budgets for costs, planned revenue and profit and combine them into one single plan called the <b>master budget</b>. </div>
<div>
<br /></div>
<div>
Here are the advantages of budgets:</div>
<div>
<ul>
<li>They set <b>objectives </b>for managers and workers to work towards, increasing their <b>motivation</b>.</li>
<li>They can be used to see how well a business is doing by comparing the budget with the result in the process of <b>variance analysis</b>. The <b>variance </b>is the difference between the budget and the result.</li>
<li>If workers get a say in choosing the objectives for a budget, the objectives would be more <b>realistic </b>since they are the ones that are going to do it and it also gives them better <b>motivation</b>.</li>
<li>Helps control the business and its <b>allocation of resources/money</b>.</li>
</ul>
<div>
All in all, budgeting in useful for: </div>
</div>
<div>
<ul>
<li>reviewing <b>past </b>activities.</li>
<li>controlling <b>current </b>business activity - following objectives.</li>
<li>planning for the <b>future</b>.</li>
</ul>
<div>
Finished! That'll be all for today!</div>
</div>
<div>
====================================================================</div>
</div>
<div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com42tag:blogger.com,1999:blog-1682051666902505276.post-54070552549271209222012-08-19T21:03:00.000+07:002017-04-14T05:07:54.325+07:00Chapter 7: Business Accounting<div dir="ltr" style="text-align: left;" trbidi="on">
<b><u>What are accounts an why are they necessary?</u></b><br />
<div>
<b><br />
</b></div>
<div>
Accounts are <b>financial records </b>of a firm's <b>transactions </b>that is kept up to date by the <b>accountants</b>, who are qualified professionals responsible for keeping accurate accounts and producing the final accounts. </div>
<div>
<br /></div>
<div>
Every end of the year, a <b>final accounts </b>must be produced which gives details of:</div>
<div>
<ul>
<li>Profits and losses made.</li>
<li>Current value of the business.</li>
<li>Other financial results.</li>
</ul>
<div>
Limited companies are bound by law to publish these accounts, but not other businesses.</div>
</div>
<div>
<br />
<a name='more'></a><br /></div>
<div>
<b>Financial documents involved in buying and selling.</b></div>
<div>
<b><br />
</b></div>
<div>
Accountants use various documents that are used for buying and selling over the year for their final accounts. They can help the accountant to:</div>
<div>
<ul>
<li>keep records of what the firm bought and from which supplier.</li>
<li>keep records of what the firm sold and to which customer.</li>
</ul>
<div>
These documents are:</div>
</div>
<div>
<ul>
<li><b>Purchase orders</b>: requests for <u>buying </u>products. It contains the quantity, type and total cost of goods. Here is an example.</li>
<li><b>Delivery notes: </b>These are sent by the firm when it has <u>received </u>its goods. It must be <u>signed </u>when the goods are delivered.</li>
<li><b>Invoices: </b>These are sent by the supplier to <u>request </u>for <u>payment </u>from the firm.</li>
<li><b>Credit notes: </b>Only issued if a <u>mistake </u>has been made. It states what kind of mistake has been made.</li>
<li><b>Statements of account: </b>Issued by the supplier to his customers which contains the <u>value</u> of <u>deliveries</u> made each month, value of any <u>credit notes </u>issued and any <u>payments </u>made by the customer. Here is an example.</li>
<li><b>Remittance advice slips: </b>usually sent with the statement of accounts. It indicates <u>which invoices </u>the firm is <u>paying </u>for so that the supplier will not make a mistake about payments.</li>
<li><b>Receipts: </b>Issued after an invoice has been paid. It is <b>proof </b>that the firm has paid for their goods.</li>
</ul>
<div>
<b>Methods of making payment</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
There are several ways goods can be paid for:</div>
<div>
<ul>
<li><b>Cash</b>: The traditional payment method. However, many businesses do not prefer to use cash for a number of <b>security reasons</b>. When cash is paid, a <b>petty cash voucher </b>is issued by the person in charge of the firm's money who also signs it to authorise the payment. The person making the purchase signs it too to show that the money has been recieved. </li>
<li><b>Cheque</b>: It is an instruction to the bank to transfer money from a bank account to a named person. In order to do this the bank needs a <b>cheque guarantee card</b>, saying that they have enough money in their account to support this payment.</li>
<li><b>Credit card</b>: Lets the consumer obtain their goods now and <b>pay later</b>. If the payment is delayed over a set period then the consumer will have to pay <b>interest</b>.</li>
<li><b>Debit card</b>: <b>Transfers</b> <b>money directly </b>from user's <b>account </b>to that of the seller.</li>
</ul>
<div>
<b>Recording accounting transactions</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Businesses usually use computers to store their transactions so that they can be easily accessed, calculated and printed quickly. </div>
<div>
<br /></div>
<div>
<b>Who uses the financial accounts of a business?</b></div>
<div>
<ul>
<li><b>Shareholders: </b>They will want to know about the profit or losses made during the year and whether the business is worth more at the end of the year or not.</li>
<li><b>Creditors:</b> They want to see whether the company can afford to pay their loans back or not.</li>
<li><b>Government:</b> Again, they want to check to see if correct taxes are paid. They also want to see how well the business is doing so that it can keep employing people.</li>
<li><b>Other companies: </b>Other companies want to compare their performance with a business or see if it is a good idea to take it over.</li>
</ul>
<div>
<b><span class="Apple-style-span"><u>What do final accounts contain?</u></span></b></div>
</div>
<div>
<b><br />
</b></div>
<div>
<b>The trading account</b></div>
<div>
<b><br />
</b></div>
<div>
This account shows how the <b>gross profit </b>of a business is calculated. Obviously, it will contain this formula:</div>
<div>
<br /></div>
<div style="text-align: center;">
<i><u>Gross profit = Sales revenue - Cost of goods sold</u></i></div>
<div style="text-align: left;">
<b><br />
</b></div>
<div style="text-align: left;">
Note that:</div>
<div style="text-align: left;">
<ul>
<li>Gross profit does <b>not</b> take to account <b>overheads</b>.</li>
<li><b>Only </b>calculate the <b>cost of goods sold</b>, and forget the <b>inventory</b>.</li>
<li>In a <b>manufacturing business</b>, <b>direct labour and manufacturing costs</b> are also deducted to obtain gross profit.</li>
</ul>
<div>
<b>The profit and loss account</b></div>
<div>
<b><br />
</b></div>
<div>
The profit and loss account shows how <b>net profit </b>is calculated. It starts off with gross profit acquired from the trading account and by deducting all other costs it comes up with net profit. </div>
<div>
<br /></div>
<div>
<b>Depreciation </b>is the fall in value of a fixed asset over time. It is also counted as an indirect cost to businesses.</div>
<div>
<br /></div>
<div>
As for <b>limited companies</b>, there are a few differences with the normal profits and loss account:</div>
<div>
<ul>
<li><b>Profits tax </b>will be shown.</li>
<li>It needs to have an <b>appropriation account </b>at the end of the profits and loss account. This shows what the company has done with its net profits, in other words, how much <b>retained profit </b>has been put back into the company.</li>
<li>Results form the <b>previous year </b>are also included.</li>
</ul>
<div>
<b>Balance sheet</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
The balance sheet shows you a business's assets and liabilities at a particular time. The balance sheet records the <b>value </b>of a business at the end of the financial year. This is what it contains:</div>
<div>
<ul>
<li><b>Fixed assets: </b>land, vehicles, buildings that are likely to be with the business for more than one year. They <b>depreciate </b>over time.</li>
<li><b>Current assets: </b>stocks, inventory, ash and debtors that are only there for a short time.</li>
<li><b>Long-term liabilities: </b>long-term borrowings that does not have to be paid in one year.</li>
<li><b>Short-term liabilities: </b>short-term borrowings that has to be paid in less than one year.</li>
</ul>
<div>
If your <b>total assets </b>are <b>higher </b>than your <b>total liabilities</b>, then you are said to own <b>wealth</b>. In a normal business, wealth belongs to the <b>owners</b>, while in a limited company, it belongs to the <b>shareholders</b>. Hence the equation:</div>
</div>
<div>
<br /></div>
<div style="text-align: center;">
<i><u>Total assets - total liabilities = Owners'/Shareholders' wealth</u></i></div>
<div style="text-align: left;">
<b><br />
</b></div>
<div style="text-align: left;">
Here are some terms found in balance sheets:</div>
<div style="text-align: left;">
<ul>
<li><b>Working capital: </b>is used to pay short-term debts and known as <b>net current assets</b>. If a business do not have enough working capital then it might be forced to go out of business. The formula:</li>
</ul>
<div style="text-align: center;">
<i><u>Working capital = Current assets - Current liabilities</u></i></div>
<div style="text-align: left;">
<ul>
<li><b>Net assets: </b>Shows the net value of all assets owned by the company. These assets must be paid for or finance by <b>shareholders' funds </b>or <b>long term liabilities</b>. The formula:</li>
</ul>
<div style="text-align: center;">
<i><u>Net assets = Fixed assets + Working capital</u></i></div>
<div style="text-align: left;">
<ul>
<li><b>Shareholders' funds: </b>The total sum invested into the business by its owners. This money is invested in two ways:</li>
</ul>
<div>
<span class="Apple-tab-span" style="white-space: pre;"> </span><b>- Share capital:</b> Money from newly issued shares.</div>
<div>
<b><span class="Apple-tab-span" style="white-space: pre;"> </span>- Profit and loss reserves: </b>Profit that is owned by shareholders but not <span class="Apple-tab-span" style="white-space: pre;"> </span>distributed to them but kept as part of shareholders' funds.</div>
<div>
<ul>
<li><b>Capital employed: </b>Long-term and permanent capital of a business that has been used to pay for all the assets. Therefore:</li>
</ul>
<div style="text-align: center;">
<i><u>Capital employed = net assets</u></i></div>
</div>
<div style="text-align: center;">
<i><u>Capital employed = Shareholders' funds + long-term liabilities</u></i></div>
<div style="text-align: left;">
<i><u><br />
</u></i></div>
<div style="text-align: left;">
<b><u><span class="Apple-style-span">Analysis of published accounts</span></u></b></div>
<div style="text-align: left;">
<b><br />
</b></div>
<div style="text-align: left;">
Without analysis, financial accounts tell us next to nothing about the performance and financial strength of a company. In order to do this we need to compare <b>two figures </b>with each other. This is called <b>ratio analysis</b>. </div>
<div style="text-align: left;">
<br /></div>
<div style="text-align: left;">
<b>Ratio analysis of accounts</b></div>
<div style="text-align: left;">
<b><br />
</b></div>
<div style="text-align: left;">
The most common ratios used are for comparing the <b>performance </b>and <b>liquidity </b>of a business. Here are five of the most commonly used ratios.</div>
<div style="text-align: left;">
<br /></div>
<div style="text-align: left;">
<b>Ratios used for analysing <u>performance</u>:</b></div>
<div style="text-align: left;">
<ul>
<li><b>Return on capital employed: </b>This result could show the efficiency of a business. If the result rises, the managers are becoming more successful.</li>
</ul>
<div style="text-align: center;">
<i><u>Return on capital employed (%) = Operating profit/Capital employed * 100</u></i></div>
<div style="text-align: left;">
<ul>
<li><b>Gross profit margin: </b>If this rises, it could mean that either they are increasing added value or costs have fallen.</li>
</ul>
<div style="text-align: center;">
<i><u>Gross profit margin = Gross profit/Sales revenue * 100</u></i></div>
<div style="text-align: left;">
<ul>
<li><b>Net profit margin: </b>The higher the result, the more successful the managers are. This could be compared with other businesses too.</li>
</ul>
<div style="text-align: center;">
<i><u>Net profit margin = Net profit before tax/Sales revenue * 100</u></i></div>
<div style="text-align: center;">
<i><u><br />
</u></i></div>
<div style="text-align: center;">
<b>Note: </b>Net profit does <b>not </b>include tax.</div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: left;">
<b>Ratios used for analysing liquidity: </b>This is too see how much cash a business has to pay off all of its short-term debts.</div>
<div style="text-align: left;">
<ul>
<li><b>Current ratio: </b>This ratio assumes that all current assets could be converted into cash quickly, but this is not always true since <b>stock/inventory </b>could not be all sold in a short time. Generally, a result of 1.5 to 2 would be preferable, so that a business could pay all of its short-term debts and still have half of its money left.</li>
</ul>
<div style="text-align: center;">
<i><u>Current ratio = Current assets/Current liabilities</u></i></div>
<div style="text-align: center;">
<i><u><br />
</u></i></div>
<div style="text-align: left;">
<ul>
<li><b>Acid test </b>or <b>liquid ratio: </b>This type of analysis neglects stocks, but it is similar to the current ratio analysis. </li>
</ul>
<div style="text-align: center;">
<i><u>Acid test ratio = (Current assets - Stocks)/Current liabilites</u></i></div>
<div style="text-align: left;">
<i><u><br />
</u></i></div>
<div style="text-align: left;">
These ratios can be used to:</div>
<div style="text-align: left;">
<ul>
<li>Compare with other years.</li>
<li>Compare with other businesses.</li>
</ul>
<div>
It must be remembered that a ratio on its own will give you nothing, but when it is compared with ratios from the past and other businesses it will tell you a lot of things.</div>
<div>
<br /></div>
<div>
However, there are still some <b>disadvantages </b>of ratio analysis:</div>
<div>
<ul>
<li>Only shows past results, does <b>not </b>show anything about the <b>future</b>.</li>
<li>Comparisons between years may be <b>misleading </b>because of <b>inflation</b>.</li>
<li>Comparisons between businesses could be <b>difficult </b>since each has its <b>own accounting methods</b>. </li>
</ul>
<div>
That'll be all for today. Chapter 8 coming very soon!</div>
</div>
<div>
===================================================================</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
<div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com49tag:blogger.com,1999:blog-1682051666902505276.post-9975050445856165832012-08-18T21:29:00.000+07:002012-08-20T18:31:18.483+07:00Chapter 8: Cash flow planning<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif; font-size: large;"><b><u>What is meant by cash flow?</u></b></span><br />
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Cash is a <b>liquid asset</b>, meaning that i can be spent on goods and services any time. Many business experience <b>cash flow problems</b>, meaning that they do not have enough cash to do what they want to do. <b>Cash flow </b>means "the flow of money <b>in </b>and <b>out </b>of a business". These are ways cash flow can occur:</span></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><br />
</span></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Cash inflows:</b></span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Sale </b>of <b>goods </b>for cash.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Payment </b>from debtors.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Borrowing </b>from a source (but will inevitably lead to cash outflow in the future).</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Sale </b>of unwanted <b>assets</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Investment </b>from investors: shareholders and owners</span></li>
</ul>
</div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Cash outflows:</b></span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Purchasing goods </b>for cash.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Payment </b>of wages, salaries and others in cash.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Purchasing </b>fixed <b>assets</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Repaying loans</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Repaying creditors</b>.<a name='more'></a></span></li>
</ul>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Cash flow cycle</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">A <b>cash flow cycle </b>explains the stages that are involved in the process of cash out and finally into the business. This is what happens:</span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-uqOZ2hNHY2s/TZXgbu-WTQI/AAAAAAAAACo/pjPerkatUng/s1600/cashflowcycle.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="150" src="http://4.bp.blogspot.com/-uqOZ2hNHY2s/TZXgbu-WTQI/AAAAAAAAACo/pjPerkatUng/s640/cashflowcycle.jpg" width="500" /></a></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><br />
</span></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">The longer it takes for cash to get back to the business, the more they will need <b>working capital </b>to pay off their short-term debts. This cycle also helps us understand the importance of <b>cash flow planning</b>. This is what happens when a company is short on cash:</span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Not enough to pay for materials, therefore sales will fall.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">The company will want to insist customers on paying in cash, but they might lose them to competitors who let them pay in credit.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">There could be a <b>liquidity crisis </b>when it does not have enough cash to pay for <b>overheads</b> (bills, rent, etc.) and the business might be forced to close down by its creditors.</span></li>
</ul>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Managers need to plan their cash flow so that they do not end up in these positions. </span></div>
</div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><br />
</span></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Cash flow is not profit!</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">First we need to examine the formula for cash flow:</span></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><br />
</span></div>
<div style="text-align: center;">
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><i><u>Cash flow = Cash inflow - Cash outflow</u></i></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><i><u><br />
</u></i></span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">However, when calculating profit, we also take into account <b>credit </b>that debtors owe us. Therefore, a company might make $20,000 in profit but only $10,000 is received in cash because half of it is payed by credit card.</span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><br />
</span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">This creates something known as <b>insolvency</b>:</span></div>
<div style="text-align: left;">
<ul>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Profitable business could run out of cash because of various reasons. This is called <b>insolvency </b>and it is one main reason why businesses fail.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">This can be because of several reasons:</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Allowing customers <b>too long </b>to <b>pay </b>back, so that they will not have paid off the debts yet by the time the business has <b>run out </b>of <b>cash</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Purchasing <b>too many assets </b>at once.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Producing or purchasing too much <b>stock/inventory </b>when <b>expanding </b>too quickly. This is called <b>overtrading</b>.</span><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"> </span></li>
</ul>
</ul>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Here is an example of a <b>cash flow statement</b>:</span><a href="http://1.bp.blogspot.com/-WQnFiVGH5rg/TZXgwfwH2UI/AAAAAAAAACs/cSG-5POMzR8/s1600/cashflowstatement.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="110" src="http://1.bp.blogspot.com/-WQnFiVGH5rg/TZXgwfwH2UI/AAAAAAAAACs/cSG-5POMzR8/s640/cashflowstatement.jpg" width="500" /></a></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><br />
</span></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">As you can see, the closing bank balance in February is negative, which means that it has become <b>overdrawn</b>.</span><br />
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><br />
</span></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif; font-size: large;"><b><u>Cash flow forecasts</u></b></span></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Because of the aforementioned problems, it is important for the manager to get an idea of how much cash will be available for which months. A <b>cash flow forecast </b>can tell the manager:</span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">How much cash is available for paying bills, loans and other fixed assets.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">How much the bank might need to lend to avoid insolvency.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Whether the business has too much cash which could be more useful if used.</span></li>
</ul>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Uses of cash flow forecasts:</b></span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Starting up a business</b>: In the first months of a business, a lot of capital will be needed to set it up properly. The problem is, not everybody realises that the amount of money they needed is much more than they had expected. Therefore, a cash flow forecast will give them a better idea of how much money will be needed.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Keeping the bank manager informed</b>: It needs to be shown to the bank to inform it of the size of the needed loan/overdraft, when it is needed, how long it is needed and when it could be repaid. Only then will the bank give you a chance to get a loan.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Running an existing business</b>: It is important to know the cash flow of a business so that loans could be arranged in advance in order to get the least <b>interest </b>possible. If a firm has cash flow problems and goes to the bank for a loan for the next day, it will charge high interests because it knows that the business has no choice. Also, if a business exceeds the <b>overdraft limit </b>without informing the bank, it could be asked to repay the overdraft immediately and could result in closure of the business.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Managing cash flow</b>: If a business has <b>too much cash</b>, it should put the cash to some good <b>use </b>quickly. Some examples of this is: repaying all loans for <b>less interest</b>, paying creditors immediately to get <b>discounts</b>.</span></li>
</ul>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif; font-size: large;"><b><u>How can cash flow problems be solved?</u></b></span></div>
</div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Here are some steps to solve cash flow problems:</span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Arrange for future loans with the bank when you anticipate <b>negative cash flow</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Reduce </b>or <b>delay </b>planned expenses until cash is available, e.g. ask to pay in credit.</span></li>
<li><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><b>Increasing </b>forecasted cash <b>inflow</b>, e.g. by getting a part-time job.</span></li>
</ul>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">For more information on the importance of cash flow visit page 132 in the book. This case study will give you a lot of information. As for the time being, thats the end of chapter 8!</span></div>
</div>
<div>
<span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">================================================================</span></div>
</div>
<div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com36tag:blogger.com,1999:blog-1682051666902505276.post-16675153888163924382012-08-17T16:44:00.000+07:002017-04-13T20:55:36.576+07:00Chapter 9: Financing business activity<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><u>Why do businesses need finance?</u></span></b><br />
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></b><br />
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Businesses need <b>finance</b>, or money, to pay for their overhead costs as well as their day to day and variable expenses. Here are three situations when businesses need finance the most:</span><br />
<br />
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Starting a business</b>: Huge amounts of finance is needed to start a business which requires buying fixed assets, paying rent and other overheads as well as producing or buying the first products to sell. The finance required to start up a business is called <b>start-up capital</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Expanding a business</b>: When expanding, a lot of capital is needed in order to buy more fixed assets or fund a takeover. Internal growth by developing new products also requires a notable amount of finance for R&D.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>A business in difficulties</b>: For example, for loss making businesses money is needed to buy more efficient machinery, or money is needed to cover negative cash flow. However, it is usually difficult for these firms to get loans. <a name='more'></a></span></li>
</ul>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">All all cases, businesses need finance for either <b>capital expenditure </b>or <b>revenue expenditure</b>:</span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Capital expenditure: </b>Money spent on fixed assets.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Revenue expenditure: </b>Money spent on day-to-day expenses.</span></li>
</ul>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></div>
<div>
<b><u><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Sources of finance</span></u></b></div>
</div>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></b></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">There are many ways to obtain finance, and they can be grouped in these ways.:</span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Internal</b> or <b>external</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Short-term</b>, <b>medium-term</b> or <b>long-term</b>.</span></li>
</ul>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Internal finance:</span></b></div>
</div>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></b></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">This is finance that can be taken from within the business itself. There are advantages and disadvantages to each of them:</span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Retained profit: </b>Profit reinvested into a business after part of the net profit has been distributed to its owners.</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: #cc0000;">+</span> </b>Retained profit does <b>not </b>have to be <b>repaid </b>unlike a loan.</span></li>
</ul>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><span class="Apple-style-span" style="color: blue;"><b>-</b> </span>New businesses <b>do not have much </b>retained profit.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><span class="Apple-style-span" style="color: blue;"><b>-</b> </span>Retained profit from small firms are <b>not enough </b>for <b>expansion</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><span class="Apple-style-span" style="color: blue;"><b>-</b> </span><b>Reduces payment </b>to owners/shareholders.</span></li>
</ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Sale of existing assets: </b>Firms can get rid of their unwanted assets for cash.</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: red;">+</span> </b>Makes better <b>use </b>of capital that is not used for anything.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;">- </span></b>Takes time to sell all of these assets.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;">-</span> </b>New businesses do not have these assets to sell.</span></li>
</ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Running down stocks: </b>Sell everything in the current existing inventory.</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: red;">+</span> </b>Reduces <b>opportunity cost </b>and <b>storage costs </b>of having inventory.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;">-</span> </b>Risks <b>disappointing </b>customers if there are not enough stock left.</span></li>
</ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Owners' savings: </b>Only applies to businesses that do not have limited liability. Since the legal identity of the business and owners are the same, this method is considered to be internal.</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: red;">+</span> Available quickly</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;"><span class="Apple-style-span" style="color: black; font-weight: normal;"><b><span class="Apple-style-span" style="color: blue;"><span class="Apple-style-span" style="color: black; font-weight: normal;"><b><span class="Apple-style-span" style="color: red;">+ </span>No interest </b>paid.</span></span></b></span></span></b></span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;">-</span> Limited </b>capital.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;">-</span> </b>Increases <b>risks </b>for owners.</span></li>
</ul>
</ul>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>External finance:</b></span></div>
</div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">This is money raised from individuals or organisations outside a business. It is the most common way to raise finance.</span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Issue of shares:</b> Same as owners' savings, but only available to limited companies.</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: red;">+</span> </b>A <b>permanent </b>source of capital that does not have to be <b>repaid</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;"><span class="Apple-style-span" style="color: black; font-weight: normal;"><b><span class="Apple-style-span" style="color: red;">+ </span>No interest </b>paid.</span></span></b></span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;">-</span> Dividends </b>will have to be paid.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;">-</span> Ownership </b>of the company could change hands to the <b>majority shareholder</b>.</span></li>
</ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b> Bank loans: </b>money borrowed from the bank.</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><span class="Apple-style-span" style="color: red;"><b>+</b></span><b> Quick </b>to <b>arrange</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: red;">+</span> Variable </b>lengths of <b>time</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: red;">+</span> Lower rates </b>offered if a large company borrows large sums.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;">-</span> </b>Must be <b>repaid </b>with <b>interest</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="font-weight: normal;"><b><span class="Apple-style-span" style="color: blue;">-</span> </b></span>Collateral </b>is needed to secure a loan and may be <b>lost</b>.</span></li>
</ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Selling debentures: </b>These are long-term loan certificates issued by limited companies.</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: red;">+</span> </b>These<b> </b>can be used to raise <b>long-term finance</b>, e.g. 25 years.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: red;">+</span> </b>No <b>collateral </b>is required, just the <b>trustworthiness </b>of a big company.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;">-</span> </b>Must be <b>repaid </b>with <b>interest</b>.</span></li>
</ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Factoring of debts: </b>Some businesses (<b>debt factors</b>)<b> </b>"buy" <b>debts </b>of a firm's <b>debtors</b> (e.g. customers) and pay the firm cash in return. The firm now does not worry about worrying about whether their customers will pay or not and 100% of all the debts goes to the factor. Factoring debt is very difficult for me to understand and explain, so explore <a href="http://business-debt.cleardebts.co.uk/factoring.html">http://business-debt.cleardebts.co.uk/factoring.html</a> for more information.</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="font-weight: normal;"><b><span class="Apple-style-span" style="color: red;">+</span> </b></span>Immediate cash </b>is obtained.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="font-weight: normal;"><b><span class="Apple-style-span" style="color: red;">+</span> </b></span>Risk </b>of collecting debt becomes the factor's.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;">-</span> </b>The firm does<b> not receive 100%</b> value of the debt.</span></li>
</ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Grants and subsidies: </b>can be obtained from outside agencies like the <b>government</b>.</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: red;">+</span> </b>Do <b>not </b>have to be <b>repaid</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;">-</span> </b>They have <b>conditions </b>that you have to fulfill (e.g. locating in poor areas).</span></li>
</ul>
</ul>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Short-term finance:</b></span></div>
</div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">This is <b>working capital </b>required to pay <b>current liabilities </b>that is needed up to three years. There are three main ways of acquiring short-term finance:</span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Overdrafts: </b>Allows you do draw more from your bank account than you have.</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: red;">+</span> </b>Overdrafts<b> </b>can <b>vary </b>every month, making it <b>flexible</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="font-weight: normal;"><b><span class="Apple-style-span" style="color: red;">+</span> </b></span>Interest </b>only needs to be paid only to the <b>amount overdrawn</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: red;">+</span> </b>They can turn out <b>cheaper </b>than loans.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="font-weight: normal;"><b><span class="Apple-style-span" style="color: blue;">-</span> </b></span>Interest rates </b>are <b>variable</b>, and often <b>higher </b>than loans.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;">-</span> </b>The bank can ask for the <b>overdraft </b>back immediately <b>anytime</b>.</span></li>
</ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Trade credits: </b>Delaying payment to your creditors, which leaves the company with better cash flow for that month.</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: red;">+</span> </b>It is almost a short-term <b>interest free </b>loan.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;">-</span> </b>The supplier could <b>refuse </b>to give <b>discounts </b>or to <b>supply </b>you at all if your payments are delayed too much.</span></li>
</ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Factoring of debts</b></span></li>
</ul>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Medium-term finance:</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Finance available for 3 to 10 years that is used to buy fixed assets such as machinery and vehicles. </span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Bank loans</b></span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Hire purchase: </b>This allows firm to pay for assets over time in monthly payments which has interest.</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: red;">+ </span></b>The firm does <b>not </b>have to come up with<b> a lot of cash</b> quickly.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;">-</span> </b>A <b>deposit </b>has to be paid at the start of the period of payment.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="font-weight: normal;"><b><span class="Apple-style-span" style="color: blue;">-</span> </b></span>Interest </b>paid can be <b>very high</b>.</span></li>
</ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Leasing: </b>Hiring something. Businesses could use the asset but will have to pay monthly. The business my choose to buy the asset at the end of the leasing period. Some businesses sell their fixed assets to a leasing company who lease them back so that they could obtain cash. This is called <b>sale and leaseback</b>.</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: red;">+ </span></b>The firm does <b>not </b>have to come up with<b> a lot of cash</b> quickly.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: red;">+ </span></b>The leasing firm <b>takes care </b>of the assets.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="font-weight: normal;"><b><span class="Apple-style-span" style="color: blue;">- </span></b></span></b>The total leasing costs will be <b>higher </b>than if the business has purchased it.</span></li>
</ul>
</ul>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Long-term finance:</b></span></div>
</div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">This kind of finance is available for more than 10 years. The money is used for long-term fixed assets or the takeover of another company.</span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Issue of shares: </b>Shares are sometimes called <b>equities</b>, therefore issuing shares is called <b>equity finance</b>. <b>New issues</b>, or shares sold by public limited companies can raise near limitless finance. However, a business will want to give the <b>right issue </b>of shares so that the amount bought by shareholders will not upset the balance of ownership.</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: red;">+</span> </b>A <b>permanent </b>source of capital that does not have to be <b>repaid</b>.</span></li>
<li><span class="Apple-style-span" style="color: red; font-family: "georgia" , "times new roman" , serif;"><span class="Apple-style-span" style="color: black;"><b><span class="Apple-style-span" style="color: red;">+</span> No interests </b>paid.</span></span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;">-</span> Dividends </b>will have to be paid. And they have to be paid after <b>tax </b>(so taxes become higher), while interest on loans are paid before taxes. </span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><span class="Apple-style-span" style="color: blue;">-</span> Ownership </b>of the company could change hands to the <b>majority shareholder</b>.</span></li>
</ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Long-term loans or debt finance: </b>Loans from a bank, and this is how they are different from issuing shares:</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Interest is paid before taxes, it is counted as an <b>expense</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Interest has to be <b>paid every year </b>but dividends only need to be paid if the firm has maid <b>profit</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">They are <b>not permanent </b>capital.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">They need <b>collateral</b>. </span></li>
</ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Debentures</b></span></li>
</ul>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><b><u>How the choice of finance is made in a business</u></b></span></div>
</div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">These are the factors that managers consider when choosing the type of finance they need.</span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Purpose and time period: </b>Managers need to <b>match </b>the source of finance to its purpose. It is quite simple, <b>short-term </b>finance is used to buy <b>current assets </b>and things like that, while <b>long-term </b>finance for <b>fixed assets </b>and similar things.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Amount needed: </b>Different types of finance depends on how much is needed.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Status and size: </b>Bigger companies have <b>more choices </b>of finance. They pay <b>less interest </b>to banks.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Control: </b>owners lose control if they own less than <b>51% </b>of <b>shares </b>in their company.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Risk and gearing: </b>loans raise the <b>gearing </b>of a business, meaning that their <b>risk </b>is increased. Gearing is can be obtained by calculating the <b>percentage </b>of <b>long-term loans </b>compared to <b>total capital</b>. If long-term loans take up more than 50% of total capital, then the business would be called <b>highly geared</b>. This is very <b>risky </b>because the business will have to pay back a lot of its loans and has to succeed to do so. Banks are less willing to lend to these businesses, so they will have to find other types of finance.</span></li>
</ul>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><b><u>Will banks lend and will shareholders invest?</u></b></span></div>
</div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Loans will be available to businesses but information about the business is required:</span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">The firms's <b>trading records</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Forecasts </b>about the future.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Forecasts </b>have to show that the firms are <b>solvent</b>, i.e. able to repay the loan and the interest back.</span></li>
</ul>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Banks will also consider:</span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Experience </b>of the people running a business.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Gearing ratio </b>of a business.</span></li>
</ul>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">This is what shareholders will consider if they want to invest:</span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">The <b>future prospects </b>of the company.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">How much <b>dividends </b>are given out compared to other companies.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Trend </b>of <b>share prices</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Gearing ratio</b>.</span></li>
</ul>
</div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Business plans</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Banks will want to see a business plan if they are to lend to most businesses, especially a newly created one. A business plan contains:</span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Objectives</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">How the business will be <b>operated</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">How the business will be <b>financed</b>.</span></li>
</ul>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">By creating a business plan owners will have to think carefully ahead about their business to ensure the best plan possible. These are things they will need to consider:</span></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Target market </b>and <b>consumers</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Profits</b>, <b>costs</b> and <b>break-even point</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Location </b>of the business.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Machinery </b>and <b>workers </b>required.</span></li>
</ul>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Without a <b>detailed </b>plan which <b>works</b>, bank managers will be reluctant to lend any money to businesses because their owners have not shown that they are serious enough about their business.</span></div>
</div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Here is an example of a business plan from the book, it shows the things you need to put in a business plan:</span></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-HCRJADvSPcw/TZcKn2QLL9I/AAAAAAAAACw/XOHGJEW6O7Y/s1600/businessplan.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="640" src="https://1.bp.blogspot.com/-HCRJADvSPcw/TZcKn2QLL9I/AAAAAAAAACw/XOHGJEW6O7Y/s640/businessplan.jpg" width="430" /></a></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">As a little reminder, this business plan is not mine, and all credit goes to the book and its author. Thank you</span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">That's the end of chapter 9! If you want to view this page in 5 different dynamic view, click <a href="http://igbusinesss.blogspot.com/view/sidebar">here</a>.</span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">================================================================</span></div>
<div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com37tag:blogger.com,1999:blog-1682051666902505276.post-68488672934379436992012-08-16T21:55:00.000+07:002017-04-13T20:59:38.167+07:00Chapter 10: Organisational Structure<b><u><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif; font-size: large;">What is organisational structure?</span></u></b><br />
<b><u><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></u></b><br />
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Organisational structure </b>refers to the levels of management and division of responsibilities within a business, which could be presented in an <b>organisational chart</b>.</span><br />
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span><br />
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">For simpler businesses in which the owner <b>employs only himself</b>, there is no need for an organisational structure. However, if the business expands and employs other people, an organisational structure is needed. When <b>employing </b>people, everybody needs a <b>job description</b>. These are its main <b>advantages</b>:</span><br />
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span><br />
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">People who apply can see what they are expected to do.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">People who are already employed will know exactly what to do.<a name='more'></a></span></li>
</ul>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Here is an example of a Job Description taken from the book:</span><br />
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></div>
<div>
<div style="text-align: center;">
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><img height="380" src="https://1.bp.blogspot.com/-JEtg_tPrkc0/TZx86pSKo_I/AAAAAAAAADA/3Bmh8YMwhsU/s640/jobdescription.jpg" width="640" /></span></div>
</div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">When there are more than one person in a small business and they all do different things, it means that they are <b>specialising </b>in different jobs.</span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></div>
<div>
<b><u><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Delegation</span></u></b></div>
<div>
<b><u><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></u></b></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Delegation </b>refers to giving a subordinate the <b>responsibility </b>and <b>authority </b>to do a given task. However, the <b>final responsibility </b>still lies with the person who delegated the job to the subordinate. Here are the advantages of delegation for managers and employees, as well as why some managers choose not to delegate.</span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></div>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Pros for the manager:</span></b></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">By letting subordinate do smaller tasks, managers have <b>more time </b>to do more important tasks.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Managers are less likely to make <b>mistakes</b> if tasks are done by <b>specialist </b>employees.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Managers can <b>measure </b>the <b>success </b>of their task more easily.</span></li>
</ul>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Pros for the subordinates:</span></b></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Work becomes more <b>interesting </b>and <b>rewarding</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Employees feel <b>important </b>and <b>trusted</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Helps <b>train </b>workers, giving them better <b>career opportunities</b>.</span></li>
</ul>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Why some managers don't want to delegate:</span></b></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Managers are afraid that their employees will <b>fail</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Managers want total <b>control</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Managers are scared that the subordinate will do tasks <b>better </b>than them, making them feel <b>insecure</b>.</span></li>
</ul>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Delegation must mean:</span></b></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">A <b>reduction </b>in <b>direct control </b>by managers or supervisors.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">An <b>increase </b>in <b>trust </b>of workers by managers or supervisors.</span></li>
</ul>
<div>
<b><u><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Organisational charts</span></u></b></div>
</div>
<div>
<b><u><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></u></b></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Eventually, when a business grows larger and employs many people, they will have to create an <b>organisational chart </b>to work out a <b>clear structure </b>for their company. Here is another example of an organisational chart from the book:</span><br />
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></div>
<div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://3.bp.blogspot.com/-i_SovL30MwM/TZx-4mcD63I/AAAAAAAAADY/hSre1_-Yztw/s1600/orgchart3.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="248" src="https://3.bp.blogspot.com/-i_SovL30MwM/TZx-4mcD63I/AAAAAAAAADY/hSre1_-Yztw/s640/orgchart3.jpg" width="640" /></a></div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Here are the most <b>important features</b> of the chart:</span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">It is a <b>hierarchy</b>. There are different <b>levels </b>in the business which has different <b>degrees of authority</b>. People on the same level have the same degree of authority.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">It is organised into <b>departments</b>, which has their own <b>function</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">It shows the <b>chain of command</b>, which is how power and authority is passed down from the top of the hierarchy, and <b>span of control</b>, meaning how many subordinates one person controls, of the business.</span></li>
</ul>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Advantages of an organisational chart:</span></b></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">The charts shows how everybody is <b>linked together</b>. Makes employees aware of the <b>communication channel </b>that will be used for messages to reach them.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Employees can see their <b>position </b>and <b>power</b>, and who they take orders from.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">It shows the <b>relationship </b>between departments.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Gives people a sense of <b>belonging</b> since they are always in one particular department.</span></li>
</ul>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Chain of command and span of control:</span></b><br />
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></b></div>
</div>
<div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-oF6l6ordicc/TZx9wvAsIQI/AAAAAAAAADI/-E4uzizVxr4/s1600/chain%2526span.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="360" src="https://2.bp.blogspot.com/-oF6l6ordicc/TZx9wvAsIQI/AAAAAAAAADI/-E4uzizVxr4/s640/chain%2526span.jpg" width="640" /></a></div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></b><br />
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Here are two organisations, one having a long chain of command and the other a wide span of control. Therefore, the longer the chain of command, the taller the business hierarchy and the narrower the span of control. When it is short, the business will have a wider span of control. </span><br />
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span><br />
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">In recent years, people have began to prefer to have their business have a wider span of control and shorter chain of command. In some cases, whole levels of management were removed. This is called <b>de-layering</b>. This is because short chains of commands have these advantages:</span><br />
<br />
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Communication </b>is <b>faster </b>and more <b>accurate. </b>The message has to pass through less people.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Managers </b>are <b>closer </b>to all employees so that they can understand the business better.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Spans of control </b>will be wider, meaning that the manager would have to take care of more subordinates, this makes:</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">The manager <b>delegate </b>more, and we already know the advantages of delegation.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Workers gain more <b>job satisfaction </b>and <b>feel trusted </b>because of delegation.</span></li>
</ul>
</ul>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">However, if the span of control is too wide, managers could <b>lose control</b>. If the subordinates are poorly trained, many mistakes would be made.</span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></div>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Functional departments</span></b></div>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></b></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Here is an example of an organisational chart from a larger business from the book:</span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span><br />
<div class="separator" style="clear: both; text-align: center;">
</div>
<div style="text-align: center;">
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><span class="Apple-style-span" style="font-family: "times new roman";"><a href="http://3.bp.blogspot.com/-oqa05cIgOn4/TZx9Vavc-YI/AAAAAAAAADE/fSWXUGp9qGY/s1600/orgchart1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="377" src="https://3.bp.blogspot.com/-oqa05cIgOn4/TZx9Vavc-YI/AAAAAAAAADE/fSWXUGp9qGY/s640/orgchart1.jpg" width="640" /></a></span></span></div>
</div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Here are they key features of this graph:</span></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">The business is divided into <b>functional departments</b>. They use <b>specialists </b>for each job and this creates more <b>efficiency</b>. However, workers are more <b>loyal </b>to their department than to the organisation as a whole. Therefore, <b>conflict </b>can occur between different departments. Managers working in these departments are called <b>line managers</b>, who have direct authority and the power to put their decisions into effect over their department.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Not only are there departments, there are also other <b>regional divisions </b>that take care of outlets that are situated in other countries. They use the local knowledge to their advantage.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">There are some departments which do not have a distinctive function but still employs <b>specialists </b>and report directly to the <b>CEO/Board of Directors</b>. These departments are the <b>IT department</b>, and the <b>Economic Forecasting department</b>. Some say the <b>HR </b>department fits in this category. These departments give <b>specialist advice </b>and <b>support </b>to the board of Directors and <b>line managers</b>, and the managers of these departments are called <b>staff managers</b>. They are often very highly qualified personnel who specialises in only their area. </span></li>
</ul>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Here are the pros and cons of employing <b>staff managers</b>:</span></div>
</div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></div>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Pros:</span></b></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Staff managers <b>help </b>and <b>provide advice </b>for line managers on things such as computer systems.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Helps line managers <b>concentrate </b>on their <b>main tasks</b>.</span></li>
</ul>
</div>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Cons:</span></b></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">There may be <b>conflict </b>between the two groups on important decisions and views.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Line employees may be <b>confused </b>and do not know who to take orders form, line or staff managers.</span></li>
</ul>
<div>
<b><u><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Decentralisation</span></u></b></div>
</div>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></b></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Decentralisation </b>refers to a business <b>delegating </b>important decisions to lower divisions in the business. In a <b>centralised </b>structure important decisions are taken at the <b>centre</b>, or higher levels of management.</span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></div>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Advantages of a decentralised structure:</span></b></div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Decisions are made by managers who are "<b>closer to the action"</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Managers feel more trusted and get more job satisfaction due to <b>delegation</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Decisions </b>can be made much more quickly.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">The business can <b>adapt </b>to <b>change </b>much more quickly.</span></li>
</ul>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Decentralisation means that:</span></b></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Less <b>central control</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">More <b>delegation</b>.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Decisions taken "<b>lower down</b>" in the organisation.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Authority </b>given to departments/regions</span></li>
</ul>
<div>
<b><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Different forms of decentralisation:</span></b></div>
</div>
<div>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Functional decentralisation: S</b><b>pecialist </b>departments are given the authority to make <b>decisions</b>. The most common of these are:</span></li>
<ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Human Resources.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Marketing.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Finance.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">Production.</span></li>
</ul>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Federal decentralisation: </b>Authority is <b>divided </b>between different <b>product lines</b>. e.g separate truck/car/bus divisions.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Regional decentralisation: </b>In <b>multinationals</b>, each <b>base </b>in each country has authority to make its own decisions.</span></li>
<li><span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Decentralisation by project means: </b>For a certain <b>project</b>, decision-making authority is given to a <b>team </b>chosen from all functional departments.</span></li>
</ul>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b>Is complete decentralisation a good idea?</b></span></div>
</div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><b><br />
</b></span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">It is dangerous to let the lower-level management make all the decisions. Therefore, it is wise for the <b>central management </b>to decide on <b>major issues</b>, <b>long-term decisions</b>, <b>growth</b> and <b>business objectives</b>. If these issues are not <b>centralised </b>then there would be a <b>lack of purpose </b>or <b>direction </b>in the business.</span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></div>
<div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;"><br />
</span></div>
<div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">That's all folks! It's Pi Mai on Friday! Have fun water fights!</span><br />
<span class="Apple-style-span" style="font-family: "georgia" , "times new roman" , serif;">===============================================================</span></div>
</div>
<div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com61tag:blogger.com,1999:blog-1682051666902505276.post-32262150643123176972012-08-15T18:33:00.000+07:002017-04-13T21:04:22.592+07:00Chapter 11: Managing a business<b><u><span class="Apple-style-span" style="font-size: large;">What do managers do?</span></u></b><br />
<b><br />
</b><br />
All organizations have <b>managers</b>. They can come by the name of director, headmaster, etc... but they all perform similar <b>tasks</b>. These tasks are:<br />
<br />
<b>Planning: </b><br />
<br />
<b></b>Planning for the future involves <b>setting goals </b>for a business. These goals give the business a <b>sense of direction </b>and <b>purpose</b>. Now the whole business will have something to work towards. Managers also need to plan for <b>resources </b>which will be needed. These are only two <b>strategies </b>managers use to keep the business running.<br />
<b></b><br />
<a name='more'></a><b><br />
</b><br />
<b>Organising: </b><br />
<br />
<b></b>A manager cannot do everything by himself. Therefore, jobs must be <b>delegated </b>to employees. Employees need <b>sufficient resources </b>to complete their job, so managers need to <b>organise people </b>and <b>resources </b>effectively.<br />
<b><br />
</b><br />
<b>Co-ordinating:</b><br />
<b><br />
</b><br />
Managers need to <b>bring people together </b>in a business for it to succeed. This is called <b>co-ordination</b>. If different <b>functional departments </b>do not co-ordinate, they could be doing completely different things which does not follow any common plan. Managers could co-ordinate the departments by holding regular <b>meetings </b>or setting up a <b>project team </b>with different members from different departments.<br />
<b><br />
</b><br />
<b>Commanding:</b><br />
<b><br />
</b><br />
Commanding refers to <b>guiding</b>, <b>leading </b>and <b>guiding </b>subordinates which is very important in any organisation. Managers need to make sure that all subordinates are <b>following targets</b> and <b>deadlines</b>. It is the <b>responsibility </b>of the manager to ensure that all tasks are completed and therefore <b>instruction </b>and <b>guidance </b>must be provided to employees so that they can do so.<br />
<b><br />
</b><br />
<b>Controlling:</b><br />
<b><br />
</b><br />
Controlling means <b>evaluating </b>the <b>performance </b>of subordinates, so that <b>corrective action </b>can be carried out if the subordinates are not sticking to <b>goals</b>.<br />
<br />
To sum up, this is what management gives to any organisation:<br />
<br />
<ul>
<li>a sense of <b>control </b>and <b>direction</b>.</li>
<li><b>co-ordination </b>between departments, preventing <b>wastage </b>of <b>efforts</b>.</li>
<li><b>control </b>of employees.</li>
<li>making the most out of <b>resources </b>(<b>organisation</b>)</li>
</ul>
<div>
<b>What makes a good manager?</b></div>
<div>
<b><br />
</b></div>
<div>
There are different views of why some managers are better than others. Some say that managers are born that way, while others say good managers are trained. However, good managers do have these distinct characteristics:</div>
<div>
<ul>
<li><b>intelligence: </b>to understand difficult ideas and deal with different issues.</li>
<li><b>initiative: </b>to be able to think of solutions and take control of situations.</li>
<li><b>self-confidence: </b>to be willing to lead others and be a model image.</li>
<li><b>assertiveness and determination: </b>to be able to take command of others and take ideas and solutions to the end.</li>
<li><b>communication skills: </b>to be able to inform subordinates in a clear way so that they will respond positively.</li>
<li><b>energy and enthusiasm: </b>to work with high effort and involvement so that others will follow.</li>
</ul>
<div>
<b>Styles of leadership:</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Different managers use different styles of leadership, and each one makes subordinates react in a certain way. It is important for the managers to choose the appropriate leadership style for the right situation. These styles will be discussed in Chapter 13: Motivation at work.</div>
<div>
<br /></div>
<div>
<b><span class="Apple-style-span" style="font-size: large;"><u>Management involves taking risks: </u></span></b></div>
<div>
<b><br />
</b></div>
<div>
All managers need to make decisions in what they do, whether it is planning, organising, co-ordinating, ect. All as you know, all decisions involve some sort of risk.</div>
<div>
<br /></div>
<div>
<b>Are all decisions as important as each other?</b></div>
<div>
<b><br />
</b></div>
<div>
There are three types of decisions which has their type of importance and the length of time that is is going to affect the business. They are:</div>
<div>
<ul>
<li><b>Strategic: </b>These are very important decisions that will affect the overall success of an organisation. They are long-term decisions such as company goals or growth. They are usually taken by the top management.</li>
<li><b>Tactical: </b>These are decisions that are less important decisions that are taken more frequently. They can include: new ways to train staff, new transportation routes used, advertising methods, etc... They are usually taken by the middle management.</li>
<li><b>Operational: </b>They are day-to-day decisions taken by the lower management. They tend to be repetitive and previous experience could be used to help making these decisions. They can be: inventory/stock levels, ordering goods, dealing with customers.</li>
</ul>
<div>
All of these decisions involve risk. Since they all cost <b>time</b>, <b>money </b>and <b>opportunity </b>cost one should think well before making a decision. </div>
</div>
<div>
<br /></div>
<div>
In business, decisions need to be made and the risks need to be accepted. People like sole traders who have unlimited liability risk loosing all that they own by setting up a business are called <b>entrepreneurs</b>. As we already know they are the <b>managers </b>and <b>risk-takers </b>of a company. Managers in a limited company are not "real" entrepreneurs, because they are not risking their assets but the capital of the shareholders.</div>
<div>
<br /></div>
<div>
<b>How can managers reduce risks when taking decisions?</b></div>
<div>
<b><br />
</b></div>
<div>
Risks are the <b>results of failure</b>. Risks cannot be eliminated, but they can be reduced by the process of making decisions. Here are the steps:</div>
<div>
<ul>
<li><b>Set goals</b>: It is impossible to make decisions if the aims are not clear.</li>
<li><b>Identify and analyse the problem: </b>Managers all make decisions to solve a problem. This problem might be how to use your salary in the most efficient way possible, how to spend the rest of your life, etc... It is imperative that you must understand the problem before finding a solution for it. Otherwise, you might make the wrong decision.</li>
<li><b>Collect data on all possible alternative solutions: </b>It is always important to analyse all possible solutions to find which one is the best. The data collected should also contain <b>constraints </b>and <b>limitations </b>on the possible decisions (e.g. the law).</li>
<li><b>Make the final decisions and put it into effect: </b>This is called <b>implementing the decision</b>. This means that the manager must see to it that the decision is carried out and is working to plan.</li>
<li><b>Review and evaluation of decision: </b>This is looking back at the decision to identify pros and cons of a decision so that the experience can be used in the future. This is often hard to do especially when the wrong decision is made. It is nevertheless necessary.</li>
</ul>
<div>
Here is a decision-making flow chart from the book that will help you visualise the process:</div>
</div>
<div>
<br /></div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-8LW1tFFWXBU/TaGVPf4ySDI/AAAAAAAAADk/TeO5u6PkDnA/s1600/decisionchart.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="180" src="https://4.bp.blogspot.com/-8LW1tFFWXBU/TaGVPf4ySDI/AAAAAAAAADk/TeO5u6PkDnA/s640/decisionchart.jpg" width="500" /></a></div>
<div>
<br /></div>
<div>
<br /></div>
<div>
<b><u><span class="Apple-style-span" style="font-size: large;">Management responsibilities in departments:</span></u></b></div>
<div>
<b><br />
</b></div>
<div>
<b>Human resources department:</b></div>
<div>
<ul>
<li><b>Forecasting </b>staffing needs.</li>
<li><b>Recruiting </b>staff.</li>
<li>Preparing the <b>job descriptions </b>and <b>job specifications</b>.</li>
<li>Planning and implementing staff <b>training </b>programmes.</li>
<li><b>Interviewing </b>and <b>selecting </b>staff.</li>
<li><b>Negotiating </b>with worker representatives, such as union leaders, on <b>wages </b>and <b>working conditions</b>.</li>
<li>Keeping <b>staff records</b>.</li>
<li><b>Disciplining </b>staff</li>
</ul>
<div>
The role of this department is becoming more and more important as the cost of hiring staff rises, so that it is crucial for the HR department to manage people firmly and fairly. An unsuccessful HR department results in a high <b>staff turnover </b>(people leaving the business early). The department must also make sure that the business and staff comply with all employment laws.</div>
</div>
<div>
<br /></div>
<div>
<b>Marketing department:</b></div>
<div>
<ul>
<li>Market research for:</li>
<ul>
<li>New <b>products</b>.</li>
<li>New <b>markets</b>.</li>
<li>New <b>opportunities</b>.</li>
</ul>
<li><b>Planning </b>the release of new products, often working with the Production and R&D departments.</li>
<li>Decide on the best <b>marketing mix</b> (discussed later) for a product and implementing it.</li>
<li>Keeping track of products so <b>extension strategies </b>can be used or to take the product off the market.</li>
</ul>
<div>
The marketing department is crucial for the business to keep in touch with its customers. No business can survive without this kind of function.</div>
</div>
<div>
<br /></div>
<div>
<b>Accounting and finance department:</b></div>
<div>
<b></b><br />
<ul>
<li><b><span class="Apple-style-span" style="font-weight: normal;">Recording all </span>financial transactions<span class="Apple-style-span" style="font-weight: normal;">.</span></b></li>
<b>
<li style="font-weight: normal;">Collecting all the data and presenting it as the <b>regular accounts</b>.</li>
<li><span class="Apple-style-span" style="font-weight: normal;">Preparing all </span>budgets<span class="Apple-style-span" style="font-weight: normal;">.</span></li>
<li><span class="Apple-style-span" style="font-weight: normal;">Analysing the </span>profitability <span class="Apple-style-span" style="font-weight: normal;">of new projects.</span></li>
<li><span class="Apple-style-span" style="font-weight: normal;">Deciding on which </span>source of finance <span class="Apple-style-span" style="font-weight: normal;">to use.</span></li>
<li><span class="Apple-style-span" style="font-weight: normal;">Keeping control over business </span>cash flow<span class="Apple-style-span" style="font-weight: normal;">.</span></li>
</b></ul>
</div>
<div>
<b>Production department/Operations management:</b></div>
<div>
<ul>
<li>Ordering <b>stock/inventory </b>of <b>materials </b>and <b>resources</b> used for producing goods.</li>
<li><b>Developing </b>and <b>designing </b>new products.</li>
<li><b>Locating </b>in the most cost-effective place possible.</li>
<li>Deciding on the <b>methods of production </b>and <b>machinery</b>. Purchase of new machinery will involve the Finance department.</li>
<li>Controlling production to maintain high levels of <b>efficiency</b>.</li>
<li>Maintaining the <b>efficiency </b>of <b>machines</b>.</li>
<li>Keeping the <b>quality </b>high to meet the <b>standards </b>of the consumers. All staff will need to co-operate because poor quality is normally blamed on bad staff. </li>
</ul>
</div>
<div>
<b>Administration department:</b></div>
<div>
<b><br />
</b></div>
<div>
The responsibilities of the Administration department varies with the business it is in. For example, in smaller businesses, the administration department would be the same as the Accounts and Finance department. A larger business will have more specialized administrative department. These are what the the department does:</div>
<div>
<ul>
<li><b>Clerical and office support services: </b>Ensure the smooth running of all other departments.</li>
<ul>
<li><b>Sorting </b>of incoming <b>mail </b>and sorting and franking of outgoing mail.</li>
<li><b>Reception </b>will greet visitors, answer calls, and schedule rooms for meetings.</li>
<li><b>Office </b>tasks will include filing all records. e.g. visitors and calls.</li>
<li><b>Information </b>and <b>data </b>processing.</li>
</ul>
<li><b>Responsibility for the IT system:</b></li>
<ul>
<li>The <b>IT </b>department is part of the Administration department.</li>
<li>Allows <b>information </b>to be <b>delivered </b>between departments <b>accurately</b>.</li>
<li>Provides managers with <b>data </b>to help in decision making.</li>
</ul>
<li><b>Cleaning, maintenance and security:</b></li>
<ul>
<li>Vital for <b>safe </b>and <b>healthy working conditions</b>.</li>
<li>Failure to maintain <b>equipment </b>and <b>the building </b>(e.g. air conditioner) will result in reduced <b>efficiency</b>.</li>
</ul>
</ul>
<div>
The widespread use of <b>computers </b>means that many workers in all departments can do some of these tasks by themselves (clerical and support services), reducing the function of the Administration department and make them less common in businesses.</div>
</div>
<div>
<br /></div>
<div>
That's all for today! Next chapter coming tomorrow!<br />
========================================================================</div>
<div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com29tag:blogger.com,1999:blog-1682051666902505276.post-56211210829787025412012-08-14T19:02:00.000+07:002012-08-20T18:29:03.784+07:00Chapter 12: Communication in business<b><u><span class="Apple-style-span" style="font-family: inherit; font-size: large;">What is effective communication and why is it necessary?</span></u></b><br />
<div>
<b><span class="Apple-style-span" style="font-family: inherit;"><br />
</span></b></div>
<div>
<span class="Apple-style-span" style="font-family: inherit;">Communication is when a <b>message transfered </b>from one person to another and is <b>understood </b>by the latter. We communicate everyday (by talking, by chatting, by texting, etc.) but we need to learn how to communicate <b>effectively</b>. Effective communication means that:</span><br />
<blockquote>
<i><span class="Apple-style-span" style="font-family: inherit;">"The information or message being sent is <b>received</b>, <b>understood </b>and <b>acted upon </b>in the way <b>intended</b>."</span></i></blockquote>
<span class="Apple-style-span" style="font-family: inherit;">In business, ineffective communication or communication failure could result in serious problems. </span><br />
<span class="Apple-style-span" style="font-family: inherit;"></span><br />
<a name='more'></a><span class="Apple-style-span" style="font-family: inherit;"><br />
</span><br />
<span class="Apple-style-span" style="font-family: inherit;"><b>Why do people within business need to communicate with each other?</b></span><br />
<span class="Apple-style-span" style="font-family: inherit;"><b><br />
</b></span><br />
In business, if we do not communicate, we would be working as individuals with no co-ordination with anybody else in the business. The management, whose tasks are guiding, instructing and commanding subordinates could not be done because they cannot communicate with them. Here are some common messages found in the workplace:<br />
<ul>
<li>No Smoking (sign)</li>
<li>You are fired because you are always late (letter)</li>
<li>Do not touch (sign)</li>
<li>There will be a fire drill 11:00 today (noticeboard)</li>
</ul>
<div>
There are many more things that are communicated. Consequences would be severe if these matters are not communicated effectively. </div>
<div>
<br /></div>
<div>
<b><span class="Apple-style-span" style="font-size: large;"><u>The process of effective communication:</u></span></b></div>
<div>
<b><br />
</b></div>
<div>
Effective communication involves four features:</div>
<div>
<ul>
<li>The <b>transmitter/sender </b>who sends the message. He has to choose the next two features carefully for effective communication.</li>
<li>The <b>medium of communication</b>. It is the method of communication, e.g. noticeboard, letter, etc...</li>
<li>The <b>receiver </b>who receives the message. </li>
<li><b>Feedback </b>means that the receiver has received the message and <b>responds</b> to it. This confirms that the message has been <b>understood </b>and <b>acted upon </b>if necessary.</li>
</ul>
<div>
<b><u><span class="Apple-style-span" style="font-size: large;">One-way and two-way communication</span></u></b></div>
</div>
</div>
<div>
<b><br />
</b></div>
<div>
There are two types of communication. <b>One-way </b>communication is when there is no feedback required for the message, or the receiver is not allowed to reply. This might be the sign that says "No smoking", or your boss saying: "give me a biscuit". The other is <b>two-way </b>communication, when feedback is required. Therefore, both people are now involved in the communication process. This could lead to better and clearer information.</div>
<div>
<br /></div>
<div>
<b>Pros of two-way communication:</b></div>
<div>
<ul>
<li>The sender can now <b>know </b>whether the <b>receiver </b>has <b>understood </b>and <b>acted upon </b>the message or not. If they have not, the message might have to be <b>sent again </b>or <b>made clearer</b>. Effective communication takes place only if the message is understood by the receiver.</li>
<li><b>Both </b>people are <b>involved </b>in the communication process. This makes the receiver feel more <b>important </b>which might <b>motivate </b>them to make better contributions to the topic discussed.</li>
</ul>
<div>
<b><u><span class="Apple-style-span" style="font-size: large;">Internal and external communication</span></u></b></div>
</div>
<div>
<b><br />
</b></div>
<div>
<b>Internal </b>communication is messages sent between people <b>inside </b>a business. For example:</div>
<div>
<ul>
<li>The boss talking to his subordinates.</li>
<li>A report sent to the CEO.</li>
</ul>
<div>
<b>External </b>communication refers to messages sent to people or organisations outside the business. For example:</div>
</div>
<div>
<ul>
<li>Orders for goods from suppliers.</li>
<li>Talking to customers.</li>
<li>Advertising to the public.</li>
</ul>
<div>
Both types of communication is almost the same, the only difference is <b>who </b>is being communicated with.</div>
</div>
<div>
<br /></div>
<div>
<b>Why external communication has to work well</b></div>
<div>
<b><br />
</b></div>
<div>
External communication can greatly affect the <b>efficiency </b>and <b>image </b>of a business. Imagine if the wrong information is sent to a supplier and a customer. The supplier would send wrong materials while the customer might buy products from another company. Here are some cases which ineffective external communication might turn out to be very dangerous:</div>
<div>
<ul>
<li>The Finance Manager writes to the tax office inquiring about the amount of tax that must be paid this year.</li>
<li>The Sales Manager receives an order of 330 goods to be delivered on Wednesday.</li>
<li>The business must contact thousands of customers because a product turned out to be dangerous. An add must be put into the newspaper so that customers can return the product for a refund.</li>
</ul>
<div>
<b><u><span class="Apple-style-span" style="font-size: large;">Different ways of communicating: the communication media</span></u></b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Information can be transmitted in several ways:</div>
<div>
<ul>
<li><b>Verbal</b>: Involves the sender <b>speaking </b>to the receiver.</li>
<li><b>Written</b>: The message is <b>written </b>to the receiver.</li>
<li><b>Visual</b>: Using <b>charts</b>, <b>videos</b>, <b>images </b>or <b>diagrams </b>to communicate a message.</li>
</ul>
<div>
There is no best method of communication, so the appropriate medium of communication must be selected depending on the situation. First the sender also has to analyse the advantages and disadvantages of each type of communication.</div>
</div>
<div>
<br /></div>
<div>
<b>Verbal communication</b></div>
<div>
<b><br />
</b></div>
<div>
Verbal/Oral communication might be:</div>
<div>
<ul>
<li>One-to-one talks.</li>
<li>Telephone conversations.</li>
<li>Video conferencing.</li>
<li>Meetings.</li>
</ul>
<div>
<b>Pros:</b></div>
</div>
<div>
<ul>
<li>Information is transferred <b>quickly</b>. This is an efficient way to communicate in meeting to lots of people.</li>
<li>There is opportunity for <b>immediate feedback </b>which results in <b>two-way </b>communication.</li>
<li>The message might be <b>enforced </b>by <b>seeing </b>the speaker. Here the <b>body language </b>and <b>facial expression </b>could make the message easily understood.</li>
</ul>
<div>
<b>Cons:</b></div>
</div>
<div>
<ul>
<li>In big meetings, we do not know if everybody is <b>listening </b>or has <b>understood </b>the message.</li>
<li>It can take <b>longer </b>for <b>verbal feedback </b>to occur than <b>written feedback</b>.</li>
<li>Verbal communication is <b>inappropriate </b>for storing <b>accurate </b>and <b>permanent </b>information if a message. (e.g. warning to a worker)</li>
</ul>
<div>
<b>Written communication including electronic communication</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Here are some written forms of communication:</div>
<div>
<ul>
<li><b>Letters</b>: Used for both external and internal communication. Follows a set structure.</li>
<li><b>Memos</b>: Used only for internal communication.</li>
<li><b>Reports</b>: Detailed documents about any problem. They are done by specialists who send them to managers to analyse before meetings. These reports are often so detailed that they cannot be understood by all employees.</li>
<li><b>Notices</b>: Pinned to noticeboards that offer information to everyone. However, there is no certainty on whether they are read or not.</li>
<li><b>Faxes</b>: Written messages sent to other offices via telephone lines.</li>
<li><b>E-mails</b>: Messages sent between people with the same <b>computing facilities</b>. The message is printed if a <b>hard copy</b> is needed.</li>
<ul>
<li><b>Intranet</b>: A network inside a business which lets all employees with a computer message each other.</li>
<li><b>Internet</b>: The global network for messaging anyone. (e.g. customers, suppliers)</li>
</ul>
</ul>
<div>
<b>Pros:</b></div>
</div>
<div>
<ul>
<li>There is <b>hard evidence </b>of the message which can be referred to and help solve <b>disputes </b>in the <b>future </b>over the content of the message.</li>
<li>It is needed when <b>detailed </b>information is transferred: it could be easily <b>misunderstood</b>. Some countries the law states that businesses need to put safety notices up because people could <b>forget</b> them.</li>
<li>The written message can be <b>copied </b>and sent to <b>many people</b>.</li>
<li><b>Electronic communication </b>is a <b>quick </b>and <b>cheap </b>way to get to many people.</li>
</ul>
<div>
<b>Cons: </b></div>
</div>
<div>
<ul>
<li> <b>Direct </b>feedback is not always possible, unless electronic communication is used. However, this could result in too many emails sent (<b>information overload</b>). Direct feedback via other means of written communication is hard.</li>
<li>It is not as easy to <b>check </b>whether the message has been <b>understood </b>or <b>acted upon</b>.</li>
<li>The <b>language </b>used might be <b>difficult </b>to <b>understand</b>. The message might be <b>too long </b>and <b>disinterest </b>the reader.</li>
<li>There is no opportunity for <b>body language </b>to be used to <b>enforce </b>the message.</li>
</ul>
<div>
<b>Visual communication</b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Here are some forms of visual communication:</div>
<div>
<ul>
<li><b>Films</b>, <b>videos</b>, and <b>PowerPoint displays</b>: often to help train new staff or inform sales people about new products.</li>
<li><b>Posters</b>: can be used to explain a simple but important message. (e.g. propaganda poster)</li>
<li><b>Charts </b>and <b>diagrams</b>: Can be used in letters or reports to <b>simplify </b>and <b>classify </b>complicated data. Computer technology could help in the design of these charts or diagrams. A printed copy might be needed for <b>hard </b>data to add to reports and documents.</li>
</ul>
<div>
<b>Pros:</b></div>
</div>
<div>
<ul>
<li>Present information in an <b>appealing </b>and <b>attractive </b>way that <b>encourages </b>people to look at it.</li>
<li>They can be used to make a written message <b>clearer </b>by adding a picture or a chart to illustrate the point being made.</li>
</ul>
<div>
<b>Cons:</b></div>
</div>
<div>
<ul>
<li><b>No feedback </b>is possible. People need to checked via verbal or written communication to check that they have understood the message.</li>
<li>Charts and graphs might be <b>difficult </b>for some people to <b>understand</b>. The message might be misunderstood if the receiver <b>does not know how </b>to <b>interpret </b>a <b>technical diagram</b>.</li>
</ul>
<div>
<b><u><span class="Apple-style-span" style="font-size: large;">Formal and informal communication</span></u></b></div>
</div>
<div>
<b><br />
</b></div>
<div>
<b>Formal communication </b>is the channel of communication that is <b>recognised </b>by the business, such as notices on boards, emails and memos. Formal means of communication is important. It shows that the information given is true.</div>
<div>
<br /></div>
<div>
<b>Informal communication </b>might be communication between friends and co-workers. There is no set structure and the information transferred is not <b>recognised </b>by the business. This channel of communication could be used by the manager to <b>try out new ideas</b>, before publicly announcing it to the rest of a company. However, informal communication can result in <b>gossip </b>can <b>rumour</b>, and managers have no way to remove these informal links from people.</div>
<div>
<br /></div>
<div>
<b><u><span class="Apple-style-span" style="font-size: large;">Communication nets</span></u></b></div>
<div>
<b><br />
</b></div>
<div>
There are many groups of people in any organisation, and each of them communicate in different ways. People have connections with each other, and these links form <b>communication nets</b>. There are three standard types of communication nets:</div>
<div>
<br /></div>
<div>
<b>Chain network:</b></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://3.bp.blogspot.com/-P0yNhn5p47Y/TaLs5xmZZQI/AAAAAAAAADo/ukbQfWGCzqM/s1600/chain+network.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="200" src="http://3.bp.blogspot.com/-P0yNhn5p47Y/TaLs5xmZZQI/AAAAAAAAADo/ukbQfWGCzqM/s200/chain+network.jpg" width="77" /></a></div>
<div>
<b><br />
</b></div>
<div>
<span class="Apple-style-span" style="color: red;">+ </span>Can be used to transfer <b>important messages </b>from higher management levels to lower levels.</div>
<div>
<span class="Apple-style-span" style="color: blue;"> - </span>This often leads to <b>one way </b>communication.</div>
<div>
<span class="Apple-style-span" style="color: blue;">- </span>The message could become <b>altered </b>as it passes through different management levels.</div>
<div>
<br /></div>
<div>
<b>Wheel network:</b></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-rwK-EyMVj6k/TaLs_4cYPZI/AAAAAAAAAD0/Jh2pyltFgTc/s1600/wheel+network.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="177" src="http://1.bp.blogspot.com/-rwK-EyMVj6k/TaLs_4cYPZI/AAAAAAAAAD0/Jh2pyltFgTc/s320/wheel+network.jpg" width="320" /></a></div>
<div>
<b><br />
</b></div>
<div>
<span class="Apple-style-span" style="color: red;">+ </span>The central management can pass messages to <b>all departments </b>quickly.</div>
<div>
<span class="Apple-style-span" style="color: blue;"> -</span><span class="Apple-style-span" style="color: blue;"> </span>The departments <b>cannot </b>communicate <b>directly between themselves</b>.</div>
<div>
<br /></div>
<div>
<b>Connected network:</b></div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-pNLgjBkVYUo/TaLs8pISydI/AAAAAAAAADs/wcXYtVhsZ_k/s1600/connected+network.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="209" src="http://4.bp.blogspot.com/-pNLgjBkVYUo/TaLs8pISydI/AAAAAAAAADs/wcXYtVhsZ_k/s320/connected+network.jpg" width="320" /></a></div>
<div>
<b><br />
</b></div>
<div>
<span class="Apple-style-span" style="color: red;">+</span><span class="Apple-style-span" style="color: red;"> </span>This is used to <b>create </b>or <b>discuss new ideas</b>.</div>
<div>
<span class="Apple-style-span" style="color: red;">+</span><span class="Apple-style-span" style="color: red;"> </span>It specialises in <b>two-way communication</b>.</div>
<div>
<span class="Apple-style-span" style="color: blue;"> -</span><span class="Apple-style-span" style="color: blue;"> </span>Can be <b>time-consuming</b>.</div>
<div>
<span class="Apple-style-span" style="color: blue;"> -</span><span class="Apple-style-span" style="color: blue;"> </span>There is no <b>clear leader </b>or <b>sender </b>of messages.</div>
<div>
<br /></div>
<div>
<b>Which network works best?</b></div>
<div>
<b><br />
</b></div>
<div>
There is again, no best network. A company is likely to use different network at <b>different times </b>or for <b>different groups</b>.</div>
<div>
<ul>
<li>The <b>chain network</b> is for communicating <b>important business policies</b>.</li>
<li>The <b>wheel network</b> is used for sending different messages to different <b>departments</b>.</li>
<li>The <b>connected network</b> is used to generate new <b>ideas </b>or <b>solutions </b>to problems where <b>group discussion </b>is the most effective.</li>
</ul>
<div>
<b><u><span class="Apple-style-span" style="font-size: large;">The direction of communications</span></u></b></div>
</div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://2.bp.blogspot.com/-I-r1q5ByE4k/TaLs9_Y-PhI/AAAAAAAAADw/dQakHFxjo18/s1600/direction+of+communication.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="230" src="http://2.bp.blogspot.com/-I-r1q5ByE4k/TaLs9_Y-PhI/AAAAAAAAADw/dQakHFxjo18/s640/direction+of+communication.jpg" width="550" /></a></div>
<div>
<b><br />
</b></div>
<div>
Here is an organisation chart from the book explaining the direction of communications within the business. The arrows are labeled A, B and C which shows the direction of communication:</div>
<div>
<ul>
<li><b>Arrow A (downwards communication)</b>: </li>
<ul>
<li>Used by managers to send <b>important messages</b> to <b>subordinates</b>.</li>
<li>Does <b>not </b>allow <b>feedback</b>.</li>
<li>The message might be <b>altered </b>after passing different levels.</li>
</ul>
<li><b>Arrow B (upwards communicati</b><b>on)</b>:</li>
<ul>
<li>Used by subordinate send <b>feedback </b>to <b>managers</b>. </li>
<li>Feedback from subordinates ensures that there is <b>effective communication</b>.</li>
<li>Feedback results in higher <b>morale </b>and new <b>ideas </b>contributed to the business.</li>
</ul>
<li><b>Arrow C (horizontal/lateral communication)</b>:</li>
<ul>
<li>People at the <b>same level </b>of management communicate with each other.</li>
<li>Information and ideas can be exchanged both <b>formally </b>and <b>informally</b>.</li>
<li>Can cause <b>conflict </b>between departments. (e.g. Production department asks the Finance department for a budget to hire new staff but is rejected)</li>
</ul>
</ul>
<div>
<b><u><span class="Apple-style-span" style="font-size: large;">Barriers to effective communication</span></u></b></div>
</div>
<div>
<b><u><br />
</u></b></div>
<div>
As we already know, the four parts of effective communication includes the <b>sender</b>,<b> medium</b>,<b> receiver </b>and<b> feedback</b>. However, communication may fail if there are problems with one of these four features. If one part fails, it becomes a <b>barrier to effective communication </b>which might cause a <b>breakdown in communication </b>resulting in serious consequences to the business. Here are some common barriers to effective communication and how to overcome them.</div>
<div>
<br /></div>
<div>
<b>Problems with sender:</b></div>
<div>
<ul>
<li><b>Problem: </b>Language is too difficult to understand. Technical <b>jargon </b>may not be understood.<br />
<b><span class="Apple-style-span" style="color: blue;">Solution: </span></b><span class="Apple-style-span" style="color: blue;">The sender should ensure that the receiver can <b>understand </b>the message.</span></li>
<li><b style="font-weight: bold;">Problem:</b><span class="Apple-style-span" style="font-weight: normal;"> </span><span class="Apple-style-span" style="font-weight: normal;">There are problems with </span><b>verbal </b><span class="Apple-style-span" style="font-weight: normal;">means of communication. (e.g speaking too quickly)</span><br />
<b><span class="Apple-style-span" style="color: blue;">Solution: </span></b><span class="Apple-style-span" style="color: blue;">The sender should make the message as <b>clear </b>as possible and ask for <b>feedback</b>.</span></li>
<li><b>Problem:</b><span class="Apple-style-span" style="font-weight: normal;"> </span><span class="Apple-style-span" style="font-weight: normal;">The sender sends the </span><b>wrong message </b><span class="Apple-style-span" style="font-weight: normal;">to the </span><b>wrong receiver</b><span class="Apple-style-span" style="font-weight: normal;">.</span><br />
<b><span class="Apple-style-span" style="color: blue;">Solution:</span></b><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style="color: blue;"> The sender must ensure that the </span></span><span class="Apple-style-span" style="color: blue;"><b>right person </b>is receiving the <b>right message</b>.</span></li>
<li><b>Problem:</b><b style="font-weight: normal;"> The message is </b><b>too long </b>with too much <b>detail </b>which prevents the <b>main points </b>from being understood.<br />
<span class="Apple-style-span" style="color: blue;"><b>Solution:</b><b style="font-weight: normal;"> The message should be </b><b>brief </b>so that the <b>main points </b>are understood.</span></li>
</ul>
<div>
<b>Problems with the medium:</b></div>
</div>
<div>
<ul>
<li><b>Problem:</b><b style="font-weight: normal;"> The message may be </b><b>lost</b>.<br />
<span class="Apple-style-span" style="color: blue;"><b>Solution:</b><b style="font-weight: normal;"> Check for </b><b>feedback</b>. Send the message <b>again!</b></span></li>
<li><b>Problem:</b><b style="font-weight: normal;"> </b>The <b>wrong channel </b>has been used.<br />
<span class="Apple-style-span" style="color: blue;"><b>Solution:</b><b style="font-weight: normal;"> Ensure the </b><b>appropriate channel </b>is selected.</span></li>
<li><b>Problem:</b><b style="font-weight: normal;"> </b>Message could be <b>distorted </b>after moving down a long chain of command.<br />
<span class="Apple-style-span" style="color: blue;"><b>Solution:</b><b style="font-weight: normal;"> The </b><b>shortest channel </b>should be used to avoid this problem.</span></li>
<li><b>Problem:</b><b style="font-weight: normal;"> </b><b>No feedback </b>is received.<br />
<span class="Apple-style-span" style="color: blue;"><b>Solution:</b><b style="font-weight: normal;"> </b><b>Ask </b>for it! Use <b>different methods </b>of communication (e.g. meeting)</span></li>
<li><b>Problem:</b><b style="font-weight: normal;"> </b><b>Breakdown </b>of the medium.<br />
<span class="Apple-style-span" style="color: blue;"><b>Solution:</b><b> </b>Use <b>other forms </b>of communication.</span></li>
</ul>
<div>
<b>Problems with the receiver:</b></div>
</div>
<div>
<ul>
<li><b>Problem:</b><b style="font-weight: normal;"> They might not be </b><b>listening</b><b style="font-weight: normal;"> or </b><b>paying </b><b>attention</b><b style="font-weight: normal;">.</b><br />
<span class="Apple-style-span" style="color: blue;"><b>Solution:</b><b style="font-weight: normal;"> The </b><b>importance </b><b style="font-weight: normal;">of the message should be </b><b>emphasised</b>. Request <b>feedback</b>.</span></li>
<li><b>Problem:</b><b style="font-weight: normal;"> The receiver might not like or </b><b>trust </b>the sender, and may be <b>unwilling </b>to <b>act upon </b>the message.<br />
<span class="Apple-style-span" style="color: blue;"><b>Solution: Trust </b>is needed for effective communication. Use <b>another sender </b>to communicate the message.</span></li>
</ul>
<div>
<b>Problems with the feedback:</b></div>
</div>
<div>
<ul>
<li><b>Problem:</b><b style="font-weight: normal;"> There is </b><b>no </b><b>feedback</b><b style="font-weight: normal;">.</b><br />
<span class="Apple-style-span" style="color: blue;"><b>Solution:</b><b style="font-weight: normal;"> </b><b>Ask </b>for feedback. Use a different <b>method </b>of communication which <b>allows feedback</b>.</span></li>
<li><b>Problem: </b>The feedback is received <b>too slowly </b>and may be <b>distorted</b>.<br />
<span class="Apple-style-span" style="color: blue;"><b>Solution: Direct lines of communication </b>should be available between the subordinate and the manager.</span></li>
</ul>
<div>
<b>Note: </b>The <b>forms </b>of communication are: verbal, written and visual.</div>
</div>
<div>
The <b>methods </b>of communication can be: telephone, e-mail, meeting, etc...</div>
<div>
<br /></div>
<div>
Finished! Enjoy your Pi Mai holidays and have fun! Next chapter coming tomorrow!</div>
<div>
======================================================================</div>
<div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com28tag:blogger.com,1999:blog-1682051666902505276.post-32303563688367142262012-08-13T16:08:00.000+07:002012-08-20T18:28:38.196+07:00Chapter 13: Motivation at work<span class="Apple-style-span" style="font-size: large;"><b><u>Motivation</u></b></span><br />
<span class="Apple-style-span" style="font-size: large;"><b><u><br />
</u></b></span><br />
People work for a number of reasons. Most people work because they need to earn money to survive, while others work voluntarily for other reasons. <b>Motivation </b>is the reason why people work, and it <b>drives </b>them to work better. Therefore, managers try to find out what motivate workers and use them to encourage workers to work <b>more efficiency</b>. This results in higher <b>productivity</b>, increased <b>output</b>, and ultimately higher <b>profits</b>.<br />
<ul>
<li>Nowadays, machinery is more common in businesses which results in increased productivity as well. However, the amount that a well motivated workforce can produce must still be recognised, since employees are a firms greatest assets!</li>
</ul>
<br />
<a name='more'></a><br />
<br />
<b><u><span class="Apple-style-span" style="font-size: large;">Motivation theories</span></u></b><br />
<b><br />
</b><br />
People work very hard when they are working for themselves. When they work for other people, less so. Managers have been looking into what makes employees contribute their fullest to the company and these studies have resulted four main theories of motivation.<br />
<br />
<b><u>F.W.Taylor</u></b><br />
<b><br />
</b><br />
<b>Theory:</b><br />
<ul>
<li><b>Money </b>is the main motivator.</li>
<li>If employees are <b>paid more</b>, they <b>work more</b>.</li>
<li>Work is broken down into simple processes, and <b>more money </b>is paid which will increase the <b>level </b>of <b>productivity </b>an employee will achieve.</li>
<li>The <b>extra pay </b>is <b>less </b>than the <b>increased productivity</b>.</li>
</ul>
<div>
<b>Cons:</b></div>
<div>
<ul>
<li>Workers are seen rather like <b>machines</b>, and this theory does not take into account <b>non-financial motivators</b>.</li>
<li>Even if you pay more, there is <b>no guarantee</b> of a productivity rise.</li>
<li>It is <b>difficult </b>to <b>measure </b>an employees output.</li>
</ul>
<div>
<b><u>Maslow</u></b></div>
</div>
<div>
<b><u><br />
</u></b></div>
<div>
Maslow created what is know as the <b>hierarchy of needs</b>. </div>
<div>
<br /></div>
<div>
In this diagram, there are 5 different types of motivation:</div>
<div>
<ul>
<li><b>Physiological needs: </b>basic requirements for survival.</li>
<li><b>Security needs: </b>the need to by physically safe.</li>
<li><b>Social needs: </b>the need to belong and have good relationships with co-workers.</li>
<li><b>Esteem needs: </b>the need for self-respect and to be respected by others.</li>
<li><b>Self-actualisation needs: </b>the need to reach your full potential and be promoted.</li>
</ul>
<div>
Businesses realise that the more <b>levels of motivation </b>are available to workers, the harder they will work. Maslow also suggest that each level of motivation <b>must</b> be <b>achieved before </b>going to the <b>next level</b>. Once one level of motivation is met, more of that will<b> no longer </b>motivate the employee. </div>
</div>
<div>
<br /></div>
<div>
<b>Cons:</b></div>
<div>
<ul>
<li>Some levels are <b>not present </b>in some jobs.</li>
<li>Some rewards belong to <b>more than one level </b>on others.</li>
<li>Managers <b>need </b>to <b>identify </b>the levels of motivation in any job before using it to motivate employees.</li>
</ul>
<div>
<b><u>Herzberg</u></b></div>
</div>
<div>
<b><u><br />
</u></b></div>
<div>
To Herzberg, humans have <b>hygiene factors</b>, or basic animal needs of humans. We also have <b>motivational factors/motivators</b>, that are required for the human to grow psychologically. </div>
<div>
<br /></div>
<div>
<b>Hygiene factors:</b></div>
<div>
<ul>
<li>Status.</li>
<li>Security.</li>
<li>Working conditions.</li>
<li>Company policies and administration.</li>
<li>Relationship with supervisor.</li>
<li>Relationship with subordinates.</li>
<li>Salary.</li>
</ul>
</div>
<div>
<b>Motivational factors:</b></div>
<div>
<ul>
<li>Achievement.</li>
<li>Recognition.</li>
<li>Personal growth/development.</li>
<li>Advancement/promotion.</li>
<li>Job satisfaction.</li>
</ul>
</div>
<div>
To Herzberg, if the hygiene factors are <b>not satisfied</b>, they will act as <b>demotivators</b>. They are <b>not motivators</b>, since the motivating effect quickly wears off after they have been satisfied. True motivators are are Herzberg's motivational factors.</div>
<div>
<br /></div>
<div>
<b><u>McGregor</u></b></div>
<div>
<b><u><br />
</u></b></div>
<div>
McGregor splits his theory into what managers believe. One type believes in <b>theory X</b>, while the other type believes in <b>theory Y</b>. Here is the table:</div>
<div>
<br /></div>
<div>
Here are some differences in how a <b>X manager </b>will work and how an <b>Y manager </b>will work:</div>
<div>
<ul>
<li>X managers believe that people are naturally lazy, and has to be pushed with <b>external factors </b>to work harder. (e.g. higher pay).</li>
<li>Y managers believe that people want to do a good days work but need a good <b>environment </b>to do the work. A better environment is an <b>internal factor</b>.</li>
<li>X managers will try to provide <b>incentives </b>and <b>supervision </b>for employees to work hard.</li>
<li>Y managers will try to provide a <b>favourable environment </b>so that employees can enjoy their work.</li>
</ul>
<div>
Theory's like <b>Taylor's theory </b>are X theories, while others like <b>McGregor's theory </b>are Y theories. People may say that money is the main motivator, but studies have shown that many people leave jobs because other motivational factors are not available to them.</div>
</div>
<div>
<br /></div>
<div>
<b><u><span class="Apple-style-span" style="font-size: large;">Why do people work?</span></u></b><br />
<b><u><br />
</u></b><br />
Here is a summary of why people work:<br />
<br />
<ul>
<li><b>Money</b>: to satisfy needs and wants.</li>
<li><b>Security</b>: knowing that you are physically safe and have job security.</li>
<li><b>Social</b> <b>needs</b>: to belong to a group, making friends at work.</li>
<li><b>Esteem needs </b>(self importance): feeling important, feeling the job you do is important.</li>
<li><b>Job satisfaction</b>: enjoyment from the feeling of having done a good job. </li>
</ul>
<div>
<b><u><span class="Apple-style-span" style="font-size: large;">Motivating factors - financial motivators</span></u></b></div>
<div>
<b><u><br />
</u></b></div>
<div>
There are three ways to motivate a workforce:</div>
<div>
<ul>
<li>financial motivators</li>
<li>non-financial motivators </li>
<li>ways to increase job satisfaction</li>
</ul>
<div>
<b><u>Financial rewards</u></b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Pay may be the basic reason why people work, but different kinds of pay can motivate people differently. Here are the most common methods of payment:</div>
<div>
<b><br />
</b></div>
<div>
<b><span class="Apple-style-span" style="font-size: large;">Wages</span></b></div>
<div>
<br /></div>
<div>
<b></b>Wages are paid <b>every week</b>, in <b>cash </b>or straight into the bank account, so that the employee does not have to wait long for his/her money. People tend to pay wages to<b> </b>manual workers. Since wages are paid weekly, they must be calculated every week which takes time and money. <b>Wages clerks </b>are paid to do this task. Workers get <b>extra pay </b>for the <b>overtime </b>that they do. There are some ways that wages could be calculated:</div>
<div>
<b><br />
</b></div>
<div>
<b><u>Time rate</u>: </b>Time rate is payment according<b> </b>to how many <b>hours </b>an employee has worked. It is used in businesses where it is difficult to measure the output of a worker.<br />
<ul>
<li>+ Easy to calculate the wage of the employee. A <b>time-sheet </b>must be filled out by the Accounts department to calculate the wage.</li>
<li> - Both good and bad workers get paid the same wages. Therefore, more <b>supervisors </b>are needed to maintain good productivity. a <b>clocking-in system </b>is needed to know how many hours an employee has done.</li>
</ul>
<div>
Here is an example of a wage slip and time-sheet:</div>
<div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-Nv24KJUvY_c/TaQVgBFDMwI/AAAAAAAAAD4/qwNF3qEnvkc/s1600/wage+slip.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="155" src="http://4.bp.blogspot.com/-Nv24KJUvY_c/TaQVgBFDMwI/AAAAAAAAAD4/qwNF3qEnvkc/s400/wage+slip.jpg" width="400" /></a></div>
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://3.bp.blogspot.com/-rfXVQHRLoDw/TaQVjH6peLI/AAAAAAAAAD8/CA1Y269Ip3I/s1600/timeslip.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="233" src="http://3.bp.blogspot.com/-rfXVQHRLoDw/TaQVjH6peLI/AAAAAAAAAD8/CA1Y269Ip3I/s400/timeslip.jpg" width="400" /></a></div>
They show:</div>
<div>
<ul>
<li><b>Basic pay + Overtime = Gross Pay </b></li>
<li><b>Gross pay - Deductions = Net Pay</b></li>
</ul>
<div>
<b>Deductions </b>include:</div>
</div>
<div>
<ul>
<li>Taxes</li>
<li>Pension</li>
<li>Union fees</li>
<li>National insurance: entitles the payee to short-term <b>unemployment benefits</b>, <b>sickness benefits </b>and <b>state pension</b>.</li>
</ul>
</div>
<b><u>Piece rate</u>: </b>Piece rates are paid depending on <b>how many units </b>they have produced. There is usually a base pay (<b>minimum wage</b>) and the piece rate is calculated as a bonus on how many units were created. Piece rates are found in businesses where it is possible to measure a workers productivity.</div>
<div>
<ul>
<li>+ Encourages workers to work <b>faster </b>and produce <b>more goods</b>.</li>
<li> - Workers will often <b>neglect quality</b>, and businesses will need a <b>quality control system </b>which is <b>expensive</b>.</li>
<li> - Workers who <b>focus </b>on <b>quality </b>will <b>earn less</b>. <b>Tension </b>is caused when some workers <b>earn more </b>than others.</li>
<li> - If <b>machinery breaks down</b>, employees earn less. That is why there is a guaranteed <b>minimum pay</b>.</li>
</ul>
<div>
<b><span class="Apple-style-span" style="font-size: large;">Salaries</span></b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Salaries are paid <b>monthly</b>, and normally straight into the <b>bank account</b>. They are usually for <b>white collar workers</b>. A salary is counted as an <b>amount per year </b>that is divided into <b>12 monthly accounts</b>. You <b>do not </b>usually receive <b>overtime</b>. Managers only need to pay their workers once a month, and since the amount is transferred by the bank, the manager loses much less time and money calculate salary.<br />
<br />
Salaries are usually a standard rate, but other <b>rewards </b>could be given to employees:<br />
<br />
<ul>
<li><b><u>Commission</u>: </b>A <b>percentage </b>is paid, usually to sales staff, depending on the <b>value </b>of <b>goods </b>they have sold. Workers are encouraged to sell more. However, they could persuade customers to buy products they don'r really want, making the company look bad. Just like the piece rate, in a bad month where there are little sales, worker's pay will fall.</li>
<li><b><u>Profit sharing</u>: </b>Employees receive a <b>percentage </b>of the <b>profits </b>made. However, they will get nothing if the business doesn't make a profit. This is often used in the service sector, where it is hard to find an employees contribution to the company.</li>
<li><b><u>Bonus</u>: </b>A <b>lump sum </b>paid to employees who have done well. It is usually paid at the end of the year or before holidays. However, this could cause jealousy between workers. Giving bonuses to a <b>team </b>works better.</li>
<li><b><u>Performance related pay</u>: </b>Employee pay is linked to the <b>effectiveness </b>of their work. It is often used in organisations where it is hard to measure productivity. It uses the system of <b>appraisal</b>: employees are observed and their colleagues are interviewed to determine their effectiveness. Afterwards, the immediate superior of the employee has a meeting with them to discuss their effectiveness. </li>
<li><b><u>Share ownership</u>: </b>Employees receive some <b>shares </b>from the company. They will either benefit from <b>dividends </b>or <b>sell </b>the shares when their <b>price </b>has <b>risen</b>. They will be more <b>motivated </b>because they feel like a <b>part </b>of the company.</li>
</ul>
<div>
<div>
<div style="margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px;">
<b><u><span class="Apple-style-span" style="font-size: large;">Motivating factors - non-financial motivators</span></u></b></div>
</div>
<div>
</div>
</div>
<div>
<br /></div>
<div>
There are other factors that motivate people in a business, and they are often called <b>perks </b>or <b>fringe benefits</b>. They may be having free accommodation, free car, etc... However, when you look at it, it is just money in different forms. Here is a list of these motivators:</div>
<div>
<ul>
<li>Children's education.</li>
<li>Discounts on company products.</li>
<li>Free Healthcare.</li>
<li>Company vehicle.</li>
<li>Free accommodation.</li>
<li>Share options.</li>
<li>Expense accounts.</li>
<li>Pension.</li>
<li>Free holidays.</li>
</ul>
<div>
<b><u>Job satisfaction: </u></b></div>
</div>
<div>
<b><br />
</b></div>
<div>
Employees will become more motivated by <b>enjoying </b>the job they do. Job satisfaction can come in different ways. However, there are some <b>factors </b>that <b>demotivate </b>employees if they are not satisfied, and must be satisfied before the motivators can take effect. Here are some things that make workers' jobs satisfying:</div>
<div>
<ul>
<li>Pay.</li>
<li>Promotion.</li>
<li>working conditions.</li>
<li>Fringe benefits.</li>
<li>Management</li>
<li>Working hours.</li>
<li>The nature of the work itself.</li>
<li>Colleagues, etc...</li>
</ul>
<div>
Herzberg and Maslow stresses that things such as <b>responsibility </b>recognition <b>is also crucial </b>to provide job satisfaction. Letting workers contribute to the job would also help, making jobs less boring and more creative. Here are some policies to increase job satisfaction:</div>
</div>
<div>
<br /></div>
<div>
<b>Job rotation:</b></div>
<div>
<b><br />
</b></div>
<div>
Workers in a <b>production line </b>can now change jobs with each other and making their jobs not so boring. It helps <b>train </b>the employee in different aspects of their jobs so that they can <b>cover </b>for other employees if they do not show up.</div>
<div>
<br /></div>
<div>
<b>Job enlargement: </b></div>
<div>
<b><br />
</b></div>
<div>
Adding tasks of a <b>similar level </b>to a worker's job. Job enlargement simply gives more <b>variety </b>to employees' work which makes it more enjoyable.</div>
<div>
<br /></div>
<div>
<b>Job enrichment:</b></div>
<div>
<b><br />
</b></div>
<div>
Adding tasks of a <b>higher level</b> to a worker's job. Workers<b> </b>may need <b>training</b>, but they will be taking a step closer to their <b>potential</b>. Workers become more <b>committed </b>to their job which gives them more satisfaction.</div>
<div>
<br /></div>
<div>
<b>Autonomous work groups or teamworking:</b></div>
<div>
<b><br />
</b></div>
<div>
This is when <b>group </b>of workers are given <b>total responsibility </b>to organise themselves and perform a task. This makes the employees feel more <b>important</b>, as well as giving them a sense of <b>belonging </b>when they are part of a team. If they organise themselves differently every time, the team could get <b>job enlargement </b>and <b>job enrichment </b>too!</div>
<div>
<br /></div>
<div>
<b><u><span class="Apple-style-span" style="font-size: large;">Leadership</span></u></b></div>
<div>
<b><u><br />
</u></b></div>
<div>
Studies have shown that leadership has a great impact on worker's motivation. Good managers have <b>leadership skills </b>that <b>inspire </b>their workers to work better, as well as directing them with a common <b>goal</b>. Managers use many styles of leadership, and they can be summarised into 3 main styles:</div>
<div>
<br /></div>
<div>
<b>Autocratic leadership:</b></div>
<div>
<ul>
<li>The manager <b>controls all aspects </b>of their subordinates' <b>work</b>.</li>
<li>They keep themselves <b>separate </b>from employees.</li>
<li>Employees are expected to obey every <b>command</b> and <b>cannot contribute </b>to decisions.</li>
<li>Communication is only <b>top-down</b>.</li>
</ul>
<div>
<b>Laissez-faire leadership:</b></div>
</div>
<div>
<ul>
<li><b>Objectives </b>are shown to employees,<b> </b>but the task is <b>completely delegated </b>to them.</li>
<li><b>Communication </b>can be <b>difficult </b>since <b>clear instructions </b>are not given.</li>
<li>The manager has a <b>limited role </b>in this type of leadership.</li>
</ul>
<div>
<b>Democratic leadership:</b></div>
</div>
<div>
<ul>
<li>The manager <b>discusses </b>tasks with his employees before making decisions.</li>
<li>Communication will be <b>two-way</b>, both top-down and bottom-up.</li>
</ul>
<div>
Here is a diagram to summarise the leadership styles:</div>
</div>
<div class="separator" style="clear: both; text-align: center;">
</div>
<div>
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-UTWWBIbaLqI/TaQWRvu3lsI/AAAAAAAAAEE/j0woDq1VHw0/s1600/styles+of+leadership.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="200" src="http://4.bp.blogspot.com/-UTWWBIbaLqI/TaQWRvu3lsI/AAAAAAAAAEE/j0woDq1VHw0/s400/styles+of+leadership.jpg" width="400" /></a></div>
The style of leadership used can vary depending on situations where they are the most effective.</div>
<div>
<br /></div>
<div>
<b><u><span class="Apple-style-span" style="font-size: large;">Formal and informal groups</span></u></b></div>
<div>
<b><u><br />
</u></b></div>
<div>
A <b>formal group </b>is an <b>official </b>group that is formed to do a specific task in an organisation. An <b>informal group </b>is a group of people which are formed <b>independently </b>by themselves. They are not official, but the people in the group have a <b>common interest </b>or <b>cause</b>. Both of these groups are needed in business, and let's see why in this example. e.g. a school might create a football team (formal group) but the players need to bond together to play effectively (informal group).</div>
<div>
<br /></div>
<div>
<b>Formal groups in business</b></div>
<div>
<b><br />
</b></div>
<div>
<b>Departments </b>withing a business are good examples of formal groups. From time to time different groups might be set up to cope with different problems or do different tasks. Sometimes people from different departments could come together in a group to do a <b>team project</b>.</div>
<div>
<br /></div>
<div>
<b>Informal groups in business</b></div>
<div>
<b><br />
</b></div>
<div>
There are can be many informal groups in a business that can increase the motivation of workers because they have a true sense of <b>belonging</b>. e.g. There is a group of factory workers who are interested in basketball, and they form an informal group, as a result, when they get back into their formal group they are likely to co-ordinate better with each other.</div>
<div>
<br /></div>
<div>
There are other scenarios where two departments <b>merge </b>to become one, making them one formal group. However, the people from these former departments still see themselves as <b>separate </b>from each other. These two groups of people will refuse to co-operate until they are also <b>merged </b>into an <b>informal group</b>. Therefore, informal groups should be handled carefully in business to yield the best results.</div>
<div>
<br /></div>
<div>
Regular meetings, free holidays, sporting events and such things could be organised to create informal groups and use them in a more positive way to avoid them getting into the way of business activity.</div>
<div>
<br /></div>
<div>
Thats the end of Chapter 13! Now, find a way to motivate yourselves and do some good work!</div>
<div>
======================================================================</div>
</div>
</div>
<div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com52tag:blogger.com,1999:blog-1682051666902505276.post-18623836290075846672012-08-12T17:45:00.000+07:002012-08-20T18:28:07.995+07:00Chapter 14: Recruitment, Training, and human resources<span xmlns=""></span><br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman';"><span style="font-size: 18pt; text-decoration: underline;"><strong>The work of the Human Resources department</strong></span><span style="font-size: 13pt;"><br />
</span></span></span><br />
<span xmlns=""><br />
</span><br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">We all know that recruitment and selection is one of the tasks that the HR department fulfills. The other tasks will be discussed below:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Recruitment and selection: </strong>Involves selecting and attracting the best workers.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Wages and salaries: </strong>Must be enough to motivate or attract workers.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Industrial relations: </strong>There must be effective communication between departments.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Training programmes: </strong>Must meet the training needs of employees and accomplish business objectives.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Health and safety: </strong>Must do things according to the law.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Redundancy and dismissal: </strong>Must obey all laws when firing workers.<a name='more'></a><br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Recruitment and selection<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Workers are needed when a business <strong>starts up</strong>, <strong>expands</strong> or an existing employee <strong>leaves</strong>. Businesses use the <strong>recruitment process </strong>to successfully employ the right people. This process is usually undertaken by the HR department, but in small business, HR departments do not exist since the businesses employ too little workers for it to be of much use. Here is a diagram summarising the recruitment process:<br />
</span></span><br />
<ol>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Vacancy arises.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">A <strong>job analysis </strong>is done, which identifies the responsibilities and tasks of the job.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">A <strong>job description </strong>lists that responsibilities and tasks to the candidates who apply for the position.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">A <strong>job specification </strong>outlines the required <strong>qualifications</strong>, <strong>expertise </strong>and <strong>experience</strong> a candidate needs so that they can be accepted.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">The job is <strong>advertised </strong>in the <strong>appropriate media</strong>. (e.g. newspapers)<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Candidates fill out <strong>application forms</strong>, which are <strong>short-listed </strong>so that only the best candidates remain.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Interviews </strong>are held with remaining candidates, and the ones suitable for the job are <strong>selected</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Vacancy filled.<br />
</span></li>
</span></ol>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt; text-decoration: underline;"><strong>The recruitment process<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt; text-decoration: underline;"><strong>Job analysis and description:<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">When a new employee is needed, a <strong>job analysis </strong>needs to be taken to identify the tasks and responsibilities of the position. This should be easy for a job that needs replacement, but not so much for a job that has just been created.<br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Once all the details of the job has been gathered, a <strong>job description </strong>needs to be drawn up. This job description has several functions:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Given to <strong>candidates </strong>so they will know what the job will involve.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Allows a <strong>job specification </strong>to be drawn up which will state the <strong>requirements </strong>for the job.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Shows whether an employee carries out the job <strong>effectively </strong>or not. It helps <strong>solve disputes </strong>between employees and employers about wages, working hours, etc.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The job description for any business will usually contain:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The <strong>title </strong>of the job.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">The <strong>department </strong> one will work in.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Who will be <strong>in charge of</strong> the job-holder.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Who the job-holder will be <strong>in charge for</strong>. <br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">The <strong>purpose </strong>of the job (job summary).<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">The <strong>main duties </strong>of the job.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Job description sometimes contain information about:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The <strong>conditions of employment</strong> – working hours, wages, pension schemes.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Training </strong>that will be offered.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Opportunities of <strong>promotion</strong>.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt; text-decoration: underline;"><strong>Job specification<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">After the job description has been drawn up, the <strong>qualifications </strong>for the job can be identified. They usually include:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The <strong>level </strong>of <strong>educational qualifications</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">The <strong>amount </strong>and <strong>type </strong>of <strong>experience</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Special skills</strong>, <strong>talents </strong>or <strong>knowledge</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Personal characteristics</strong>. (e.g. type of personality)<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt; text-decoration: underline;"><br />
<strong>Advertising the vacancy</strong><br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The next stage is on how to get people to know that you have a job to be filled.<br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Internal recruitment</strong><br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The vacancy can be filled by an employee already in the business. It might be suitable for employees seeking <strong>promotion</strong>.<br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Pros of internal recruitment:<br />
</strong></span></span><br />
<ul style="margin-left: 39pt;">
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Saves <strong>time </strong>and <strong>money</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">The candidates' <strong>reliability</strong>, <strong>ability </strong>and <strong>potential </strong>are <strong>already known</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">The candidates know the <strong>expectations </strong>and <strong>rules </strong>of the company.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Motivates </strong>other employees to work harder to get promoted too.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Cons of internal recruitment<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">No <strong>new ideas </strong>or <strong>experience </strong>come into the business. <br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">May create <strong>jealousy </strong>and <strong>rivalry </strong>between existing employees.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>External recruitment</strong><br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Most vacancies are filled with <strong>external recruitment</strong>, which always involves advertising the vacancy. Here are some suitable media of advertising:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Local newspaper: </strong>Usually for <strong>office </strong>and <strong>manual </strong>workers. These people are plenty since the job does not require too much skill.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>National newspaper: </strong>Used to find workers for <strong>senior positions </strong>that requires a lot of skills. It can be read by people anywhere in the country or overseas.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Specialist magazines: </strong>Used for particular <strong>technical specialists </strong>such as physicists. Can be used to hire people in the home country or abroad.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Recruitment agencies: </strong>Keeps details of qualified people, and will send the suitable applicants to interviews when a business asks for a worker. Many businesses prefer to use recruitment agencies to find them workers because it is easier. However, it is expensive since their fee is based on a <strong>percentage</strong> of the workers <strong>pay</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Government job centres: </strong>Place where businesses can <strong>advertise</strong> their vacancies. These vacancies are usually for <strong>unskilled </strong>or <strong>semi-skilled </strong>workers.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt; text-decoration: underline;"><strong>Possible effects of government legislation on the recruitment process<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Many governments pass laws to create equal <strong>employee</strong><br />
<strong>opportunities</strong>. They state that all employees should be treated <strong>equally </strong>in the work place and receive the <strong>same salary </strong>for doing the same job. People of any sex and people with disabilities are treated equally. Therefore, businesses need to be careful when <strong>advertising</strong> and <strong>treating</strong> their employees because they could be <strong>prosecuted</strong> and <strong>fined</strong>.<strong><br />
</strong><br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt; text-decoration: underline;"><strong>Job advertisement</strong><br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">This is what a business needs to decide when drawing up an advertisement:<br />
</span></span><br />
<ul>
<li><div>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>What</strong> should be included.<br />
</span></span></div>
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Job description<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Job specification<br />
</span></li>
</span></ul>
</li>
<span xmlns="">
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Where</strong> the ad will be placed.<br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">(depends on job)<br />
</span></li>
</ul>
</li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;">Advertising <strong>budget</strong>.<br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">(depends on job)<br />
</span></li>
</ul>
</li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt; text-decoration: underline;"><strong>Applications forms and CVs/résumés<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">When a person applies for a job, he will have to fill out an <strong>application form</strong>, or write an <strong>application letter </strong>with a <strong>CV </strong>enclosed. <strong>CVs </strong>are descriptions about one's qualifications and skills in a set <strong>format</strong>. <br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Businesses will use application forms and CVs to see whether an applicant match the <strong>job specifications </strong>or not. The closest matching applicants are invited to <strong>interviews </strong>in the <strong>selection stage</strong>. A <strong>short-list </strong>is drawn up. <br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">These are what CVs should contain:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Name<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Address<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Telephone Number<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Date of Birth<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Nationality<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Education and qualifications<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Work experience<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Positions of responsibility<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Interests<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Names and addresses of <strong>references</strong>.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The letter of application should contain briefly:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Why the applicant wants the job.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Why the applicant feels he/she would be suitable.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Applicant forms ask for the same information as the application letter and CV, but may ask for other types of information.<br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt; text-decoration: underline;"><strong>Interviews</strong><br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Applicants who are invited to interviews will have provided the names and addresses of their <strong>references</strong>. These people can give their opinions on the reliability, honesty and skills of the applicants and they will be likely to tell the truth because the applicants will not know what they have said. <br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Interviews are the most popular form of <strong>selection</strong>. However, interviews are not always the most reliable process of selection. They aim to find out these things:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The applicant's ability to do the job.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Personal qualities that are advantageous and disadvantageous.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">General characteristics – whether they can "fit in"?<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">These are the likely questions in an interview:<br />
</span></span><br />
<ul style="margin-left: 39pt;">
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Why have you applied for the job?<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">What do you know about this company?<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">What qualities do you have to offer the company?<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">What ambitions do you have?<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">What are your hobbies and interests?<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Do you have any questions to ask us?<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Interviews can be one-to-one, two-to-one, or a <strong>panel </strong>of people to interview people which is used to select people for important jobs. Some businesses include tests in their selection.<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Skill tests: </strong>To test the skills of the candidates.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Aptitude tests: </strong>To test how easily candidates can be trained/learn new things.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Personality tests: </strong>To test for people who have specific personal qualities which will fit into jobs – e.g. that has a lot of stress; requires you to work with a team.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Group situation tests: </strong>To test how well applicants work with other people.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><span style="text-decoration: underline;"><strong>Rejecting unsuccessful applicants</strong></span><br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">When applicants fail to get the job, they should be informed and thanked for applying.<br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt; text-decoration: underline;"><strong>Training<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Training is often needed to do achieve the needs listed below. These needs can be long-term or short-term.<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Introduce a <strong>new process </strong>or <strong>equipment</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Improve efficiency</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Decrease supervision </strong>needed.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Improve</strong> the opportunity for <strong>internal promotion</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Decrease</strong> the chance of <strong>accidents</strong><br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Employees should know the benefits of training for them to take it seriously. Here are some <strong>objectives </strong>of training:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Increase <strong>skills</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Increase <strong>knowledge</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Change <strong>attitude</strong>, raise <strong>awareness</strong>.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">There are three main types of training:<br />
</span></span><br />
<ul>
<li><div>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Induction training:</strong><br />
</span></span></div>
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Introducing a <strong>new</strong><br />
<strong>employee</strong> to their business/management/co-workers/facilities.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Lasts <strong>one</strong> to <strong>several</strong><br />
<strong>days</strong>.<br />
</span></li>
</span></ul>
</li>
<span xmlns="">
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>On-the-job training:</strong><br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Employees are trained by <strong>watching</strong><br />
<strong>professionals</strong> do a job.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Only suitable for <strong>unskilled</strong> and <strong>semi</strong>-<strong>skilled</strong> jobs.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Cuts <strong>travel</strong><br />
<strong>costs</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">The trainee may <strong>do</strong><br />
<strong>some</strong><br />
<strong>work</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">The trainer's <strong>productiveness</strong> is <strong>decreased</strong> because he has to show things to the trainee.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">The trainer's <strong>bad</strong><br />
<strong>habits</strong> can be passed to the trainee.<br />
</span></li>
</ul>
</li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Off-the-job training: </strong><br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Workers go to another place for training (e.g. school).<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Methods are <strong>varied </strong>and usually more <strong>complex</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Usually <strong>classroom training</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Employees still <strong>work </strong>during the day.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Employees can learn <strong>many skills</strong>.<br />
</span></li>
</ul>
</li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><span style="text-decoration: underline;"><strong>Workforce planning</strong></span><br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">A business will need to forecast the <strong>type </strong>and <strong>number </strong>of employees needed in the future. This depends on the firm's growth and objectives. The forecast can be done by:<br />
</span></span><br />
<ul style="margin-left: 39pt;">
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Finding out the <strong>skills</strong> of all current employees.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Counting out people who are <strong>leaving</strong> soon (e.g. retirement).<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Talk to staff about who would want to <strong>retrain</strong> for new jobs.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Provide a <strong>recruitment plan</strong>. (how many new staff are needed, and how they should be recruited, internal or external)<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt; text-decoration: underline;"><strong>Dismissal and Redundancy<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">There are some situations when businesses need to reduce the number of employees they have. This can be done in two ways:<br />
</span></span><br />
<ul>
<li><div>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Dismissal:</strong><br />
</span></span></div>
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">A worker is <strong>fired </strong>for <strong>unsatisfactory work </strong>or <strong>behaviour</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Fault </strong>of the employee.<br />
</span></li>
</span></ul>
</li>
<span xmlns="">
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Redundancy:</strong><br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Employees are <strong>no longer needed</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Not </strong>the <strong>fault </strong>of the employee.<br />
</span></li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;">Some <strong>reasons </strong>are:<br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">A business is <strong>closing down </strong>a factory.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">A business wants to <strong>cut costs </strong>by reducing the number of employees.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">A business has merged/taken over another and there are too many staff in certain departments.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">New machinery replaces workers.<br />
</span></li>
</ul>
</li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;">Employees are given some <strong>money </strong>to compensate for their lost job.<br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">The money is often negotiated with <strong>trade unions</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Some government have <strong>laws </strong>that makes businesses pay for their workers this way.<br />
</span></li>
</ul>
</li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;">If only some employees are to be made redundant, trade unions will agree with the <strong>fairest </strong>way to see who goes. These terms are negotiated with the <strong>HR department</strong>.<br />
</span></div>
<ul>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;">Sometimes there will be <strong>voluntary redundancy</strong> by members.<br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Older </strong>workers.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">There may be some who wants to leave because they have <strong>other ideas</strong>.<br />
</span></li>
</ul>
</li>
</ul>
</li>
</ul>
</li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">==========================================================================<br />
</span></span><div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com28tag:blogger.com,1999:blog-1682051666902505276.post-23516570824712067382012-08-11T17:22:00.000+07:002012-08-20T18:27:42.393+07:00Chapter 15: Employee and employer associations<span xmlns=""></span><br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">In smaller businesses, if employees have any problems they can <strong>talk directly </strong>to their employer. However, in larger businesses that employs many people, it becomes extremely hard to do so. It is also hard for the Human Resources department to make decisions when they have about 500 employees (e.g. who will get a pay rise?). It becomes much easier if decisions are negotiated with a <strong>trade union</strong>, and employee association that represents them. This saves the management a lot of time because they do not have to see individual employees to discuss problems.<br />
</span></span><br />
<br />
<a name='more'></a><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Employees might not be treated fairly at work. They may be <strong>overworked </strong>and <strong>underpaid</strong>. Trade unions has the role of <strong>bargaining </strong>with the HR department for better working conditions, conditions of employment and better pay.<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 18pt;"><strong>Trade Unions<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Employees with similar interests (higher pay) form a trade union. Trade unions are a form of <strong>pressure group </strong>with has the ability to influence business activity. There are four main types of trade unions:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Craft union: </strong>For workers <strong>skilled </strong>at a particular job.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>General union: </strong>For <strong>unskilled </strong>and <strong>semi-skilled </strong>workers from different industries.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><span style="color: black;"><strong>Industrial union:</strong></span> For all types of workers in an <strong>industry</strong>.<span style="color: black;"><br />
</span></span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>White-collar union: </strong>For <strong>non-manual </strong>or <strong>office </strong>workers.<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt; text-decoration: underline;"><strong>Why do workers join a trade union?<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Unions have a <strong>shop steward</strong>, who is an <strong>unpaid </strong>representative of the union. When someone is new to a job they may ask if they may want to join. If the person joins, they will have to pay an <strong>annual subscription</strong>. This money will be use for employing <strong>union officials </strong>who will represent the views of the employees. <br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Advantages of a union<br />
</strong></span></span><br />
<ul style="margin-left: 39pt;">
<li><span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Strength </strong>in <strong>numbers</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Improved <strong>conditions of employment</strong>.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Improved <strong>working conditions</strong>.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Improved <strong>sickness benefits</strong>, <strong>pensions</strong>, and <strong>retrenchment benefits</strong>.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Improved <strong>job satisfaction</strong> and encourage <strong>training</strong>.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Advice</strong>/<strong>Financial</strong><br />
<strong>support</strong> if a worker is <strong>dismissed unfairly/made redundant</strong> or is asked to do something not part of their job.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Improved <strong>fringe benefits</strong>.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Employment </strong>where there is a <strong>closed shop</strong>, which is when all employees in a business must belong to the <strong>same </strong>union.<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Trade unions need to:<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Put forward their views in the <strong>media </strong>to influence <strong>government decisions </strong>on pay, employment, etc…<strong><br />
</strong></span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Improve <strong>communications </strong>between workers and managers.<strong><br />
</strong></span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt; text-decoration: underline;"><strong>Closed shop<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">A <strong>closed</strong><br />
<strong>shop</strong> is when all employees must join one union in order to be employed. It is because its <strong>members </strong>feel that the union is doing nothing when non-members receive the same pay rises as them. They think it is unfair. Trade unions also gain greater strength if all the employees are members of the union. However, many people think that it is unfair since they are <strong>forced </strong>to join – they should be able to make their <strong>own decisions</strong>.<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt; text-decoration: underline;"><strong>Single union agreement</strong><br />
</span></span><br />
<span xmlns=""><br />
</span><span class="Apple-style-span" style="font-size: 18px;">Some companies have a </span><span class="Apple-style-span" style="font-size: 18px;"><strong>single union agreement</strong></span><span class="Apple-style-span" style="font-size: 18px;">, when a business only agrees to deal with a single union. Any employees who want to join a union can join this union. It is becoming more popular nowadays because many employees are becoming </span><span class="Apple-style-span" style="font-size: 18px;"><strong>multi-skilled</strong></span><span class="Apple-style-span" style="font-size: 18px;">, and do not know which union to join.</span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Advantages to the employee:<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Discussions</strong> are <strong>clearer</strong> if there is only one union to deal with.<strong><br />
</strong></span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">The union has <strong>greater power</strong>.<strong><br />
</strong></span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>No disagreements </strong>between different unions.<strong><br />
</strong></span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">A better <strong>working relationship </strong>should develop between the union and the management.<strong><br />
</strong></span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Disputes </strong>are solved more quickly.<strong><br />
</strong></span></li>
</span></ul>
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Advantages to the employer:<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Discussions </strong>are <strong>clearer</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">A better <strong>working relationship </strong>should develop, meaning that there would be less <strong>industrial disputes</strong>, benefiting both employees and employers.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Disputes </strong>are solved more quickly.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">It is easier to agree to <strong>changes</strong>.<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>The structure of a trade union<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">The structure of different unions vary, but most elect a <strong>President </strong>or <strong>General Secretary </strong>to work <strong>full-time </strong>for and get <strong>paid </strong>by the union. They work at the union's <strong>headquarters</strong>. If the union is large, there will be <strong>union officials </strong>to take cared of members in different branches. Each <strong>branch </strong>represents its members in one <strong>work site</strong>, one factory, or one <strong>employer</strong>. Each branch has a <strong>representative</strong>. Unions are usually <strong>democratic </strong>and their union officers are voted up by the members.<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Employer associations<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Employers join what are called <strong>employer associations/employer federations/trade associations</strong>. Like trade unions, employer associations are made up of businesses and employers and who all pay annual fees for their benefits.<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Advantages of joining an employer association:<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">They <strong>negotiate </strong>with trade unions on behalf of their members.<strong><br />
</strong></span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">They give advice on <strong>employment laws</strong>, <strong>health and safety</strong>, <strong>taxation laws </strong>etc…<strong><br />
</strong></span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Strength in numbers, they want to <strong>influence government decisions</strong>.<strong><br />
</strong></span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">They can <strong>share ideas </strong>and <strong>research facilities</strong>.<strong><br />
</strong></span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">They can organise <strong>bulk buying </strong>for members and get <strong>discounts</strong>.<strong><br />
</strong></span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Employer associations and the government.<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Employer associations represent similar wants of businesses, and will try to influence the governments to give better conditions for businesses to prosper:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">They want the government to control things such as <strong>inflation, law and order, health and safety, </strong>and <strong>education </strong>for the workforce.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Lower <strong>taxes</strong>.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">More <strong>freedom </strong>for <strong>businesses</strong>.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Fair <strong>competition</strong>.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Good <strong>transport infrastructure</strong>.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Access to <strong>overseas markets</strong>.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Reliable source of <strong>power</strong>.<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 18pt;"><strong>Collective bargaining<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">This is when <strong>representatives </strong>of different interest groups negotiate and a <strong>collective agreement </strong>is made. The bargaining can be with <strong>businesses </strong>or with the <strong>government</strong>. <strong>Collective</strong><br />
<strong>bargaining</strong> in businesses usually means that the representatives of one or more trade unions negotiate with one or more employers or employer associations to come up with a <strong>mutually</strong><br />
<strong>acceptable</strong> <strong>agreement</strong> on <strong>conditions</strong> <strong>of</strong> <strong>employment</strong>.<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Why trade unions want wage increases:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Inflation</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">It is difficult to recruit <strong>qualified workers </strong>(so pay them more!).<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Pay <strong>differentials </strong>need to be maintained (everybody's wages should rise when the minimum wage rises).<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Changes </strong>in the workplace, e.g. new machinery.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">If there are increased <strong>productivity</strong>, wages should <strong>increase </strong>too. There are <strong>productivity agreements</strong>, when managers and trade unions agree to raise prices for increased productivity.<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Often agreements take place and the <strong>"middle path" </strong>is taken. However, this does not always happen and if the workers and unsatisfied with the agreements, they will use <strong>industrial action</strong>.<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 18pt;"><strong>Industrial action<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">There are various forms of industrial action that try to influence the decisions of employers. Here are some of their most comment forms.<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Strikes<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Strikes are when workers stop working and leave the workplace to protest against things.<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Token strike: </strong>Stoppage for an hour, a few hours or half a day to show strong feelings.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Selective strike: </strong>Only a few workers go on strike. They are chosen by the union to cause as much <strong>disruption </strong>as possible.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>All out strike: </strong>All union members stop working and wait until a dispute has been settled.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Unions have to pay their members out of <strong>strike</strong><br />
<strong>funds</strong> as long as the strike has been approved by the union. All members <strong>vote</strong> to see if the strike is favourable or not.<br />
</span></span><br />
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Picketing</strong><br />
</span></span><br />
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">This is when workers <strong>stand</strong> <strong>outside</strong> the factory holding <strong>signs</strong> to <strong>protest</strong> and <strong>stop</strong> any <strong>people</strong><br />
<strong>going</strong> <strong>in</strong> and <strong>out</strong> as well as <strong>goods</strong>. This can halt the production process. The strikers gain <strong>publicity </strong>and gives the firm a <strong>bad image</strong>. This puts <strong>pressure </strong>on the firm to settle the dispute.<br />
</span></span><br />
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Work to rule</strong><br />
</span></span><br />
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">This is when workers <strong>stick rigidly </strong>to every <strong>rule</strong> and regulation in the business so that it <strong>slows</strong><br />
<strong>down</strong> the <strong>production </strong><strong>process</strong>. They still get <strong>paid</strong> since they are technically doing nothing wrong, but this still causes a lot of <strong>disruption</strong> in the workplace.<br />
</span></span><br />
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Go slow<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">All workers deliberately do things very slowly.<br />
</span></span><br />
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Non-cooperative</strong><br />
</span></span><br />
<span xmlns=""><br />
</span><span class="Apple-style-span" style="font-size: 18px;">Workers refuse to work with any </span><span class="Apple-style-span" style="font-size: 18px;"><strong>new </strong></span><span class="Apple-style-span" style="font-size: 18px;">rules or follow any new practices they do not approve of.</span><br />
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Overtime ban<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Workers refuse to do any <strong>overtime</strong>. This might damage the business if they need to complete some orders quickly. <br />
</span></span><br />
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Possible harmful consequences of industrial action:<br />
</strong></span></span><br />
<ul>
<li><div>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>For employers:<br />
</strong></span></span></div>
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Loss of output.<strong><br />
</strong></span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Loss of profit.<strong><br />
</strong></span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Loss of customers.<strong><br />
</strong></span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Poor reputation.<strong><br />
</strong></span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Bad image.<strong><br />
</strong></span></li>
</span></ul>
</li>
<span xmlns="">
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>For employees:<br />
</strong></span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Loss of wages.<strong><br />
</strong></span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">They might lose their jobs if the company suffers low profits.<strong><br />
</strong></span></li>
</ul>
</li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>For customers:<br />
</strong></span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">They need to find another supplier which might cost more (production is stopped)<strong><br />
</strong></span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Shortage of products.<strong><br />
</strong></span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Deliveries not made.<strong><br />
</strong></span></li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;">For other businesses:<strong><br />
</strong></span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">May lose income.<strong><br />
</strong></span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">May not have materials to produce goods.<strong><br />
</strong></span></li>
</ul>
</li>
</ul>
</li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>For the economy:<br />
</strong></span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Workers have less money to spend.<strong><br />
</strong></span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Less tax revenue.<strong><br />
</strong></span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Country gain bad reputation for late deliveries.<strong><br />
</strong></span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Workers may be made redundant.<strong><br />
</strong></span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Exports may be lost and imports increased.<strong><br />
</strong></span></li>
</ul>
</li>
</span></ul>
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Employer's powers<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">However, employers can do something about the situation. Usually, they will sign a <strong>no-strike agreement </strong>with the union which also involves <strong>pay rises</strong>. The pay rises are determined by an <strong>arbitrator</strong>, an independent person who represents both sides and decides on the best decisions possible. Again, he will most likely choose the <strong>"middle path"</strong>.<br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Nevertheless, if strikes do happen, here are some things employers can do:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Dismiss all workers: </strong>This leave the company in a very terrible position since they can't produce goods or deliver goods.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Lock-out the workers: </strong>Stop workers from coming to work or get paid. Used to counter work to rule and go slow strategies.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Institute a pay freeze: </strong>Used if employees are refusing to follow new rules, practices or operate new machinery.<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>Worker participation:<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The management needs to let everyone feel that they are part of the business. This means that managers will let <strong>workers participate </strong>in business decisions. There are several ways of doing this:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Worker directors: </strong>Some workers become directors, but they are not allowed to attend all board meetings.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Works councils: </strong>These are where representatives of employees get together and discuss matters that affect employees with managers. Works councils are called European committees in Europe, and are becoming more common there. Multinationals with more than 1000 workers or 100 workers per branch will have to create a works council and will have to always consult it when making decisions affecting employees.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Quality circles: </strong>This is often used in Japanese companies, where workers regularly debate on how to improve quality and efficiency.<strong><br />
</strong></span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Using a democratic style of leadership: </strong>Workers are delegated tasks and are consulted in business decisions.<strong><br />
</strong></span></li>
</span></ul>
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Advantages of worker participation</strong><br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">It increases the flow of <strong>information </strong>and improve <strong>relationships </strong>between the employer and the employee.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">It increases <strong>motivation</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">It increases <strong>job satisfaction</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">It benefits the company since it can use <strong>knowledge </strong>from <strong>experienced </strong>workers.<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Disadvantages of worker participation<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">It is <strong>time consuming</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Workers may <strong>lack necessary technical knowledge</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">If representation is done via <strong>trade unions</strong>, non union members won't be affected.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">There could be <strong>conflict of interests</strong>.<br />
</span></li>
</span></ul>
<span class="Apple-style-span" style="font-size: 18px;">=====================================================================</span><div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com34tag:blogger.com,1999:blog-1682051666902505276.post-87129020473935648212012-08-10T21:08:00.000+07:002012-08-20T18:27:22.989+07:00Chapter 16: The market and marketing<span xmlns=""></span><br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 18pt;"><strong>What is marketing?<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">A <strong>market </strong>is where <strong>buyers</strong> and <strong>sellers</strong> come together and <strong>exchange</strong> their <strong>products</strong> for <strong>money</strong>. It can be in the streets, on the internet, in shops around the world, etc… Customers and sellers exchange both <strong>goods</strong> and <strong>services</strong> for money.<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 18pt;"><strong>Product-orientated and market-orientated businesses<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">A <strong>product orientated </strong>business focuses on the quality and price of the product before finding a <strong>market </strong>for it to sell in. These type of businesses usually produce <strong>basic needs</strong>. <strong>New technology </strong>could be developed this way, and customer <strong>wants </strong>are created by <strong>advertising</strong>. <br />
</span></span><br />
<br />
<a name='more'></a><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Other big companies cannot afford to produce a product that will not sell, so they have to do <strong>market research </strong>first to find consumer wants <strong>before </strong>developing a product. They are called<strong> market-orientated </strong>businesses. They will need to set up a <strong>marketing budget </strong>for this, which is a <strong>financial plan </strong>for marketing of a product, which contains the amount of money the Marketing department may spend on marketing.<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 18pt;"><strong>What is marketing</strong><br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Marketing </strong>is the <strong>management process </strong>which identifies consumer <strong>wants</strong>, predict <strong>future </strong>wants, <strong>create </strong>wants and find ways to <strong>use </strong>these wants to the fullest (most profitably). In other words, businesses try to <strong>satisfy </strong>wants in the most <strong>profitable </strong>way possible. Marketing covers a wide range of activities such as: advertising, packaging, promotion, etc…<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 18pt;"><strong>The Marketing department<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Most businesses will have a <strong>Marketing department</strong>, which will have a <strong>Marketing Director</strong>. He will be in charge of things such as R&D, distribution and pricing. Here is an organisational chart showing what departments the marketing director controls: <br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Sales department: </strong>Responsible for sale and distribution of products for each <strong>region</strong>. There may also be an <strong>export department</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Research and Development department: </strong>Responsible for finding out consumer wants and <strong>developing new products</strong>. They also need to find ways to <strong>improve </strong>an existing product.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Promotion department: </strong>In charge of advertising and promotion. It will need a <strong>marketing budget </strong>which limits the amount of money it can spend.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Distribution department: </strong>It transports products to their markets.<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 18pt;"><strong>The objectives of marketing<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">A successful Marketing department should be able to achieve these objectives for the business:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">To increase <strong>sales revenue </strong>and <strong>profitability</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">To increase <strong>market share </strong>(percentage of sales a product has in a market).<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">To maintain or improve<strong> image </strong>of a product or company.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">To target a <strong>new market </strong>or <strong>market segment</strong>.<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">To develop <strong>new products </strong>or <strong>improve </strong>existing ones.<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 18pt;"><strong>SWOT analysis<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">This is a method to evaluate the statistics of a product of business. It assess these things:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Strengths </strong>(internal)<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Weaknesses </strong>(internal)<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Opportunities </strong>(external)<br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Threats </strong>(external)<br />
</span></li>
</span></ul>
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Strengths and weaknesses of a product are its <strong>internal factors</strong>, while opportunities and threats are <strong>external factors</strong>.<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 18pt;"><strong>Market segments<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Market segments </strong>are parts of a market which contains people which have similar <strong>preferences </strong>for their products. The Marketing department should know which segment their product fits the most, so that they can advertise and sell their products to it.<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">There are two ways to <strong>segment </strong>markets. By the <strong>type of product </strong>or the attributes of the <strong>customers </strong>buying it. Here are two types of markets which are segmented based on the product:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Mass market: </strong>Where there is a <strong>large </strong>number of sales of a product. (e.g. Pepsi can be bought anywhere)<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Niche market: </strong>A <strong>small </strong>market for <strong>specialised </strong>products. (e.g. Ferrari cars)<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">Here is how a market can be segmented regarding people buying the product:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Income</strong><br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Age</strong><br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Region</strong><br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Gender</strong><br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Use of product</strong><br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Lifestyle</strong><br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">It is very important to <strong>target </strong>the right market segment since it can <strong>increase</strong><br />
<strong>sales</strong> by a lot. If a business can analyse all of these market segments, they may find a market segment whose <strong>needs</strong> are <strong>not </strong>being <strong>met</strong>. This is when the business finds a <strong>gap in the market</strong>, and it could produce goods to take advantage of this gap and again increase<strong><br />
</strong>sales.<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 18pt;"><strong>The marketing mix<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;">The <strong>marketing mix </strong>is a term that describes how products are <strong>marketed</strong>. You must remember that before marketing can be achieved, <strong>market research </strong>is needed. The rest is summarized into the <strong>four P's</strong>. Let's look at them briefly first, since they will be covered in other chapters:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Product: </strong>Design and quality, competitiveness, <strong>packaging</strong>, etc… <br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Price: </strong>There are different pricing strategies. Businesses need to use them so that they increase sales. <br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Promotion: </strong>Advertising and promotion. Discounts, TV adverts, sales, <strong>packaging</strong>,<strong><br />
</strong>etc… <br />
</span></li>
<li><span style="color: black; font-family: 'Times New Roman'; font-size: 13pt;"><strong>Place: </strong>The location of the <strong>point of sale </strong>(the shop). <strong>Channels of distribution</strong>. Type of shop (wholesaler or retailer?)<br />
</span></li>
</span></ul>
<span class="Apple-style-span" style="font-size: 18px;">A successful product require effective use of the four P's. However, businesses must be careful to not let each of these factors </span><span class="Apple-style-span" style="font-size: 18px;"><strong>counteract each other </strong></span><span class="Apple-style-span" style="font-size: 18px;">(e.g. expensive but low quality goods), else the product will fail. </span><br />
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Thankee all for reading.<br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">===============================================================</span></span><div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com54tag:blogger.com,1999:blog-1682051666902505276.post-19521542942600894412012-08-09T19:37:00.000+07:002017-04-10T18:48:21.191+07:00Chapter 17: Market research<span xmlns=""></span><br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 18pt;"><strong>Why is market research needed?<br />
</strong></span></span><br />
<span xmlns=""><br />
</span><br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Any business should find out what people want to buy and how many people are going to buy that product before producing a product since the chances of failing are very high. Usually, <strong>market</strong> <strong>research</strong> try to answer these questions:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">What <strong>feature </strong>of the product do they <strong>like/dislike</strong>?<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Are people <strong>willing </strong>to buy the product?<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;">What <strong>price </strong>are people prepared to pay?<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Location </strong>of the selling point of the product.<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Type<strong><br />
</strong>of <strong>customer</strong> who buys the product.<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Type of <strong>promotion </strong>that will be <strong>effective</strong>.<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Competition </strong>in the same industry.<br />
</span></li>
</span></ul>
<span xmlns=""></span><br />
<a name='more'></a><span xmlns=""><br />
</span><span class="Apple-style-span" style="font-size: 18px;">Businesses need to know these things as well as </span><span class="Apple-style-span" style="font-size: 18px;"><strong>consumer wants </strong></span><span class="Apple-style-span" style="font-size: 18px;">to be more competitive. There are </span><span class="Apple-style-span" style="font-size: 18px;"><strong>two</strong></span><span class="Apple-style-span" style="font-size: 18px;"> main </span><span class="Apple-style-span" style="font-size: 18px;"><strong>types</strong></span><span class="Apple-style-span" style="font-size: 18px;"> of </span><span class="Apple-style-span" style="font-size: 18px;"><strong>information</strong></span><span class="Apple-style-span" style="font-size: 18px;"> that can be gathered from market research:</span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Qualitative information: </strong>information where <strong>opinion </strong>or <strong>judgement </strong>is necessary.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Quantitative information: </strong>information about the <strong>quantity </strong>of something.</span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">There are two ways to gather any information for market research:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Primary research </strong>or <strong>field research.<br />
</strong></span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Secondary research </strong>or <strong>desk research</strong>.<br />
</span></li>
</span></ul>
<span xmlns=""><br />
</span><br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 18pt;"><strong>Primary research</strong><br />
</span></span><br />
<span xmlns=""><br />
</span><br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Primary research is gathering <strong>original data </strong>which may require <strong>direct contact </strong>with customers. There are several ways to do primary research:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Questionnaires</strong><br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Interviews</strong><br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Consumer panels</strong><br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Observation</strong><br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Experiments</strong><br />
</span></li>
</span></ul>
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Note: </strong>Questionnaires, interviews and consumer panels are all types of <strong>surveys</strong>.</span></span><br />
<span xmlns=""> </span><br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>The process of primary research</strong></span></span><br />
<ol>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Identify the <strong>purpose </strong>of the market research.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Decide on the best <strong>method of research</strong>. (primary, secondary or both)<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Decide on the <strong>size </strong>and <strong>type </strong>of <strong>sample</strong> (group of people who will be asked)<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Carry out </strong>the research.<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Collate data </strong>and <strong>analyse </strong>results.<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Produce a <strong>report</strong>. (may include recommendations of action paths to take)<br />
</span></li>
</span></ol>
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 18pt;"><strong>Methods of primary research<br />
</strong></span></span><br />
<span xmlns=""><br />
</span><span style="color: black; font-family: "times new roman"; font-size: 13pt; text-decoration: underline;"><strong>Questionnaires</strong></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Questionnaires involve asking people questions. Deciding <strong>what questions </strong>to ask since sometimes questions may <strong>mislead </strong>people and make them answer what they don't really think.<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Pros:<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Detailed qualitative </strong>information can be gathered.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Customers' <strong>opinions </strong>can be gathered.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Cons:<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">If the <strong>questions </strong>are bad it could <strong>mislead </strong>customers.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Takes <strong>time </strong>and <strong>money </strong>to collate the results.<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt; text-decoration: underline;"><strong>Interviews<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Interviews are face-to-face <strong>conversations </strong>with customers where the interviewer has a set of <strong>prepared questions</strong>. <br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Pros:<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">The interviewer can <strong>explain </strong>any questions the interviewee does not <strong>understand</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Detailed </strong>information about customers' <strong>opinions</strong>.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Cons:<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Interviewer bias</strong>. The interviewer might unconsciously lead the interviewee to answer in a certain way.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Time consuming </strong>and <strong>expensive</strong>.<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt; text-decoration: underline;"><strong>Samples<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">A <strong>group </strong>of people who are chosen to do market research on. There could be:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Random sample: </strong>A random number of people are selected.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Quota sample: </strong>People are selected for some certain <strong>characteristics</strong>.<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="font-family: "times new roman"; font-size: 13pt; text-decoration: underline;"><strong>Consumer panels<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="font-family: "times new roman"; font-size: 13pt;"><strong>Consumer panels </strong>are groups of people who agree to provide <strong>information</strong> and <strong>spending</strong><br />
<strong>patterns</strong> about a product. They may even <strong>test</strong> it and give feedback on likes and dislikes.<br />
</span></span><br />
<br />
<span xmlns=""><span style="font-family: "times new roman"; font-size: 13pt;"><strong>Pros:<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">They provide <strong>detailed information </strong>about a product.<strong><br />
</strong></span></span></li>
<span xmlns=""> </span></ul>
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Cons:</strong><br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">They can be <strong>time consuming</strong>, <strong>expensive</strong>, and <strong>biased </strong>if opinions of some is influenced by others.<br />
</span></span></li>
<span xmlns=""> </span></ul>
<br />
<span xmlns=""><span style="font-family: "times new roman"; font-size: 13pt; text-decoration: underline;"><strong>Observation<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="font-family: "times new roman"; font-size: 13pt;"><strong>Observation </strong>involves:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: "times new roman"; font-size: 13pt;"><strong>Recording: </strong>e.g. meters can be fitted to a monitor to see what people are watching.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: "times new roman"; font-size: 13pt;"><strong>Watching: </strong>e.g. see how many people go into a shop and actually buy something.<br />
</span></li>
<li><span style="font-family: "times new roman"; font-size: 13pt;"><strong>Audits: </strong>e.g. counting inventory to see what has sold well. (inspecting)<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="font-family: "times new roman"; font-size: 13pt;"><strong>Pros:<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">It is <strong>inexpensive</strong>.<strong><br />
</strong></span></span></li>
<span xmlns=""> </span></ul>
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Cons:</strong><br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Only provide <strong>basic figures </strong>and not <strong>reasons </strong>why people do things.<br />
</span></span></li>
<span xmlns=""> </span></ul>
<br />
<span xmlns=""><span style="font-family: "times new roman"; font-size: 13pt; text-decoration: underline;"><strong>Experiments<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="font-family: "times new roman"; font-size: 13pt;"><strong>Experimenting </strong>involves giving products to consumers to see what they think about it.<br />
</span></span><br />
<br />
<span xmlns=""><span style="font-family: "times new roman"; font-size: 13pt;"><strong>Pros:<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Easy </strong>to <strong>set up</strong>, <strong>carry out</strong>, and gather consumer <strong>opinions</strong>.<strong><br />
</strong></span></span></li>
<span xmlns=""> </span></ul>
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Cons:</strong><br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">People might give <strong>wrong feelings </strong>to avoid <strong>offence</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Representatives </strong>of <strong>samples </strong>may not be asked, just people who shop in an area.<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Many <strong>potential customers </strong>may not be asked.<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 18pt;"><strong>Secondary research<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Secondary research </strong>means taking information that has been already collected by others.<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt; text-decoration: underline;"><strong>Internal sources of information</strong><br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Data collected from past researches could easily be used again if it is needed. Examples of internal sources of information include:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Sales</strong><br />
<strong>department</strong>: sales records, pricing data, customer records, sales records.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Distribution </strong>and <strong>PR personnel</strong>.<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Finance department</strong>.<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Customer service department</strong>.<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt; text-decoration: underline;"><strong>External sources of information<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Data collected from sources <strong>outside </strong>the business. The data may still be useful but there are many <strong>limitations </strong>since it has been gathered for other purposes. Sources include:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Internet</strong>: gives all sorts of information, but the info must be validated.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Trade </strong>and <strong>employer associations</strong>: gives info about things in an industry.<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Specialist journals</strong>.<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Research reports</strong>.<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Newspapers</strong>: about the economy and disposable income of workers. <br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Government reports </strong>and <strong>statistics</strong>: contains things such as age groups and culture.<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Media reports</strong>.<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Market research agencies' reports</strong>: detailed reports on the economy. Expensive to buy.<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Secondary research is often a much <strong>cheaper </strong>way of obtaining information. It also gains access to data which cannot be gathered by primary research such as <strong>government issues </strong>or the economy.<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 18pt;"><strong>Who carries out market research?<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Normally, research is done by any business who needs it. In smaller businesses, owners use secondary research since they cannot afford to conduct primary research. However, if a business has enough money, it can afford to have a <strong>specialist market research agency </strong>to do the research for it. <br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 18pt;"><strong>Accuracy of market research information<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">The accuracy of market research depends on <strong>how the research was conducted </strong>and <strong>how carefully samples have been selected</strong>. Here are some ways to make information from market research more accurate:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">A <strong>sample </strong>needs to be truly <strong>representative </strong>of the total population, hence a <strong>quota sample </strong>is normally used.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;">The <strong>larger </strong>the sample, the more accurate the results.<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Questionnaires need to be <strong>tested </strong>on a small group of people to see if there are <strong>misinterpretations</strong>. The questionnaires will be <strong>modified </strong>to be as clear as possible.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Concerning secondary research, there are a few problems with it:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Data collected by others may not be accurate since it was used for other <strong>purposes</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Data can be <strong>out of date</strong>.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">All in all, it must never be assumed that information collected from market research is completely correct.<br />
</span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>How to design and use a questionnaire<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Firstly, you need to ask yourself some questions:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>What</strong> do I need to find<strong><br />
</strong>out?<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Who </strong>do I need to ask?<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Where </strong>will I carry out my questionnaire?<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Writing the questions</strong><br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Ask <strong>no more </strong>than <strong>12 </strong>questions. (impatience)<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Make the questions <strong>simple</strong>. The answers should be <strong>simple enough </strong>to <strong>collate</strong>. (e.g. Yes/No answers)<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;">Use choice of <strong>age groups</strong>.<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Avoid open-ended </strong>questions.<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Avoid misleading </strong>the interviewee with questions. (don't want to cause offence)<br />
</span></li>
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;">The <strong>order </strong>of the questions should be <strong>logical</strong>.<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Carrying out the questionnaire<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;">First you need to figure out:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>How </strong>you will <strong>ask</strong> the questions.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>How </strong>you will <strong>collate </strong>the results.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: "times new roman"; font-size: 13pt;">Then:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Where </strong>are you going to ask the questions.<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>Who </strong>are you going to ask?<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: "times new roman"; font-size: 13pt;">And finally:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>How many </strong>people will be asked?<br />
</span></span></li>
<span xmlns="">
<li><span style="color: black; font-family: "times new roman"; font-size: 13pt;"><strong>When </strong>will you ask the questions? (time)<br />
</span></li>
</span></ul>
<br />
<span xmlns=""><span style="font-family: "times new roman"; font-size: 13pt;"><strong>Analysing questionnaires<br />
</strong></span></span><br />
<br />
<span xmlns=""><span style="font-family: "times new roman"; font-size: 13pt;">Analysing the results should be straightforward if you have easily collated the data. It simply involves reading the answers and thinking about what they mean. It takes practice, so open your books to pages 271 and 272 and let's do the case studies! <br />
</span></span><br />
<br />
<span xmlns=""><span style="font-family: "times new roman"; font-size: 13pt;">=================================================================</span></span><div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com30tag:blogger.com,1999:blog-1682051666902505276.post-71203182102526698412012-08-08T21:03:00.000+07:002012-08-20T18:22:09.471+07:00Chapter 18: Presentation of information<span xmlns=""></span><br />
<span xmlns=""><span style="font-family: inherit; font-size: 18pt;"><span style="text-decoration: underline;"><strong>Presentation of data from market research</strong></span><br />
</span></span><br />
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-size: 18px;"><br />
</span></span><br />
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-size: 18px;">Presentation of data is important because it </span><span class="Apple-style-span" style="font-size: 18px;"><strong>converts </strong></span><span class="Apple-style-span" style="font-size: 18px;">raw data into a form that is easier to </span><span class="Apple-style-span" style="font-size: 18px;"><strong>understand</strong></span><span class="Apple-style-span" style="font-size: 18px;">. Information can be displayed as:</span></span><br />
<span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-size: 18px;"><br />
</span></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><strong><span class="Apple-style-span" style="font-family: inherit;">Table/tally chart:</span></strong></span><br />
<span xmlns=""><span style="font-family: inherit; font-size: 13pt;">It is the most suitable method of presenting data when <strong>raw data </strong>is needed. However, it offers little more than that and the information should be converted into other forms if it needs to be understood or analysed carefully. It is sufficient for info that is brief or does not contain a lot of different things.<br />
</span></span><br />
<span xmlns=""><span style="font-family: inherit; font-size: 13pt;"></span></span><br />
<a name='more'></a><span xmlns=""><span style="font-family: inherit; font-size: 13pt;"><br />
</span></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><strong><span class="Apple-style-span" style="font-family: inherit;">Bar chart:</span></strong></span><br />
<span xmlns=""><span style="font-family: inherit; font-size: 13pt;">Charts are a more <strong>meaningful </strong>and <strong>attractive </strong>way to present data. They are normally used to <strong>compare </strong>two or more sets of stats with each other. <br />
</span></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><strong><span class="Apple-style-span" style="font-family: inherit;"><br />
</span></strong></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><strong><span class="Apple-style-span" style="font-family: inherit;">Pictogram:</span></strong></span><br />
<span xmlns=""><span style="font-family: inherit; font-size: 13pt;">It is similar to a bar chart but uses <strong>symbols </strong>instead of columns. It becomes extremely effective if the data is short and simple.<br />
</span></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><strong><span class="Apple-style-span" style="font-family: inherit;"><br />
</span></strong></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><strong><span class="Apple-style-span" style="font-family: inherit;">Pie chart:</span></strong></span><br />
<span class="Apple-style-span" style="font-family: inherit;"><span xmlns=""><span style="font-size: 13pt;"><strong></strong></span></span><span class="Apple-style-span" style="font-size: 18px;">Pie charts are ways to show the <strong>proportion </strong>that each components take up compared to the <strong>total figure</strong>.</span></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><strong><span class="Apple-style-span" style="font-family: inherit;"><br />
</span></strong></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><strong><span class="Apple-style-span" style="font-family: inherit;">Line graph:</span></strong></span><br />
<span style="font-family: inherit;" xmlns=""><span style="font-size: 13pt;">Graphs show the <strong>relationship </strong>between <strong>two variables</strong>. It can be drawn in a straight or curved line. It is usually to compare things with <strong>time </strong>and to identify <strong>trends</strong>.</span><br />
</span><br />
<span class="Apple-style-span" style="font-size: 25px;"><strong><span style="font-family: inherit; text-decoration: underline;"><br />
</span></strong></span><br />
<span class="Apple-style-span" style="font-size: 25px;"><strong><span style="font-family: inherit; text-decoration: underline;">Alternative ways of presenting information for coursework</span></strong></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><strong><span class="Apple-style-span" style="font-family: inherit;"><br />
</span></strong></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><strong><span class="Apple-style-span" style="font-family: inherit;">Tables</span></strong></span><br />
<span xmlns=""><span style="font-family: inherit; font-size: 13pt;">Tables could be also be used to present data in situations such as when people are interviewed on why they like a product and they are given <strong>multiple choices</strong>.<br />
</span></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><strong><span class="Apple-style-span" style="font-family: inherit;"><br />
</span></strong></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><strong><span class="Apple-style-span" style="font-family: inherit;">Photographs</span></strong></span><br />
<span xmlns=""><span style="font-family: inherit; font-size: 13pt;">Photos can be used to help <strong>illustrate </strong>your points or <strong>support </strong>your work. However, <strong>avoid </strong>adding them to your work just to make them more <strong>attractive</strong>. <br />
</span></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><strong><span class="Apple-style-span" style="font-family: inherit;"><br />
</span></strong></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><strong><span class="Apple-style-span" style="font-family: inherit;">Diagrams</span></strong></span><br />
<span xmlns=""><span style="font-family: inherit; font-size: 13pt;">Diagrams are used to <strong>simplify </strong>information. It can be used to show <strong>relationships </strong>of things which all leads to the same <strong>root</strong>, which is usually at the centre of the diagram. It can also be used to show <strong>variation</strong>, e.g. diagram for ways to save water with different ways to do so branching out from the centre of the diagram. <br />
</span></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><strong><span class="Apple-style-span" style="font-family: inherit;"><br />
</span></strong></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><strong><span class="Apple-style-span" style="font-family: inherit;">Maps</span></strong></span><br />
<span xmlns=""><span style="font-family: inherit; font-size: 13pt;">Maps are usually used to present <strong>location </strong>or <strong>transport routes</strong>, etc… They aim to make the information as <strong>clear </strong>as possible to the reader. This of course, only applies to certain types of information where words and numbers cannot express them.</span></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><span class="Apple-style-span" style="font-family: inherit;"><br />
</span></span><br />
<span class="Apple-style-span" style="font-size: 18px;"><span class="Apple-style-span" style="font-family: inherit;">Wow, such a short chapter! Nevertheless, the information is still extremely important and has more uses to it than just in Business Studies. Good luck spicing up your reports with them!</span></span><br />
<span xmlns=""><span style="font-family: inherit; font-size: 13pt;">==================================================================</span></span><div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com12tag:blogger.com,1999:blog-1682051666902505276.post-47381220926231591452012-08-07T16:48:00.000+07:002012-09-30T20:33:25.997+07:00Chapter 19: The marketing mix: product and packaging<span xmlns=""></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>The role of product in the marketing mix<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The <strong>product </strong>itself is the most important element in the marketing mix. Without it, the other three wouldn't exist. Most companies today are market oriented, and will identify a suitable product for the market before moving on to determine the other 3 elements. Large companies have <strong>R&D </strong>departments which spends all its time developing new product and analysing the pros and cons of competitors' products.</span></span><br />
<a name='more'></a><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Types of products:<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Consumer goods: </strong>Goods that are used up by consumers. (e.g. food, cake)<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Consumer services: </strong>Services that are produced for people. (e.g. education)<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Producer goods: </strong>Goods produced for businesses. (e.g. machinery)<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Producer services: </strong>Services for businesses. (e.g. accounting, insurance)<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Each type of product <strong>determines </strong>the price, promotion and place to sell the product. Here are what make products successful.<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Products need to <strong>satisfy </strong>consumer <strong>wants/needs </strong>to be successful.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">The product must be at the right <strong>quality </strong>so that customers are willing to pay for it.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Costs should be low enough to make a <strong>profit</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Design </strong>of a product is important. This means that its <strong>quality</strong> and <strong>durability </strong>should meet expectations and match the <strong>price </strong>of the product. The design should also enhance the products <strong>brand image</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Products are <strong>novelties</strong> (newly introduced to the market).<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Products can <strong>stimulate new wants</strong>.<br />
</span></li>
</span></ul>
<span xmlns=""><br />
</span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>Product development<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Most businesses use a general process to develop any product:<br />
</span></span><br />
<ol>
<li><div>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Generate ideas: </strong>Ideas can be generated by:<br />
</span></span></div>
<ol>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Employees.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Customers.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Competitor's products.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">R&D department.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Sales department.<br />
</span></li>
</span></ol>
</li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Further research: </strong>The best ideas are selected and further research is done to see their pros and cons.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Will there be enough sales?: </strong>To see whether there will be enough sales of the product to break-even (development costs included). <br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Develop a prototype: </strong>To see how a product could be manufactured and identify its problems.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Test launch: </strong>To see if the product can sell or not.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Full launch.</strong><br />
</span></li>
</span></ol>
<span xmlns=""><br />
</span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>The importance of branding<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Traditionally, a product's unique features and quality were explained by the sellers who made the product. However, since products are usually sold in private retail shops nowadays, these points need to be projected differently. Products therefore need to be <strong>branded </strong>with an <strong>unique brand name </strong>and the products features and quality will be projected with advertisement. The price of branded goods are usually higher, since customers are more confident to buy them. Here are things that are involved with branding:<br />
</span></span><br />
<ul style="margin-left: 39pt;">
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Unique </strong>name.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Unique packaging</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Needs <strong>advertising </strong>to enforce the brand's qualities.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Higher price </strong>than unbranded products.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Higher quality </strong>than unbranded products.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Creates a <strong>brand image</strong> (<strong>unique </strong>image associated with using the product)<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Creates <strong>brand loyalty</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Consistent quality</strong>.<br />
</span></li>
</span></ul>
<span xmlns=""><br />
</span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>Packaging<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Getting the packaging right is very important. Packaging performs several tasks:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Protecting </strong>the product (also includes preserving foods)<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Making it <strong>easy </strong>to <strong>transport</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Allow the product to be <strong>used easily</strong>. Container must be able to be <strong>opened easily</strong>. (e.g. juice in a can)<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Suitable for the product to <strong>fit in</strong>.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Packaging also helps <strong>promote </strong>the product:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Make it <strong>eye-catching</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Carries <strong>information </strong>about the product.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Promotes </strong>the <strong>brand image</strong>.<br />
</span></li>
</span></ul>
<span xmlns=""><br />
</span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>The product life cycle<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Product life cycles show the stages that a product goes through from its introduction, to its growth, and then to its decline. Here is a graph to show the product life cycle:<br />
</span></span><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-71SDQC660mk/Tb_g2M8p19I/AAAAAAAAAE0/kCd-r2mAMGU/s1600/IMG_0002.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="187" src="http://4.bp.blogspot.com/-71SDQC660mk/Tb_g2M8p19I/AAAAAAAAAE0/kCd-r2mAMGU/s400/IMG_0002.jpg" width="400" /></a></div>
<ol>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Development: </strong>The product is under development.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Introduction: </strong>The product is introduced. Sales grow slowly and <strong>informative </strong>advertising start to attract customers. Price skimming could be used if the product is new to the market. The main aim of sales is to breakeven.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Growth: </strong>Prices rise rapidly. <strong>Persuasive </strong>advertising is used to encourage brand loyalty. Prices may be reduced a little. Sales start to generate profits since costs have been covered.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Maturity: </strong>Sales rise more slowly. Competition forces prices to be lowered and the firm uses competitive pricing. Advertising is used to maintain sales. Profits are at their <strong>highest</strong>. <br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Saturation: </strong>Sales reach their <strong>limit</strong>. There are no new competitors. Sales and advertising becomes stable but profits fall because of lowered prices to be competitive.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Decline: </strong>Product go out of fashion and sales and profits decline. Advertising eventually stops. It is no longer profitable to produce the product. <br />
</span></li>
</span></ol>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The length of each stage varies with products. The business needs to identify which stage their products are in so that they can use a suitable marketing strategy for it.<br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Extending the product life cycle<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">When a product has reached its maturity or saturation stage a business may adopt <strong>extension strategies</strong> to stop sales from falling which <strong>extends </strong>the product life cycle. Sales are given a <strong>boost </strong>by these strategies.<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Introducing <strong>new variations </strong>of the product.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Sell into <strong>new markets</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Make small <strong>changes </strong>to the products <strong>design </strong>and <strong>packaging</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Sell through <strong>additional</strong>, <strong>different </strong>retail outlets.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Update </strong>the product (make it better)<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Use a new <strong>advertising campaign</strong>.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Extension strategies aim to prolong the <strong>maturity </strong>stage of a product. Successful extension strategies may result in something like this:<br />
</span></span><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://3.bp.blogspot.com/-Kc5DQ5JFqmQ/Tb_g1UEzuAI/AAAAAAAAAEw/1Il0itI-IU4/s1600/IMG.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="159" src="http://3.bp.blogspot.com/-Kc5DQ5JFqmQ/Tb_g1UEzuAI/AAAAAAAAAEw/1Il0itI-IU4/s320/IMG.jpg" width="320" /></a></div>
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Nevertheless, it must be noted that businesses manufacture more than one product. They should have a product in <strong>growth </strong>stage to <strong>counteract </strong>an older one which is declining.<br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">=================================================================</span></span><div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com22tag:blogger.com,1999:blog-1682051666902505276.post-8971366685904764552012-08-06T16:48:00.000+07:002012-12-31T00:15:17.324+07:00Chapter 20: The marketing mix: price<span xmlns=""></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>The role of price in the marketing mix<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">When pricing a product, a business needs to choose one that fits with the rest of the elements in the marketing mix. E.g. high price so that consumers thinks they are buying high quality goods, low price for low quality goods, or competitive prices in a market with a lot of competition.</span></span><br />
<a name='more'></a><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>Price determination in a free market<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">People think that prices are determined by the seller of the product, but that is not quite so. Prices are driven by market forces called <strong>demand </strong>and <strong>supply</strong>.<br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Demand<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Demand is not only that people want to buy a product, but that they want it can are <strong>willing to pay </strong>for it. Prices can affect how much demand there is for a product. Normally, if the <strong>price</strong> goes <strong>up</strong>, <strong>demand</strong> goes <strong>down</strong>, and vice versa. This can be shown on the graph below:<br />
</span></span><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://3.bp.blogspot.com/-SsUswnCBdB0/Tb_g3IOOAlI/AAAAAAAAAE4/yj9utptgf4U/s1600/IMG_0004.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="226" src="http://3.bp.blogspot.com/-SsUswnCBdB0/Tb_g3IOOAlI/AAAAAAAAAE4/yj9utptgf4U/s400/IMG_0004.jpg" width="400" /></a></div>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><br />
</span></span><br />
<span class="Apple-style-span" style="font-size: 17px;"><strong>Supply</strong></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Supply also varies with price. However, it is different. If the <strong>price </strong>goes <strong>up</strong>, then the owners would want to be supplied with more products to take advantage of the high price, thus the <strong>supply </strong>goes <strong>up </strong>(and vice versa). This can be demonstrated on the graph below:<br />
</span></span><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-Qaceqt_i3FU/Tb_g3zLsucI/AAAAAAAAAE8/KQ9eUUBUX7A/s1600/IMG_0005.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="194" src="http://1.bp.blogspot.com/-Qaceqt_i3FU/Tb_g3zLsucI/AAAAAAAAAE8/KQ9eUUBUX7A/s320/IMG_0005.jpg" width="320" /></a></div>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><br />
</span></span><br />
<span class="Apple-style-span" style="font-size: 17px;"><strong>The market price</strong></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">For the market price to be determined, demand and supply must all be put onto the same graph. The place where the two lines (called <strong>curves</strong>) cross is called the <strong>equilibrium</strong>, where the same number of goods are demanded and in supply resulting in <strong>no leftovers</strong>. All the products are demanded and all of them are sold. <br />
</span></span><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-jyeG-1qKwWo/Tb_g_lnSHrI/AAAAAAAAAFU/o2NbJQERiWk/s1600/IMG_00051.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="192" src="http://1.bp.blogspot.com/-jyeG-1qKwWo/Tb_g_lnSHrI/AAAAAAAAAFU/o2NbJQERiWk/s320/IMG_00051.jpg" width="320" /></a></div>
<span class="Apple-style-span" style="font-size: 17px;"><br />
</span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>Factors that affect demand and supply<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The graphs above assume that the demand and supply of goods are fixed. But these things can change, which shifts the demand or supply curve to the left or the right in the graph. Changes in the <strong>price </strong>affects where you are on the <strong>curves</strong>. But changes in <strong>other factors</strong> affect the <strong>position </strong>of the <strong>curve </strong>on the graph. <br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Factors affecting demand<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The popularity of <strong>substitute products</strong>. (products that can be used <strong>instead of </strong>the product)<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">The popularity of <strong>complementary products</strong>. (products that require each other or are <strong>used together</strong>)<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Changes in <strong>income</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Changes in <strong>taste </strong>and <strong>fashion</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Changes in <strong>advertising</strong>.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The result is: if demand <strong>falls</strong>, the <strong>market price </strong>and <strong>sales </strong>will <strong>fall</strong>, and the demand curve will shift to the <strong>left</strong>. If demand <strong>rises</strong>, the <strong>market price </strong>and <strong>sales </strong>will <strong>rise</strong>, and the demand curve will shift to the <strong>right</strong>. It is illustrated on the graphs below. <br />
</span></span><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://1.bp.blogspot.com/-1rodvIxhR8A/Tb_g5E1C0hI/AAAAAAAAAFA/o1BtJ7bzDRk/s1600/IMG_0006.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="171" src="http://1.bp.blogspot.com/-1rodvIxhR8A/Tb_g5E1C0hI/AAAAAAAAAFA/o1BtJ7bzDRk/s400/IMG_0006.jpg" width="400" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Elasticity of demand</strong><br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Elasticity of demand is how <strong>easily</strong> demand can <strong>change</strong> when <strong>prices change</strong>. A product with an <strong>elastic demand curve </strong>would have a <strong>higher change in demand </strong>than a <strong>change in price </strong>(uses percentages). A product with an <strong>inelastic demand curve </strong>would have a <strong>lower change in demand </strong>than a <strong>change in price</strong>. The elasticity of demand of a product is mainly affected by <strong>how many substitute </strong>products that it has.<br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Factors affecting supply</strong><br />
</span></span><br />
<ul>
<li><div>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Costs in supplying goods to the market:</strong><br />
</span></span></div>
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Price of raw materials.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Wage rates.<br />
</span></li>
</span></ul>
</li>
<span xmlns="">
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Improvements in technology:</strong><br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Makes it cheaper to produce goods.<br />
</span></li>
</ul>
</li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Taxes and subsidies:</strong><br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Higher taxes mean higher costs.<br />
</span></li>
</ul>
</li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Climate (for agricultural products):</strong><br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Supply of crops depend on weather.<br />
</span></li>
</ul>
</li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The result is: if supply <strong>falls</strong>, the <strong>market price </strong>will <b>rise</b>, <strong>sales </strong>will <b>fall</b><strong> </strong>and the supply curve will shift to the <strong>left</strong>. If supply <strong>rises</strong>, the <strong>market price </strong>will <b>fall</b>, <strong>sales </strong>will <b>rise</b> and the supply curve will shift to the <strong>right</strong>. It is illustrated on the graphs below. <br />
</span></span><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://4.bp.blogspot.com/-6v870OkdOfU/Tb_g6OwmDRI/AAAAAAAAAFE/PjVqiF_rQsw/s1600/IMG_0007.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="175" src="http://4.bp.blogspot.com/-6v870OkdOfU/Tb_g6OwmDRI/AAAAAAAAAFE/PjVqiF_rQsw/s400/IMG_0007.jpg" width="400" /></a></div>
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Elasticity of supply</strong><br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Elasticity of supply is how <strong>easily </strong>and <strong>quickly </strong>supply can <strong>change</strong> when <strong>prices change</strong>. How <strong>quickly</strong> means how quickly products can be produced and supplied, which is not very quick for products made by agriculture. A product with an <strong>elastic supply curve </strong>would have a <strong>higher % change in supply </strong>than a <strong>change in price</strong>. A product with an <strong>inelastic supply curve </strong>would have a <strong>lower change in supply </strong>than a <strong>change in price</strong>. <br />
</span></span><br />
<br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>Pricing strategies<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">If a product is easily recognizable from other products, it would probably have a <strong>brand name</strong>. And if it has one, it would need a suitable <strong>pricing strategy </strong>to <strong>complement </strong>the brand name that should improve its <strong>brand image</strong>. Here are the strategies that are used:<br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Cost-plus pricing<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Cost-plus pricing involves <strong>covering all costs </strong>and adding a percentage <strong>mark-up</strong> for profit.<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">+ <strong>Easy</strong> to apply.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">- You <strong>lose</strong> sales if your price is <strong>higher</strong> than your competitors price.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Penetration pricing<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Penetration pricing is used to <strong>enter</strong> a <strong>new market</strong>. It should be lower than competitors' prices.<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">+ Ensures that <strong>sales</strong> are <strong>made</strong> when a product enters a market.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">- Prices will be low. Sales revenue will be <strong>low</strong>.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Pricing skimming<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">High prices are used when a <strong>new product </strong>is introduced into a market, partly because it has a <strong>novelty factor</strong>, and because of the high <strong>development costs</strong>. High prices could be charged because a product is <strong>high quality</strong>. One last use of it is to <strong>improve </strong>the <strong>brand image </strong>of a product, since people usually associate high price with good products.<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">+ Skimming can help <strong>establish </strong>a product as being <strong>good quality</strong>. <br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">- It may <strong>lose potential customers </strong>because of high price.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Competitive pricing<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Competitive pricing means setting your price to a <strong>similar </strong>or <strong>lower level </strong>than your <strong>competitors prices</strong>.<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">+ Sales will be high because your price is at a <strong>realistic level</strong> (not under/over-priced).<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">- You have to <strong>research </strong>on your competitors prices which costs <strong>time </strong>and <strong>money</strong>.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Promotional pricing<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Promotional pricing means that you <strong>lower </strong>the prices of goods for a short time.<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">+ Help <strong>get rid </strong>of <strong>unwanted </strong>stock.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">+ Can <strong>renew interest </strong>in a product.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">- Sales revenue will be <strong>lower</strong>.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Psychological pricing<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Psychological pricing involves setting the price that <strong>changes consumers perception </strong>of a product. This may be by:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Using high price to make using the product give the user a <strong>status symbol</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Pricing a product at just below a <strong>whole number</strong> (e.g. $99) which gives it an <strong>impression </strong>that it is <strong>cheaper</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Supermarkets charge low prices for products that are bought on a <strong>daily basis </strong>to give consumers an <strong>impression</strong> that they are being given <strong>good value for money</strong>.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">================================================================</span></span><div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com22tag:blogger.com,1999:blog-1682051666902505276.post-84771316329952552302012-08-05T16:48:00.000+07:002012-08-20T18:21:02.334+07:00Chapter 21: The marketing mix: promotion<span xmlns=""></span><br />
<span class="Apple-style-span" style="font-size: 24px;"><strong>The role of promotion in the marketing mix</strong></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"> Promotion <strong>informs </strong>consumers about the rest of the marketing mix. Without it, consumers do not know about the product, the price, or the place. Promotion is more than just advertising, and it includes several activities. It is crucial when you are selling in a mass market or you have a brand name. Promotion includes:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Advertisements: </strong>They can take different forms, e.g. on TV, in newspapers.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Promotion: </strong>e.g. Money off coupons.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Personal selling: </strong>Sending out sales representatives to talk directly to the consumers.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Public relations: </strong>Involves making the public aware of the company, e.g. creating publicity in the media.<a name='more'></a><br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>The aims of promotion<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">To inform people about particular issues.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">To introduce new products to the market.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">To compete with competitors products.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">To improve the company/brand image.<br />
</span></li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;">To increase sales.</span></div>
</li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong><br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>Advertising<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>The advertising process<br />
</strong></span></span><br />
<ol>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Set objectives</strong>: A business needs to determine the purpose of advertising.<br />
</span></span></li>
<span xmlns="">
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Decide</strong><br />
<strong>the</strong><br />
<strong>advertising budget</strong>: Set a limit on how much the business can spend on advertising. It can be decided based on:<br />
</span></div>
<ol>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">A percentage of predicted sales revenue.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">How much competitors are spending.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">How much the business can afford.<br />
</span></li>
</ol>
</li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Create an advertising campaign</strong>: Decide on what advertising campaign to run. Can be determined based on:<br />
</span></div>
<ol>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Target audience.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Objectives.<br />
</span></li>
</ol>
</li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Select the media</strong>: Using the suitable media for advertising that is the most <strong>cost effective</strong>. E.g. TV, newspaper.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Evaluate the effectiveness of the campaign</strong>: Has the advertising met objectives?<br />
</span></li>
</span></ol>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Different types of advertising</strong><br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Informative advertising</strong>: Involves giving as much information about the product as possible. (e.g. computer)<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Persuasive advertising</strong>: Involves persuading consumers that they <strong>need </strong>the product and should buy it. (e.g. perfume)<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Different media of advertising<br />
</strong></span></span><br />
<div>
<span class="Apple-style-span" style="color: white; font-family: 'Times New Roman', serif; font-size: medium;"><span class="Apple-style-span" style="border-collapse: collapse;"><b></b></span></span><br />
<table border="1" cellpadding="0" cellspacing="0" class="MsoTableMediumShading2Accent1" style="border-collapse: collapse; border: none; mso-border-alt: solid windowtext 2.25pt; mso-padding-alt: 0cm 5.4pt 0cm 5.4pt; mso-yfti-tbllook: 1184;"><tbody>
<tr style="mso-yfti-firstrow: yes; mso-yfti-irow: -1;"> <td style="background: #4F81BD; border-bottom: solid windowtext 2.25pt; border-left: none; border-right: none; border-top: solid windowtext 2.25pt; mso-background-themecolor: accent1; padding: 0cm 5.4pt 0cm 5.4pt; width: 119.7pt;" valign="top" width="160"><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-yfti-cnfc: 517;">
<b><span style="color: white; font-family: 'Times New Roman', serif; font-size: 13.5pt;">Media</span></b><span style="color: white; font-family: 'Times New Roman', serif; font-size: 13.5pt;"><o:p></o:p></span></div>
</td> <td style="background: #4F81BD; border-bottom: solid windowtext 2.25pt; border-left: none; border-right: none; border-top: solid windowtext 2.25pt; mso-background-themecolor: accent1; padding: 0cm 5.4pt 0cm 5.4pt; width: 128.0pt;" valign="top" width="171"><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-yfti-cnfc: 1;">
<b><span style="color: white; font-family: 'Times New Roman', serif; font-size: 13.5pt;">Advantages</span></b><span style="color: white; font-family: 'Times New Roman', serif; font-size: 13.5pt;"><o:p></o:p></span></div>
</td> <td style="background: #4F81BD; border-bottom: solid windowtext 2.25pt; border-left: none; border-right: none; border-top: solid windowtext 2.25pt; mso-background-themecolor: accent1; padding: 0cm 5.4pt 0cm 5.4pt; width: 127.55pt;" valign="top" width="170"><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-yfti-cnfc: 1;">
<b><span style="color: white; font-family: 'Times New Roman', serif; font-size: 13.5pt;">Disadvantages</span></b><span style="color: white; font-family: 'Times New Roman', serif; font-size: 13.5pt;"><o:p></o:p></span></div>
</td> <td style="background: #4F81BD; border-bottom: solid windowtext 2.25pt; border-left: none; border-right: none; border-top: solid windowtext 2.25pt; mso-background-themecolor: accent1; padding: 0cm 5.4pt 0cm 5.4pt; width: 103.55pt;" valign="top" width="138"><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-yfti-cnfc: 1;">
<b><span style="color: white; font-family: 'Times New Roman', serif; font-size: 13.5pt;">Examples</span></b><span style="color: white; font-family: 'Times New Roman', serif; font-size: 13.5pt;"><o:p></o:p></span></div>
</td> </tr>
<tr style="mso-yfti-irow: 0;"> <td style="background: #4F81BD; border: none; mso-background-themecolor: accent1; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 119.7pt;" valign="top" width="160"><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-yfti-cnfc: 68;">
<b><span style="color: white; font-family: 'Times New Roman', serif; font-size: 13.5pt;">Television<o:p></o:p></span></b></div>
</td> <td style="background: #D8D8D8; border-top: none; border: solid windowtext 2.25pt; mso-background-themecolor: background1; mso-background-themeshade: 216; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 128.0pt;" valign="top" width="171"><div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Millions of people will see it.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">The product can be presented in a very attractive way.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Easy to reach target audiences.<o:p></o:p></span></div>
</td> <td style="background: #D8D8D8; border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-background-themecolor: background1; mso-background-themeshade: 216; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 127.55pt;" valign="top" width="170"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Expensive<o:p></o:p></span></div>
</td> <td style="background: #D8D8D8; border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-background-themecolor: background1; mso-background-themeshade: 216; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 103.55pt;" valign="top" width="138"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Food<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Cars<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Household tools<o:p></o:p></span></div>
</td> </tr>
<tr style="mso-yfti-irow: 1;"> <td style="background: #4F81BD; border-top: solid windowtext 2.25pt; border: none; mso-background-themecolor: accent1; padding: 0cm 5.4pt 0cm 5.4pt; width: 119.7pt;" valign="top" width="160"><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-yfti-cnfc: 4;">
<b><span style="font-family: 'Times New Roman', serif; font-size: 13.5pt;">Radio<o:p></o:p></span></b></div>
</td> <td style="border-top: none; border: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 128.0pt;" valign="top" width="171"><div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Cheaper than TV.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Uses song or tune which makes ads memorable.<o:p></o:p></span></div>
</td> <td style="border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 127.55pt;" valign="top" width="170"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Cannot use visual message.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Expensive compared to others.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">The advert has to be remembered.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Not as wide audience as TV<o:p></o:p></span></div>
</td> <td style="border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 103.55pt;" valign="top" width="138"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Local services<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Shops<o:p></o:p></span></div>
</td> </tr>
<tr style="mso-yfti-irow: 2;"> <td style="background: #4F81BD; border-top: solid windowtext 2.25pt; border: none; mso-background-themecolor: accent1; padding: 0cm 5.4pt 0cm 5.4pt; width: 119.7pt;" valign="top" width="160"><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-yfti-cnfc: 68;">
<b><span style="font-family: 'Times New Roman', serif; font-size: 13.5pt;">Newspaper<o:p></o:p></span></b></div>
</td> <td style="background: #D8D8D8; border-top: none; border: solid windowtext 2.25pt; mso-background-themecolor: background1; mso-background-themeshade: 216; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 128.0pt;" valign="top" width="171"><div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Can reach many people.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Cheap for local newspapers.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">A lot of info can be put into the ad.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Adverts are permanent*.<o:p></o:p></span></div>
</td> <td style="background: #D8D8D8; border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-background-themecolor: background1; mso-background-themeshade: 216; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 127.55pt;" valign="top" width="170"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Not eye-catching if they are in black and white.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Does not grab reader’s attention.<o:p></o:p></span></div>
</td> <td style="background: #D8D8D8; border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-background-themecolor: background1; mso-background-themeshade: 216; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 103.55pt;" valign="top" width="138"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Local products<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Cars<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Banks<o:p></o:p></span></div>
</td> </tr>
<tr style="mso-yfti-irow: 3;"> <td style="background: #4F81BD; border-top: solid windowtext 2.25pt; border: none; mso-background-themecolor: accent1; padding: 0cm 5.4pt 0cm 5.4pt; width: 119.7pt;" valign="top" width="160"><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-yfti-cnfc: 4;">
<b><span style="font-family: 'Times New Roman', serif; font-size: 13.5pt;">Magazines<o:p></o:p></span></b></div>
</td> <td style="border-top: none; border: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 128.0pt;" valign="top" width="171"><div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Can use specialist magazines to reach <b style="mso-bidi-font-weight: normal;">only </b>target audience.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Magazine ads are in colour and are more attractive.<o:p></o:p></span></div>
</td> <td style="border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 127.55pt;" valign="top" width="170"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">They are only published once per month/week.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">More expensive then newspapers.<o:p></o:p></span></div>
</td> <td style="border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 103.55pt;" valign="top" width="138"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Perfume<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Golf equipment<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Fashion clothes<o:p></o:p></span></div>
</td> </tr>
<tr style="mso-yfti-irow: 4;"> <td style="background: #4F81BD; border-top: solid windowtext 2.25pt; border: none; mso-background-themecolor: accent1; padding: 0cm 5.4pt 0cm 5.4pt; width: 119.7pt;" valign="top" width="160"><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-yfti-cnfc: 68;">
<b><span style="font-family: 'Times New Roman', serif; font-size: 13.5pt;">Posters/billboards<o:p></o:p></span></b></div>
</td> <td style="background: #D8D8D8; border-top: none; border: solid windowtext 2.25pt; mso-background-themecolor: background1; mso-background-themeshade: 216; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 128.0pt;" valign="top" width="171"><div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Permanent*<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Cheap<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Potentially seen by anyone who passes by them.<o:p></o:p></span></div>
</td> <td style="background: #D8D8D8; border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-background-themecolor: background1; mso-background-themeshade: 216; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 127.55pt;" valign="top" width="170"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Can easily be missed.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">No detailed info can be included.<o:p></o:p></span></div>
</td> <td style="background: #D8D8D8; border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-background-themecolor: background1; mso-background-themeshade: 216; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 103.55pt;" valign="top" width="138"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Events<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Products bought by a large section of the population<o:p></o:p></span></div>
</td> </tr>
<tr style="mso-yfti-irow: 5;"> <td style="background: #4F81BD; border-top: solid windowtext 2.25pt; border: none; mso-background-themecolor: accent1; padding: 0cm 5.4pt 0cm 5.4pt; width: 119.7pt;" valign="top" width="160"><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-yfti-cnfc: 4;">
<b><span style="font-family: 'Times New Roman', serif; font-size: 13.5pt;">Cinemas<o:p></o:p></span></b></div>
</td> <td style="border-top: none; border: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 128.0pt;" valign="top" width="171"><div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Visual image shows product in a positive way.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Fairly cheap.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Effective if target audience goes to see particular films.<o:p></o:p></span></div>
</td> <td style="border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 127.55pt;" valign="top" width="170"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Only seen by people who go to watch films.<o:p></o:p></span></div>
</td> <td style="border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 103.55pt;" valign="top" width="138"><div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Toys for a children’s film.<o:p></o:p></span></div>
</td> </tr>
<tr style="mso-yfti-irow: 6;"> <td style="background: #4F81BD; border-top: solid windowtext 2.25pt; border: none; mso-background-themecolor: accent1; padding: 0cm 5.4pt 0cm 5.4pt; width: 119.7pt;" valign="top" width="160"><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-yfti-cnfc: 68;">
<b><span style="font-family: 'Times New Roman', serif; font-size: 13.5pt;">Leaflets<o:p></o:p></span></b></div>
</td> <td style="background: #D8D8D8; border-top: none; border: solid windowtext 2.25pt; mso-background-themecolor: background1; mso-background-themeshade: 216; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 128.0pt;" valign="top" width="171"><div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Cheap<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Given to a wide range of people.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Delivered to people’s houses.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">May contain vouchers to encourage readers to keep the advert.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Permanent*<o:p></o:p></span></div>
</td> <td style="background: #D8D8D8; border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-background-themecolor: background1; mso-background-themeshade: 216; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 127.55pt;" valign="top" width="170"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">May not be read.<o:p></o:p></span></div>
</td> <td style="background: #D8D8D8; border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-background-themecolor: background1; mso-background-themeshade: 216; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 103.55pt;" valign="top" width="138"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Local events.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Retail stores like Seven-Eleven<o:p></o:p></span></div>
</td> </tr>
<tr style="mso-yfti-irow: 7;"> <td style="background: #4F81BD; border-top: solid windowtext 2.25pt; border: none; mso-background-themecolor: accent1; padding: 0cm 5.4pt 0cm 5.4pt; width: 119.7pt;" valign="top" width="160"><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-yfti-cnfc: 4;">
<b><span style="font-family: 'Times New Roman', serif; font-size: 13.5pt;">Internet<o:p></o:p></span></b></div>
</td> <td style="border-top: none; border: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 128.0pt;" valign="top" width="171"><div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Can be seen by anybody around the world.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Can store lots of info.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Orders can instantly be made.<o:p></o:p></span></div>
</td> <td style="border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 127.55pt;" valign="top" width="170"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Internet searches may not highlight the website and it could be missed.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Internet access is limited in some countries.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Competition from other websites.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Security issues may discourage people from buying online.<o:p></o:p></span></div>
</td> <td style="border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 103.55pt;" valign="top" width="138"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Virtual goods.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Services such as banking or insurance.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Virtually anything that is not too small.<o:p></o:p></span></div>
</td> </tr>
<tr style="mso-yfti-irow: 8; mso-yfti-lastrow: yes;"> <td style="background: #4F81BD; border-bottom: solid windowtext 2.25pt; border-left: none; border-right: none; border-top: solid windowtext 2.25pt; mso-background-themecolor: accent1; padding: 0cm 5.4pt 0cm 5.4pt; width: 119.7pt;" valign="top" width="160"><div class="MsoNormal" style="margin-bottom: .0001pt; margin-bottom: 0cm; mso-yfti-cnfc: 68;">
<b><span style="font-family: 'Times New Roman', serif; font-size: 13.5pt;">Others (delivery vehicles or sides of bags)<o:p></o:p></span></b></div>
</td> <td style="background: #D8D8D8; border-top: none; border: solid windowtext 2.25pt; mso-background-themecolor: background1; mso-background-themeshade: 216; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 128.0pt;" valign="top" width="171"><div class="MsoListParagraphCxSpFirst" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 16.25pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Cheap <o:p></o:p></span></div>
</td> <td style="background: #D8D8D8; border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-background-themecolor: background1; mso-background-themeshade: 216; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 127.55pt;" valign="top" width="170"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 22.95pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">May not be seen by everyone.<o:p></o:p></span></div>
</td> <td style="background: #D8D8D8; border-bottom: solid windowtext 2.25pt; border-left: none; border-right: solid windowtext 2.25pt; border-top: none; mso-background-themecolor: background1; mso-background-themeshade: 216; mso-border-left-alt: solid windowtext 2.25pt; mso-border-top-alt: solid windowtext 2.25pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 103.55pt;" valign="top" width="138"><div class="MsoListParagraphCxSpMiddle" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Shops put their names on plastic bags.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpLast" style="margin-bottom: .0001pt; margin-bottom: 0cm; margin-left: 18.05pt; margin-right: 0cm; margin-top: 0cm; mso-add-space: auto; mso-list: l0 level1 lfo1; mso-yfti-cnfc: 64; text-indent: -18.0pt;">
<span style="font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> </span></span><span style="font-family: 'Times New Roman', serif;">Coca cola use neon signs.<o:p></o:p></span></div>
</td> </tr>
</tbody></table>
</div>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>*Permanent: </strong>adverts can be kept for future references.<br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Design of adverts</strong><br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Businesses usually use the <strong>AIDA </strong>model:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Attention: </strong>Informs consumers that the product exists.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Interest: </strong>Consumers need to become interested in the product.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Desire: </strong>Makes consumers want the product.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Action: </strong>Prompts consumers into buying the product.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The AIDA model is most effective on products that are not used regularly. It is less effective on products that are bought on a daily basis because people will know how good the quality really is.<br />
</span></span><br />
<span xmlns=""><br />
</span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>Promotion<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt; text-decoration: underline;"><strong>Different types of promotion<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Promotion is usually used to <strong>support </strong>advertising and to encourage new or existing customers to buy the product. Its main function is to <strong>boost sales </strong>in the <strong>short-term</strong>, but not in the long term. It is used to attract <strong>new customers </strong>so that they can <strong>try </strong>out items with the hope that they will like it and continue to buy it after the promotion has ended. Here are some ways in which promotion is used:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Price reductions: </strong>Involves sales or price reduction coupons. <br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Gifts: </strong>Gifts are placed in the packaging of the product to encourage consumers to buy it. (e.g. toys in McDonald's happy meal). <br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Competitions: </strong>A card may be put in the packaging allowing the consumer to enter contests such as the lottery. <br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Point-of sale displays and demonstrations: </strong>Can be put near the window and displayed attractively. It could also encourage people to buy it if they can see how it works (demonstrated by sales staff)<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>After sales service: </strong>e.g. warranty services. It reassures the customers that if the product has a problem then they can go and fix it for free. This make the product more attractive than others without warranty.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Free samples: </strong>Encourages people to <strong>try </strong>the product. It can be included in other products as well. E.g. washing machine comes with free washing powder.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>The advantages of promotion</strong><br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Can boost sales during the year when sales are traditionally low (encourage <strong>off</strong>-<strong>season</strong> purchases)<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Encourages people to <strong>try </strong>a product.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Encourages people to buy a product or the product in <strong>greater quantities</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Encourages people to buy a product instead of <strong>competitors'</strong> products.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Which type of promotion should be used?<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">When deciding on what type of promotion should be used, these points should be considered:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>The stage of the product life cycle</strong>: e.g. use informative advertisement in the introduction stage of the life cycle.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>The nature of the product itself</strong>: e.g. consumer goods use coupons but producer goods use discounts on bulk buying.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>The advertising budget</strong>: obviously the type of promotion depends on how much you can spend.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>The cultural issues involved in international marketing</strong>: businesses need to consider whether their type of advertising might offend the local people. They should also take into account things such as how many people own TV, literacy level, etc…<br />
</span></li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>The nature of the target market</strong>: Different markets require different media for advertising.</span></div>
</li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong><br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>Personal selling</strong><br />
</span></span><br />
<ul>
<li><div>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Used when the <strong>nature</strong> of the product <strong>varies</strong>. e.g. housing<br />
</span></span></div>
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Price varies.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Quality varies.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Customer requirements vary.<br />
</span></li>
</span></ul>
</li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">When customers need <strong>advice </strong>on what type of product is the most appropriate for their situation.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">When selling <strong>expensive</strong> products such as cars.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">When <strong>negotiation</strong> about price or products is needed. This is common for businesses that sell to other businesses. (e.g. discounts on bulk buying)<br />
</span></li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;">When a business has a stand at a <strong>trade fair</strong>.</span><br />
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><br />
</span></div>
</li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>Public relations<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Good for improving the brand/company's <strong>image</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">These activities raise <strong>public awareness </strong>of the company.<br />
</span></li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;">Includes:<br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Sponsoring events such as football matches.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Giving products to charity.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Employees take part in an activity for a good cause.</span></li>
</ul>
</li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong><br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>Customer service<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">It is far more expensive to attract customers than to keep old customers, so one key objective for any business is to retain their old ones. In the international business environment, there are many competitors, so businesses need to raise the <strong>value </strong>of their products with <strong>customer service</strong>.<br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Good customer service is not only producing a good product but also means:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Giving advice about the product</strong>: It is always good to give as much information about a product as possible so that the customers can be sure that they have purchased the product that meets their requirements. <br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Delivering goods for customers</strong>: It becomes convenient for the customer which encourages the customer to buy products from the business since they do not have to go anywhere. <br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Providing credit facilities</strong>: This means letting customers pay later or in monthly installments. This make products look cheaper and more affordable encouraging customers to buy them. Credit facilities are usually offered when people buy expensive products. You usually get interest as a result, but you could charge no interest for promotional purposes. <br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Providing product information</strong>: This means giving information on how to use the product and offering help on customer service helplines.<br />
</span></li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>After-sales service</strong>: The aim is to show that you care about customers' <strong>satisfaction</strong>. Examples of after-sales service include:<br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Warranties.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Regular product checks.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Giving refunds for faulty products.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Exchanging unsatisfactory goods.<br />
</span></li>
</ul>
</li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">=====================================================</span></span><div class="blogger-post-footer">To see this page in 5 different dynamic views, click
http://igbusinesss.blogspot.com/view/sidebar</div>Unknownnoreply@blogger.com27tag:blogger.com,1999:blog-1682051666902505276.post-70956672939953378442012-08-04T16:49:00.000+07:002012-08-20T18:20:39.179+07:00Chapter 22: The marketing mix: place<div class="separator" style="clear: both; text-align: left;">
<span class="Apple-style-span" style="font-size: 24px;"><strong>The role of place in the marketing mix</strong></span></div>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">After the product, price, and promotion has been decided, the product/service has to be available to the consumer <strong>where and when they want to buy</strong>. Consumers should be able to get to the product easily, and the product has to be in the right place (e.g. expensive chocolate shouldn't be in a small grocery store) to sell well.<br />
</span></span><br />
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<a name='more'></a><br />
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<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>Channels of distribution<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Businesses need to know how to get the product to the consumer. They may use a variety of channels of distribution:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Channel 1: </strong>The manufacturer sells <strong>directly</strong> to the <strong>customer</strong>. e.g. agricultural goods are sold straight from the farm, businesses buy raw materials from another…<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Channel 2: </strong>Involves selling to <strong>retailers</strong>. Common when the retailer is large or the product is expensive.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Channel 3: </strong>Involves the product going through <strong>wholesalers</strong> as well. Wholesalers <strong>break bulk</strong> so that retailers can buy them in smaller quantities. This is common for perishable items such as foods.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Channel 4: </strong>Involve selling the product overseas through an <strong>agent</strong>, who sells them to wholesalers on behalf of the company. This may be because he/she has better knowledge of the local conditions.</span></li>
</span></ul>
<div style="font-size: 17px; text-align: center;">
<span class="Apple-style-span" style="font-size: small;"><a href="http://3.bp.blogspot.com/-9y0iMWJRAzE/Tb_g7eHCg_I/AAAAAAAAAFI/VQd3oRFCrHM/s1600/IMG_0008.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="206" src="http://3.bp.blogspot.com/-9y0iMWJRAzE/Tb_g7eHCg_I/AAAAAAAAAFI/VQd3oRFCrHM/s400/IMG_0008.jpg" width="400" /></a></span></div>
<ul><span xmlns=""> </span></ul>
<span class="Apple-style-span" style="font-size: 17px;"><strong>Methods of distribution</strong></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Methods of distribution for different channels of distribution can include:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Department stores</strong>: Usually in the centre of town that sells a wide range of goods from many producers.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Chain stores</strong>: Two or more which has the same name/characteristics.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Discount stores</strong>: Offers a wide range of products, including branded products, at discount prices. Often all the products are similar. <br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Superstores</strong>: Very large out-of-town stores.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Supermarkets</strong>: Very large retail stores with all kinds of goods. (usually daily needs, foods)<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Direct sales</strong>: Goods are sold directly to the consumer.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Mail order</strong>: Customers order via the post by looking at the catalogue<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Internet/e-commerce</strong>: Customers order via the internet by looking at the website.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>E-commerce</strong><br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">The use of the <strong>internet </strong>to carry out business transactions. Businesses could communicate via <strong>email </strong>as well. Producers as well as retailers can use the internet to sell to customers.<br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Advantages and disadvantages of a wholesaler</strong><br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt; text-decoration: underline;"><strong>Pros<br />
</strong></span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Breaks <strong>bulk</strong>.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Reduces <strong>storage costs </strong>for retailers and producers.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Fewer <strong>transactions</strong> are needed for the producers. (only a few wholesalers) they no longer need to do as many <strong>deliveries</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Gives <strong>credit </strong>to small retailers.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">May deliver to small retailers reducing their <strong>transport costs</strong>.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Promotion </strong>carried out by wholesaler instead of producer.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">They give <strong>advice</strong> to retailers/producers on what is selling well.<br />
</span></li>
</span></ul>
<div style="font-size: 17px; text-align: center;">
<span class="Apple-style-span" style="font-size: small;"><a href="http://1.bp.blogspot.com/-FLmzR3pC_Ao/Tb_g9qkFO1I/AAAAAAAAAFM/AhRBIqDCBPo/s1600/IMG_0009.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="231" src="http://1.bp.blogspot.com/-FLmzR3pC_Ao/Tb_g9qkFO1I/AAAAAAAAAFM/AhRBIqDCBPo/s400/IMG_0009.jpg" width="400" /></a></span></div>
<ul><span xmlns=""> </span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt; text-decoration: underline;"><strong>Cons<br />
</strong></span></span><br />
<ul style="margin-left: 39pt;">
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">More <strong>expensive </strong>for small retailers.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">May not have the <strong>full range </strong>of products to sell.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Takes longer </strong>for perishable products to reach the retailer.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Wholesaler may be <strong>far </strong>from small shops.<br />
</span></li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Selecting the channel of distribution to use<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">When selecting the channel of distribution to use producers need to consider a few things:<br />
</span></span><br />
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Type of product?</strong>: Is it sold to other <strong>producers </strong>or <strong>customers</strong>?<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Is the product very technical?</strong>: Will you need to explain how to use the product? If yes, Channel 1 should be selected (e.g. airplanes) <br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>How often is the product purchased?</strong>: If it is bought every day, it should be available in many retail outlets, otherwise people might not bother to buy it at all.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>How expensive is the product?</strong>: If it is expensive and has an image of being expensive, then it will be sold in a <strong>limited </strong>number of retail outlets.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>How perishable is it?</strong>: If it is very perishable, it should reach the customers quickly or be available in many outlets so it can be sold quickly.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Location of customers?</strong>: Channel 4 might be used for customers overseas. E-commerce would be viable anywhere apart from the countryside.<br />
</span></li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Where do competitors sell their products?</strong>:<strong><br />
</strong>Usually producers will sell their product in retail stores where their competitors sell too so that they can compete directly for consumers.<br />
</span></div>
</li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 18pt;"><strong>Methods for transporting goods<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">This is what kind of vehicles are used to transport the products. They should be <strong>fast </strong>enough for the product to reach its destination in time. However, they must also be <strong>cost efficient</strong> and <strong>safe</strong>. These factors a taken into account when deciding which method of transportation is used.<br />
</span></span><br />
<ul>
<li><div>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Road haulage</strong>: <br />
</span></span></div>
<ul>
<li><span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Cheap and fast.<br />
</span></span></li>
<span xmlns="">
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Require no rail links.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Can advertise on side of lorries.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Not cost effective if lorries are not used often, may need to hire a specialist transport business instead.<br />
</span></li>
</span></ul>
</li>
<span xmlns="">
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Railways</strong>:<br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Even cheaper and faster than road haulage.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Useful for long distances.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Goods need to be transported to retail stores by road haulage at the end of the destination.<br />
</span></li>
</ul>
</li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Canal and river</strong>:<br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Slow but cheap.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Good for products far too big/heavy to be transported by road/train.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Need canals and rivers.<br />
</span></li>
</ul>
</li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Sea freight</strong>:<br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Used mainly for international trade.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Can carry a lot of products.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Products are stored in containers, which can be easily loaded onto lorries. Makes it cheap to load and unload the ships.<br />
</span></li>
</ul>
</li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Air freight</strong>:<br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Extremely fast but expensive.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Used for small, expensive, or perishable products.<br />
</span></li>
</ul>
</li>
<li><div>
<span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Pipelines</strong>:<br />
</span></div>
<ul>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Used to transport liquids or gases over long distances.<br />
</span></li>
<li><span style="font-family: 'Times New Roman'; font-size: 13pt;">Cheaper than using road haulage for liquids. Roads are not always available.<br />
</span></li>
</ul>
</li>
</span></ul>
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;"><strong>Drawing up a marketing plan<br />
</strong></span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Finally, after all the four P's of the marketing mix have been decided, the Marketing department will put them together into one <strong>marketing plan</strong>. It will also consider how the 4 P's will be modified or adapted to fit the <strong>overall image </strong>of the product. If this is successful, sales and profits will be likely to increase. <br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">Note: a detailed drawing of the product must be included in the marketing plan.<br />
</span></span><br />
<span xmlns=""><span style="font-family: 'Times New Roman'; font-size: 13pt;">============================================================</span></span><div class="blogger-post-footer">To see this page in 5 different dynamic views, click
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