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Business Studies

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James Cullen

on 30 October 2017

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Transcript of Business Studies

Creditor day

Acid test
Business Studies
Strategies For Success
Corporate objectives and strategies
Corporate aims, mission and culture
Functional objectives and strategy
Responsibilities to stakeholders
AS recap
Understanding HR objectives and strategies
Developing and implementing workforce plans
Flexibility and insecurity
Employee participation and team working
Employee relations
Integrated HR
Functional Objectives and Strategies
AS recap
Financial Objectives and constraints
Income statements
Balance sheet
Accounting Ratios
Limitations of accounts
Financial strategies and accounts
Investment appraisal
Integrated finance

Financial strategies and Accounts
Mr Cullen
Bus 3
Functional Objectives and Strategies
Financial Strategies and Accounts
Marketing Strategies
Operational Strategies
HR Strategies
Marketing Strategies
Operational Strategies
HR Strategies
AS recap
Understanding marketing objectives
Analysing markets
Measuring and forecasting trends
Selecting marketing strategies
Developing and implementing marketing plans
Integrated marketing
AS recap
Understanding operational objectives
Operational Strategies
Optimum resource mix
R+D and Innovation
Industrial and International location
Planning operations
Continuous improvement
Integrated operations management

Mission Statement
Corporate Objectives
Corporate Strategy

Long Term
Short Term
Tactical Objectives
Corprorate Strategy
Mission Statement
Sets out the purpose of the organization to all Stakeholders
Aspirational and therefore unachievable due to ambiguous wording. Why is this the case?
Corporate Objectives
Breaking Even
Market Share Increase (Growth)
The corporate objectives of an organisation will depend upon:
Business age
Type of Market
Private or Public company
Board aspirations.
Match the Mission Statement to the Organisation.

..........'s mission is to organize the world's information and make it universally accessible and useful.
"....... Means Quality"
"Continually increasing value for customers to earn their lifetime loyalty."
"Our mission and values are to help people and business throughout the world realise their full potential"
"To bring inspiration and innovation to every athlete* in the world. *"If you have a body, you are an athlete."
A plan for the whole business for the long to meduim term, determined by senior management directors as the most effective path to achieve the corporate objectives.

Implemented at department level by middle management.They are short term objectives. They maybe numerous and have a direct impact upon the "shop floor workers".
Name the stakeholder groups for the Addlestone Tesco's Extra

Highlight areas in which conflict could arise.
Stakeholder Conflicts
Demand for Profit vs Ethical business practices.

Customers demand for low prices vs workers requiring a fair treatment and wage.

Health and Safety vs the need for low cost production.
Shareholders influence the board of directors at an organizations AGM. Shareholders are able to vote off a CEO and directors if they feel that they are under performing.

What factors could influence which of these is chosen?
What aims do organisations have?
To achieve these strategies a number of tactical objectives will be employed.
The Book of Technique
Analysis - link terminology to make a succinct argument as how your content point impacts upon APSL. In both of these videos there is a chain (steps) of points brought together to justify an argument. Be sure to note the detail E.g The better school brings about an engineering job not just a better job. It seems a small point but detail and terminology is so important when achieving L3 (Analysis).
as a result of …
because …
due to the fact that …
furthermore, since …
while …
in addition to …
the result was …
this is why …
thus …
which meant that …
what this shows us is …
yet, while the …
which allowed for …
which resulted in the …

Below are phrases or words that allow to make the connections required.

Whilst trawling round the shops it became clear that explaining the advantages and disadvantages of certain types of coat was relatively straightforward (our analysis). For example if we look at a raincoat we can see that it will keep us dry and is fairly lightweight although it may not keep us warm on the coldest days. A duffle coat on the other hand will be warm and durable but may be heavy to carry when not being worn.

What is more difficult is making our final choice (evaluation-making a judgement).

Assuming we have a limited budget and can choose only one coat we need to make a choice and be able to justify it. We may argue that a duffle coat is our best option and that keeping warm is important to us. Can we improve our justification though by saying why keeping warm is more important than keeping dry? (relative importance and significance of points).

For a really good quality judgement we have to take into account our specific circumstances. Do I feel the cold? Do I need it for work or leisure? Do I need it to get to the end of this cold snap or to last 3 or 4 years (short run/long run)? The more applied our judgement is the better our chances of making a good choice.

When we consider evaluation in this light it is clear that it is not some new skill we need to learn but something we do all the time – often without realising it. What pupils need to do is get used to putting this process down in writing.
Below is a great explanation of evaluation. In short it's a reasoned judgement which could take the form of a recommendation. F297 and F293 are both strategic papers as a result you must write from a senior management point of view.
Evaluative Writing


• Comparing - finding points of similarity.

• Contrasting – finding points of difference.

• Evaluating significance of similarities and differences. Do they
matter? Do they have important implications for which model should
be used? How did you decide what was significant?

• Making a judgement. Give reasons for your opinion, based on the
Advise questions require you to make a justified judgement or recommendation.
Justification requires you to use evidence to back up your view. So in this question quote Terry's age, the relevant min wage and how much he will be paid under the new proposals.

Reasons for V's reasons against.
your recommendation
Homework 1: Find an article that discusses the objectives of an organisation. create 5 questions that can be answered using the text. Answers to be handed in on a separate sheet.
The generalised statement of wher the business is heading.

The Porter's Five Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps you understand both the strength of your current competitive position, and the strength of a position you're considering moving into.
With a clear understanding of where power lies, you can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps. This makes it an important part of your planning toolkit.
Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable. Furthermore it can be very illuminating when used to understand the balance of power in other situations.
Five Forces Analysis assumes that there are five important forces that determine competitive power in a business situation. These are:
Supplier Power: Here you assess how easy it is for suppliers to drive up prices. This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over you, the cost of switching from one to another, and so on. The fewer the supplier choices you have, and the more you need suppliers' help, the more powerful your suppliers are.
Buyer Power: Here you ask yourself how easy it is for buyers to drive prices down. Again, this is driven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on. If you deal with few, powerful buyers, then they are often able to dictate terms to you.
Competitive Rivalry: What is important here is the number and the capability of your competitors. If you have many competitors, and they offer equally attractive products and services, then you'll most likely have little power in the situation, because suppliers and buyers will go elsewhere if they don't get a good deal from you. On the other hand, if no-one else can do what you do, then you can often have tremendous strength.
Threat of Substitution: This is affected by the ability of your customers to find a different way of doing what you do – for example, if you supply a unique software product that automates an important process, people may substitute by doing the process manually or by outsourcing it. If substitution is easy and substitution is viable, then this weakens your power.
Threat of New Entry: Power is also affected by the ability of people to enter your market. If it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position. If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it.
Buyer Power: Here you ask yourself how easy it is for buyers to drive prices down. Again, this is driven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on. If you deal with few, powerful buyers, then they are often able to dictate terms to you.
Introduction to porter's 5 Forces
Porter's 5 Forces
Porters 5 Forces
Traditionally these were often directed by the desires of who?
In more recent times a new approach has developed which has required organisations to take into consideration the opinions of?
Some organisation decide to state these others dont.
Mission model
"The way we do things around here"
Organisational Culture
The ways an organisation does things.
An unwritten code that gives employes an identity and an understanding of what is expected from them and how the organisation goes about its business. It has on occassions led to abhorrent behaviour taking place (Phone hacking). However it is often used to ensure that employees buy into a successful method of doing things.

Stakeholder - a group that influences or is influenced by an organisation.
Customers - Fair price and good quality product/service
Employees - Job security and to be paid well.
Management - Shareholder value - achieving objectives.
Shareholders - Return on investment - increased share price and dividends.
Competitors - Market increases - increased unit sales and revenue increases.
Government - abide by laws, Tax, employment.
Local community - employment, pollution, traffic
Pressure Groups - act in a way that doesn't negatively impact upon the issue they are interested.
Suppliers - paid on time, long term and growth.
CSR - corporate social responsibility
Two stakeholder Conflicts -
competitors v's management
Pressure groups v's management
employees vs management
suppliers vs management.
Implementing ethical practices allows organisations to be more profitable in the long run. In western societies consumers often prefer to work for and purchase from ethical organisations that operate with a strong moral code. CSR issues include environmentalism, working conditions and child labour.
By meeting the minimum legal requirements does not make you an ethical organisation. Tax evasion and tax avoidance is a prime example
Homework 2 set on 10th sep to U6s = complete hand out.
Handed in Tuesday.

Homework 3 - John Lewis questions 1-4 Pg10
U6Q - Deadline Monday 21st
U6S - Deadline Tuesday -22nd
Corporate objectives for PLCs
Corporate objectives any business
Corporate Strategy
PLC Objectives
Maximizing shareholder value

What is it?

What is it?

What is it? - moving into an unrelated market.
Why? - reduce risk. Less reliance on one market. (Dont carry all your eggs one basket)
Ansoffs view - diversification is itself a risk.
1.Understanding new customer expectations requires a significant investment in MR.
2. Barriers to entry exist - these may include established organisations that have built up a strong brand awareness which leads to brand loyalty.
Increase share price - reflects the value of dividends to be paid in the future. This means teh board of directors will take action to increase the share price at every opportunity.
Ensure that shares are highly sought after to ensure fututre share issues are successful enabling management to fund expansion strategies ensuring long term success.
Growth in terms of profit through enhancing revenues and reducing costs. Increasing market share. Exapnsion in terms of physical assets such as new stores or factories.
Linked to share value. Size can aid in the domination of a market and there are economies of scales to benefitted from. Protection from hostile takeover.
mutually exclusive
Not for profit
Social enterprises are organisations that sell products for a profit. These profits are then distributed to good causes. One water - an organisation that was set up to provide clean water to people in Africa. They achieve this through selling bottled water in the UK.
Corporate Strategy
Functional objectives and Strategy
Businesses are made up of four functional departments:
HR - recruitment - internal,external - local expertise and strategic understanding
Corporate Objectives
Growth - Placing market share above profit would be an example of how growth can be placed above profit as an objective.
Profit maximization - all decisions are made with profit in mind. Cost minimization and revenue maximization are central to this.
Profit optimization - recognizing that maximizing profits could have a long term detrimental effect.
Not for profit motives - some organizations have a social motive and therefore do not seek profit. ("One water" sell bottled water in the UK to fund water projects in Africa )
Homework 4 - Tesco questions 1-3 - Pg 50
Tuesday - 6th U6S
Wednesday -30th U6Q
Functional Objectives
Coordinate what they are doing:
Make sure that all within their own department are aware of the objectives:

Work together to achieve a common goal:
Those objectives that are set by individual departments to bring about corporate objectives.
Timing - When, where and what - ensure that the precise details of what needs to be achieved by when is clearly communicated to all those in the department. This must happen between departments as well Marketing must cooperate with Operations to ensure enough stock is available to meet the increase in demand off the back of a new advertising campaign.
Communicate how the departmental objectives fit in with the corporate objectives. This will ensure that employees understand their role in the organization and feel more valued which in turn ensures they are better motivated to achieve the objectives.
Inter departmental rivalry should not prevent objectives being achieved. People are rivals for promotion and this can end up being a constraint to productivity - -ve aspect of internal recruitment.
Functional Objectives

CSR - has been proven to provide organizations with long term tangible benefits.
Ikea - by having an independent auditor investigate their supply chain they are exceeding legal minimum standards. This will come at a cost but the positive brand image generated will bring about long term benefits in the form of greater sales revenue.
Organizations need to take responsibility for their entire supply chain. This will include the working environment at suppliers factories. The likes of Gap and Nike have had their brand image tarnished by being associated with sweatshop factories in the far east. Protests and boycotts saw these organization suffer in the form of reduced sales revenue. The costs associated with rectifying such scandals are far higher than the finance require to audit suppliers and ensure they meet first world expectations.
Being associated with CSR behavior can boost sales. Those products that boast the fairtrade logo can charge higher prices but also can be confident of not being dragged into a costly scandal.

Owners capital
Long term
Short term
Balance sheet - a snapshot in time, that shows what the business owns and what it owes in that moment.
Why is it of use?
-Investing in the business.
-Lend it some money.
-Buy the organization outright.
depreciation - the reduction in value of an asset over time
Balance Sheet
It's known as a balance sheet because the capital will be equal to the assets.
Tangible - Factory, machinery, vehicles
Intangible - Brand, Goodwill, Copyright, Patents
Made up of:
Working Capital = Net Current Assets
Current Assets - Current Liabilities
Finance used to fund the day to day activities of the business.
Liquidity linked with cash flow
Two column format
Left hand side are detailed break downs.
Right hand side - big picture - totals.
Profitability Ratios

Gross Profit Margin = Gross profit/revenue X 100

What is gross profit = Revenue - cost of goods sold.

Costs of goods = opening stock + purchases - closing stock.
Operating profit
Turning a profit figure into a % of revenue.
Expenses: costs to the business of those components or services that are of immediate use to the business.
Operating profit is gross profit - expenses.
Overhead expenses - otherwise known as fixed costs.
PBIT - profit before interest and Tax
This is often used to calculate net profit margin. Use the profit and loss account to work this out. However unless stipulated you can use net profit figure provided to work out the net profit margin.
Net profit/revenue X 100
Operating profit/ Revenue X 100
How can you improve these figures? for each type of profit highlight how you can improve the ratio results.
Net profit = profit once all deductions have been made.
Recognise the difference between each type of profit.

Operating profit/capital employed X100

Known as the primary efficiency ratio. it measures how efficiently the organization generates profit from finance invested in the organization.

The higher the better.
Compare to the interest that can be earned on a savings account. (6% a very good interest rate on a savings account)
A good result is dependent upon the industry.

ROCE - Return on capital employed
Apple 33,000,000,000 79,800,000,000
Tesco 3,811,000,000 29,475,000,000
Operating profit
Capital Employed
Work out the ROCE for both companies.
How to improve - Generate the same level of profit whilst reducing capital invested.
Increase profit from whilst maintaining the same level of investment.
reasonable comparisons can only be made with other organizations in the same industry
Acid Test
Current ratio
Operating profit margin.
Analyse the companies performance from a historical point of view and an industry average point of view.
Current Ratio: 1.6:1
OPM: 20.8%
Zoe - Asset Turnover
Chris - Dividend yield
Emma - EPS
Izzy - Stock Turnover
Harry - DPS
George -Debtor days
Sophie - Creditor days
For each ratio
What does it show
How to improve it
(Average rate of return)
Investment Appraisal
Sum Invested
Net cash per time period (yr)

Net cash
Cumulative total
Payback takes place in year 8.
Outlay outstanding
cash in year of payback/12
95,000/12 = 7,917
1,000,000-913,000 = 87,000
87,000/7,917= 10.9

Payback takes place: 7 years 10.9 months
Shorter is better - Time is associated with risk therefore longer the payback period the higher the risk.


Limitations of accounts.
Quantitative - only a financial insight into the organizations performance. Other data such as environmental credentials are useful in understanding how well the organization is performing. It's very difficult to value intangible assets such as a companies brand or the skills it has within its workforce.

Using profit as a performance - profits importance can often to be overstated. Organisations may need to sacrifice profit in the short term to ensure improved longer term success by investing in growth. Therefore growth in revenues and recognition of new revenue streams are just as important.

State of the market - impending changes in the market are not recognized due to the historical nature of accounts. Its also worth noting that the balance sheet is a snap shot in time and therefore may not recognise the seasonal nature of an organisation. Porters five forces is an example of a analysis tool that useful to use in conjunction with accounts.

Land and buildings -

Intangible Assets-

Debtors -

Stock -

Profit quality

Window dressing -

Work over the next two lessons and homework that needs to handed in or shown to me:
Notes on limitation of accounts:Pg 72-75 (15 minutes)
Questions 2, 4, 5 and 8 of the Revision questions. Pg 76. (19 marks) (25 minutes)
Question 1 and 3 on page 77. (15 marks in total) 20 minutes
Notes on Financial Strategies and accounts Pg79 - 83. (20 minutes)
Question 7 on page 84 (4 marks) 10 minutes
Questions 1 & 3 on page 85 (22 marks) 35 minutes
Total marks - 60 marks Total time 2 hours 5 minutes.
Hand in dates:
U6S November the 26th - Burdett, Collins etc
U6Q November the 27th - Bennfors, Day etc
Wherever possible questions to be done in lesson, notes to be done outside of lesson unless you have completed questions.
The point of this - I can help
with how to answer questions.
If your total out of 60 doesn't at least equal your ALPS grade you will re do work until does.
NPV - present value of all the money coming in from the project in the future, this is set against the money being spent on the project today.
Ethics of profitability - the issues surrounding extensive profits develop out of how those profits are created. The banking sector is an example of this as it has come under huge scrutiny post financial crisis.
Primark is another example of an organization that faces significant criticism for how it generates its profits.
Should business seek profit if it is to the detriment of stakeholders?
Importance of liquidity - it's important to understand that an organization can be profitable and yet cease to trade due to liquidity problems. As a result of this liquidity should always be prioritized over profit as it ensures the organization survival. Having enough working capital is therefore essential to the long term survival of a business.
Financial management - this is vital for all organizations and not only larger ones. Cashflow (liquidity) management is key to the success of all organizations. Many small organizations fail in the first 12 months due a lack of working capital. small mistakes can place a small business in a precarious position which larger business can often be bailed out from, by financial institutions or investors. Therefore the risks of financial issues are more concentrated.
If the rate at which the business grows is significant, then it can become difficult to maintain stringent controls over the finance.
Pg 106 - Q1,3,4,7,15,16,20 Due next Thursday
Issues in finance
Importance of profit
Profit vs Profitability*
Ethics of profitability - fat cats - directors on huge salaries despite organizations failing or making redundancies. Is it right that employees of suppliers for Primark work in squalor whilst Primark make significant multi million pound profits. In short how important is profit should it sought even at the cost of morally right actions.
Importance of liquidity - liquidity has to be prioritized over profit to ensure a business remains ongoing concern. Profitable organizations can fail due to a lack of working capital.
Financial management only for large companies - what issues do small businesses face that large companies don't. Small organizations have fewer sources of finance and often struggle to maintain a healthy cash flow in the first 12 months of its existence. They are less likely to be bailed out by external entities.
Folder Check -
Batch 1
Izzy,Emma, Zoe
Take in: Monday - 7th in lesson or at 1600
Any notes that need printed off to be done 1600 or if laptop at home by Tuesday lesson.
Return: Tuesday - 8th 0800 if required or in lesson.
Kieran, Ollie, Ella
Take in: Tuesday
Notes to be handed by 1600 on Tuesday or at the very latest for Wednesdays lesson.
Returned:0800 Wednesday if required or in lesson.
Batch 2
Harry,George,Chris, Sophie
Take in: Friday - all notes to be printed off and filed
Returned: Monday @ 0800.
Callum, Alex,Tessa, luca and Jamie
Take in: Thursday in lesson or 1600. (All notes to be printed off)
Returned Friday @ 0800.
Taylor - scientific man - financial animal.
Organizational structure - Matrix, Steep, Flat, Hierarchical.
Span of control - wide/narrow.
Labour Turnover - Measure of number employees leaving in certain period time
Labour Productivity
Job enlargement
Job enrichment
Managers, team leaders, supervisors
Methods of motivation
Financial - bonus, commission, piece rate, private health insurance.
Non financial - empowerment, autonomy, flexi working,
Recruitment process - internal vs external, psychometric testing, job description, person specification, job advert, interview, travel expenses, in tray exercises.
Training - on the job, off the job, induction training.
TQM - total quality management
Mayo - Human Relations - social
Herzberg - two factor theory
Maslow - hierarchy of needs - five levels.

Number of employees that leave/total number of employees X100 = labour turnover
Methods of motivation
Theories of motivation
Organizational structure
Measures of HR performance
Labour turnover - staff leaving/number of staff at the start of the period X100
Labour Productivity -
Capacity utilization
Financial - bonus, commission, pay rise, piece rate,
Non financial - perks (free food/gym), health care/insurance, promotion, autonomy,
Maslow - Hierarchy of needs
Mayo - Hawthorne effect - Human relations school.
Herzberg - two factor theory
Taylor - scientific management
McGregor - Theory X and Theory Y

Internal Vs External - psychometric testing, interviews, CV, Job advert, head hunting, recruitment agency,
On the job vs Off the job
Induction training
De-centralized, flat, tall, hierarchical, centralized, entrepreneurial, matrix, span of control.
What do you want from your workforce?
What factors influence the organizations workforce needs?
Productivity - .

Communication -

Reliability -
efficiency -
Creativity -
Innovation -
Risk taking -
Flexibility -
Professionalism -

For each of the following write down the ratio and the norm or interpretation.

Acid test
Current ratio
Debtor days

this can be achieved through increasing the motivation of the workforce. it will lead to fewer mistakes being made and therefore the output can be increased from using the same amount of inputs (raw materials, labour and assets) this increase in efficiency will aid cost minimization and providing the selling price remains the same the profit margin will increase
bottom up - communication allows the management to understand the issues that their subordinates are facing, this will allow them to make better informed decision ensuring that employees feel included. this will lead to increased motivation and a consequence of this could be an increase in productivity which will see a reduction in mistakes being made and therefore less waste being created. This will see a reduction in cost which will not decrease the quality and therefore revenue should remain stable ensuring this will lead to increased profit.
ensuring that employees punctual and show goodwill to ensure that the businesses objectives are achieved. This may show itself in undertaking overtime at short notice or undertaking tasks that go beyond their contractual obligations. This commitment
Debtor days
current raio
profit and loss account
Corporate objectives
Most valuable brand?

Local community
balance sheet
Hierarchy of needs
Richest man in the world?
5 forces
"Rational man"
Two factor theory
Pressure groups
Name 4 possible corporate objectives?
Functional objectives
Mission statement
Richest man under 35?

Hard and soft HR
Mcgregor Theory X and Theory Y
Internal vs External influences on HR
Corporate objectives
Corporate finance
Operational objectives
Marketing Objectives
Market growth
Changes in employment law
Ethical climate
Changes in competition
HRM objectives
Desired levels of staffing and skills - fluctuate in line with demand for your product. MNC's need to ensure the right number of employees are in the right location. A recession in one market and growth in others may lead to some organizations making redundancies in one part of the world whilst hiring in others.
As organizations evolve in terms of the technology they use and the products they offer, the skills within the workforce need to change. Coding is a skill which is currently in high demand as organization need to have an online presence (website/app).

Productivity - output per employee - an area that is constantly scrutinized and an area for continuous improvement (Kaizen). Motivation of employees has a direct impact upon productivity which is why it is a key part of HRM.
Increased productivity = increase in efficiency = reduction in labour costs per unit = reduced VC per unit = lower BEP = increased profits.

Cost targets - as with any department within a business HR has budget constraints.
Higher labour turnover = higher costs.
Reducing costs in the recruitment process can have negative impacts on productivity, motivation and therefore saving costs in the short run can increase costs in the long run or have a detrimental impact upon revenue.

Employer/employee relations - a smooth line of communication will allow change to be implemented more effectively. Trust between employees and management will allow management to implement processes quicker. Two way communication is also very important. This allows managers to take on board suggestions as to allow transitions to be made more smoothly.
Open to change - employees willingness to adapt to and implement change.
Levels of motivation- committed to improve quality of service or the quality of product produced.
Willingness to contribute ideas an to innovate - improved relations leads to a more creative organisation.
Soft HR - fits in with McGregors theory Y style of leadership. A more democratic approach that allows for a collaborative approach to decision making.
Advantages include:
Being able to take advantage of all employees experiences and allowing those to be incorporated into business processes. This bring's about more innovation.
Retention of employees - prevent boredom amongst the most talented employees. This can be achieved through increasing autonomy.
Time - too much chat too little action. Discussion and drawn out decision making can lead to opportunities being missed.
Not appropriate for all workforces. Some employees don't have the skills or inclination to contribute to the decision making process.

Which to use Soft or Hard

Their own experience - managers may have been let down when they used empowerment to motivate employees.
The nature of the employees - not all employees have the intrinsic motivation to work autonomously.
Nature of the task - some jobs don't lend themselves to one method or another. Creative jobs lend themselves to soft Hr approaches.
If there there was a significant shift in the attitude towards ethics within an industry retraining will be required.
A new competitor entering the market will possibly lead to a reduction in demand which for the organization to remain profitable will require an increase in productivity or other labour related cost cutting.
Workforce planning - checking between how future workforce needs compare to the workforce audit. Then planning on how to ensure the relevant skills are available.
Workforce plans
Components of workforce plan
Recruitment and selection process
What is the purpose of this process?
To recruit employees with the appropriate skills and willingness to adopt the organizations culture. If this is achieved labour turnover will be low and productivity will be high. The organization will attempt to do this in a way that keeps costs low and time short.
The process
1.Determining requirements
2.Attracting suitable candidates
3. Selection - most appropriate candidates.
Determining the human resource requirements of the organization.
Managers will consider the following questions when undertaking a workforce audit.

How many people are retiring in 12 months?
What skills are required?
How many are likely to leave for a new company?
Entering new markets?
Change can occur when:
An individual leaves the organization
Employee promoted
Increase in workload
Development of a new product, adoption of new technology required new skills
Change in business strategy - expansion, consolidation. Overall workforce requirements will change.

Corporate Plan
Workforce plan
Origins of workplace planning
Attracting suitable candidates for a vacancy
Question 2 from B1
Question 1 From B2
Page 159.
Terminology from the recruitment process.
Job description - a document that highlights the role. Responsibilities and the workload that will come as part of the job (Pay and hours will also be mentioned). Job title will also be included as will where the job fits into the wider organisation.

Person Specification - this mirrors the job description. I.e the qualities/qualifications that a perfect candidate would have.
Internal vs External
Once this has been completed the organization will decide how to recruit.
The recruitment process is expensive and therefore should be repeated as few times as possible. E.g Standard Life spends £500,000 to recruit 50 managers = .......... per manager?
CV- References
Interview - panel/individual
Psychometric testing
Assessment centres
Role play
in tray exercises
Expensive and time consuming but very effective.
Training and development
Training - process of instructing an individual about how to carry out a task.

Development - help an individual realise their full potential.

Training and development is undertaken to ensure organisations get the best possible return on their investment. this view highlights that organisations should view people as assets rather than costs.

Induction training - to ensure that recruits become as productive as experienced employees as quickly as possible. This ensures that the productivity of the business is not significantly harmed by labour turnover.

1. Induction training -
2. Provide a wide pool of skills - flexibility/versatility.
3.Develop knowledge and enhance commitment
4. Deliver high quality products or services.

Cost of not training
Reduced productivity
Additional recruitment
Unable to deal with change as effectively
Dangerous workplace
Less likely to be aware and able to work towards corporate objectives.
What actually happens
Many organizations failed to invest enough in training as it is often viewed as a cost rather than an investment.
Few undertake proactive training - many are reactive and undertake training once a problem exists.
IIP - investors in people - this is an accreditation organistaions can achieve if they show evidence of planning training, implementation and reviewing their training provision.

Limitations - that may prevent a workforce plan from being implemented
Cost cutting
The labour market - the labor market may not provide the quantity and the skills to full in the vacancy available. Coding...
Inward migration - people bought into the country to fulfill a role.
Influences on the workforce plan
Corporate objectives and strategy
Implementation of strategy by the departments/functions
Financial health
Corporate image/ethos/culture
Government legislation
Technological change
Competitive forces
The economy
Conclusion - Workforce plan.
Managing people effectively is the single most common factor that links successful organizations. People play a vital role in any businesses success and therefore it is vital that organisation plan how to maintain this asset.
Shortages of labour , skills and experience will prevent any organization from achieving it corporate objectives. As with any plan there are two issues that are vital to success.
1. Plans are reviewed, re-evaluated and changed according to the competitive landscape in which the organization finds itself in. Workforce planning is a continuous process as workforces continually change.
2. Plans are only effective if they are implemented correctly. This is a clear L4 evaluation point ... It depends upon how successfully the plan is implemented.
Flexibility and Insecurity
Flexible workforce is required because:
Increasing competition- rapid change within the marketplace. Supermarkets - Aldi/Lidl - Tesco's failed to notice the changes in consumer behavior to maintained their competitive edge.
Many consumers have heightened expectations requiring customized products. Increased prodcution complexity whilst remaining efficient and reducing costs.
Increased competition from overseas organizations mean that organizations with seasonal demand will need to increase workforce complexity.

To survive in an ever increasing competitive environment organizations have adopted lean production techniques. To do this organization require a multiskilled flexible workforce.
Lean - no waste - no excess. Lean production therefore is production that involves minimal waste. This is to be as efficient as possible.
E.g of a flexible workforce - Honda and JCB. Workers in 2009 offered to reduce hours and or pay as to reduce or prevent redundancies.
Types of flexibility
Prof Handy
What are core and peripheral workers. - table 25.2
Explain Professor Handy's Shamrock organization.
What is a homeworker? draw a picture.
Benefits of homeworking to the employee.
What is hot desking?
Flexible operations and Hard HR.
Explain outsourcing - impact upon costs - draw the core diagrams.
Flexible workforce breeds insecurity.
What is meant by insecurity?
Analysis point:
Move to lean = move to mean.
How the change is presented and the reasons for the change will dictate how it is received by the workforce. This type of change is often problematic as different employees will see it improving their working life and other will see it as an erosion of their position within the organization.
Flexible working can benefit some employees particular those with children.

Methods of participation.
Kaizen - japanese continuous improvement. Workers meet to discuss how to improve the organization.
Work councils - groups designed to ensure concerns of workers are presented formally to the management.
Autonomous workers groups - work with little if any supervision. Only suitable for certain types of organizations. Budget responsibility also given to the group.
Employee shareholders - encourages long term improvement in performance. Employees will be paid in shares.
Other methods - suggestion boards, more democratic leadership style.
Joining in - taking part. Primarily organizations seek employees to participate in the decision making process. Two way communication and democratic leadership are often required to encourage or bring about participation.
Mayo's human relations school highlights the need for managers to pay attention to the social needs of their employees.
Participation can reduce the speed of decision making and therefore opportunities can be missed.

European directives
European works council directive - which stipulates large organizations have to introduce work councils.
These councils will have information and consultation rights relating to company performance and strategic planning.
I.E issues that will have implications on the majority of the workforce have to be consulted upon.
Consultation = dialogue.

Workers expected to work in teams. Employers believe team working to bring about more efficient and effective production.
Mayo highlights that social interaction is a key factor in workers motivation.
Delegation of authority encourages increased esteem (Maslows hierarchy of needs.)
Productivity is boosted by the fact that employees can compliment one another. One persons strengths can be complimented by others.
Psychometric testing can ensure that only those people who enjoy working as a part of team are recruited. Team working is not appropriate for all types employees and this is important to recognize when recommending team working.
Some people dislike relying upon other people if they are to be judged by the work. Decision making can also be slow, causing the organization to become cumbersome and unable to react to changes within the competitive environment.
Participation, team working and success.
Managers must provide leadership in terms of considering when encouraging employee participation is appropriate. Not all decisions can be made using this method and it is a test of leadership as decide when to use it.

Cross department teams are useful in bringing about a organization wide communication and having a better understanding of how different aspects of organisations operate.
Competitive advantage
Reduce the ability to adapt to changes in the competitive environment.
Employees are better educated and therefore are able to contribute more effectively to decisions.

Market share - Sales of one brand/total sales in the market X100
Market growth - change in sales since last year/last year sales x 100
PED - % change in quantity/ % change in price.
A2 - Marketing - strategic -
Setting marketing objectives
At what level are objective set?
Boardroom level - strategic decision making.

Companies vision - is the company's projection of what it wants to achieve in the future. This should be ambitious, relevant, and easy to communicate and capable of motivating staff.

Striking a balance between what is achievable and what is challenging. To be able to do this the organisation must have an understanding of........
To do this an extensive amount of ............. ........... will have to be undertaken.

Types of marketing objectives
1.increase product differentiation
2. growth
4. innovation
A. Distinctive design - apple - sir john ives
B. Unusual distribution - apple , direct line
C. Advertising based on image - perfumes
D. Integrated marketing programme focused on target market niche.

Why can chasing growth have negative consequences. Short term increases in sales may lead to longer term erosion of brand image as the quality of the product reduces. E.g school pupil numbers - class sizes - grades

Cannibalisation - New products launches take existing customers. Cadbury - chocolate bars, Wrigleys - chewing gum. Macdonalds - Over expanded - many of the new restaurants were taking customers away from existing restaurants.
Continuity for the long term
Long term development over short term gains. Must ensure that the brands reputation is maintained over the short term tactics that may lead to a momentary increase in sales. Established brands such as Levi, Budweiser and Bacardi insist on senior managers handing on the brand in better shape than they inherited.
Brand image over individual product development -
Levis- jeans not clothes
Cadbury - chocolate not snacks

Innovation - technology - competitive advantage
Getting it right or get in first.
Coca cola

Turning Objectives into Targets
Targets are interim points to ensure that the organisation is on target in achieving its objectives
E.g Objective = innovation - target = 40% of sales to come from products launched in the last 5 years.
first year - 32% - one national new product launched plus another in a test market.
%sales from products launched in the past 5 years.
Targets ensure:
Ensure all marketing staff know what they are aiming for.
Ensure cooperation with other departments
Provide an early warning when strategies are failing.
Help psychologically - ensures people have interim targets to meet to ensure sound performance throughout the life time of the objective.
The nature of the organization will dictate how aware marketing employees are of the organizations objectives. If all marketing employees were in one centralized office then it would be difficult to comprehend how employees could not be aware of objectives. However if the organisation was decentralized and marketing employees were spread across many outlets then communicating the objectives may be a lot harder.
Forecasting sales using extrapolation
Actual sales
Extrapolation is the process of using historical data (i.e previous sales figures) to forecast future sales.
Moving averages - this is used when the raw data is volatile. This smooths the graph to highlight the underlying trend. This is useful for organisations that operate in a seasonal industry.
Raw data
Underlying trend
Analysing the Market
Recognizing what market the organization operates in. A seemingly obvious point however a misinterpretation can have severe detrimental impacts. This can evolve over time - Nintendo - now a games console manufacturer was once a game card maker only, it made this change hugely successfully.
Purpose of Analysis
Recognizing long term trends.
Tesco - Discounters (Lidl, Aldi)- consumer behavior changed as they recognised the value provided by these companies. This led to Tescos revenue and market share tumbling. They've had to employ a turn around strategy.
Consumer Usage and Attitudes
Consumer Profile
Market Mapping
Use of IT in Analysing
Market analysis is rooted in the deep understanding of customers.
Why buy coke instead of Pepsi.
Who are the key decision makers - parents, mothers, early adopters.
who are the users? Pester power..
Once these questions are answered the organization can then accurately target its market.

MR used -
Advantage of Primary and a method for each
Advantage of secondary
Intricate understanding of consumer habits and how they consume the organisation's products.
Communicating this data amongst the different departments is key as it brings the following benefits:
Improved decision making
Fewer mistakes
Reduced duplication
converting new knowledge into added value more quickly.
Draw a picture of a typical VW golf driver.
Job/socio economic groups.
Type of house they live in.
What brands do they wear.
What phone do they use.
Marital status
children? dependents

This is statistical break down of who buys the product or brand. by doing this more accurate MR can be implemented, more precise market segmentation, deciding in which media to advertise.
Look up YUPPIE
Premium price
Aspirational (Image)
Budget price
Commodity (function)
Car Market
BMW - Luca
VW - Tessa
Toyota - Ella
Kia - Calum
Vauxhall - Kieran
Ford - Oliver
Aston Martin - Alex
Volvo - Jamie
Extension - consider
Starter clues:

1.Econ .. scale
Export -costs
2. Workforce - zero hours - Calum

Big data -
this has changed the level of detail that organizations can gather on their consumers. This in conjunction with social networks and loyalty cards have led to organizations having a hugely detailed understanding of who their target market is.

IT aids in the collection and analysis of data.
Secondary research -

Databases - used to find trends between different data sets.
The more details an orgnaisation has upon its customers the more accurate its advertising and MR is.
Analysis - the amount and accuracy of data an organization has can be a competitive advantage.
Important that data is continually updated to ensure changes in consumer trends are identified. Prevent suffering from the types of issues that Tesco's have endured in recent years.
Evaluation - The analysis of markets is central to successful marketing. Effective analysis ensures that the organization selects the most cost effective advertising tactics. It also allows future rounds of MR to be more effective.
Selecting Marketing Strategies
Strategy is about the future:
What are the future prospects of the the company. The organization must ensure that it is prepared to satisfy the future demand and ensure that they meet changing consumer needs. E.g Hybrid technology for car companies. Remember lead times must be taken into considerations.
Strategy must be achievable
Strategies must be achievable and therefore must take into consideration a significant number of factors. Is market growth significant enough or do companies resources allow for the strategy to be implemented as intended.
Strategy is company specific
A strategy is bespoke to an organisation, it may fall under a broad title but it will have to altered to meet the specific needs of the organisation. Where an organisation sits within an industry will play a role on how a certain strategy is implemented.
Strategy versus tactics
Strategy = overall plan to long - medium term issues.
Tactic - short term - day to day.
Ansoff's Matrix
On your A3 - make notes on the strategies that are derived from the matrix.
Write out - Table 19.1
1. Different laws and regulations. Laws even within EU differ from country to country so organizations must be aware of these to prevent expensive or embarrassing transgressions. Tobacco packaging is a good example of this (UK - Smoking Kills, Australia - Brandless/colourless)
Differences in marketing overseas
2. Cultural differences - HSBC advert. Misunderstandings can occur from the wrong use of colour, wording and customs.
3. Political climate- Is the country stable (Egypt,Libya)? Will the state get involved in private business ventures (Russia)? Will laws based up religious expectations reduce an advertising campaigns effectiveness?
4. Religious and cultural differences. Alcohol cannot be drunk in public and the role of woman in society are examples of how the west differs to Muslim countries. This will therefore influence marketing in these countries.
5. Ways of doing business! A payment to the CEO to seal the deal is known as a bribe in the UK, whilst in other countries it is an expectation. BAE systems have fallen foul of this issue.
6. Domestic insight is often vital. Organization will often employee local experts to them an insight into what methods of marketing will be effective in a certain country. This maybe the case within the EU - Countries such as Spain and Italy have a siesta culture - very different to the UK.
7. LANGUAGE, IDIOMA, TAAL, TEANGA, IAITH. Even within the UK different languages can be found.
Words and therefore brand names can become offensive in different countries. See the photos ---------
Low cost V's Differentiation
Michael Porter highlights that management must make strategy decisions and stick by them. They must make a decision between being a low cost operator in their industry or a highly differentiated alternative.
Ryan air - cost minimization.
Waitrose - differentiate on the quality of the service they provide.
The worst place to be positioned is in between.
Clothes market is a good example-
High end - Burberry, Chanel. - successful
Middle - Marks & Spencer - struggling
Low cost - Primark - Successful.
Measures the time in which an investment takes to break-even or "payback".
Time is associated with risk and therefore a smaller payback period is favorable.
Its main weakness is that it does not take into consideration inflow for the assets lifetime. Therefore an investment that would provide a larger return maybe turned down in favour of one that pays back quicker but has lower overall return.
As with any formula useful for Analysis marks. (Processed data)
Eval - time = risk. What is the managers or the companies attitude towards risk.
Average annual return
initial outlay
This investment appraisal highlights the level of profit or return an investment provides across it's lifespan.
Companies may set ARR requirements for investments. E.g 15% - so for an investment to gain management approval a project will have to have a higher ARR %.
Page 89/90
Can be supplemented with Table 13.5
Organistaions should use a combination of the two investment appraisals as they both provide very different but equally important perspectives on which investments are appropriate.
Exam tip - Ap - use background info from case study to suggest which is most relevant.This will aid in achieving l4 Eval marks.
Difference between inflows and outflows
This week - Operations -
Economies of scale homework
Lesson 1 - notes on innovation + R&D
Lesson 2 - complete innovation + receive notes on Location.
Class 3 - Discuss key aspects of location.

Next week
Monday - Kaizen
Tuesday - library lesson please go straight to library quiet room booked.
Discuss homeworks one on one - areas for focus over Easter.
Revision pack - explained.
Notes on Op's Objectives.
Wednesday - Kaizen or sweep up of location

Thursday Friday Post Easter.
18 mark essay under timed conditions
Week 2 summer term
Lean production/planning operations - CPA hard for some
Lessons 1+2 introduce principles
Critical path
Non critical activities.
Work through example from past paper.
Homework - independent attempt at a CPA from a previous paper.
Lesson 3 - go through homework.

Easter work - revision + lean production (CPA) notes. Please note topics that require extra attention. Past papers!! Write up q's planned by JC + complete past paper q's in pack.
Week 3 summer term.
Lesson 1 - integrated Ops.
Homework to prepare for ops man q.
Lesson 2. Sweep up (weaknesses + questions) + 18 mark ops man question in class.
Lesson 3 - NPV - very very briefly touched upon during finance section.

Week 4 -
Lesson 1 - 34 markers technique - skills the same lay out different.
Homework to write a 34 marker.
Lesson 2 - Revision begins - Pupil led - please , please be prepared to highlight areas of weakness.
Question based + technique + use of case study
Using processed data.


Lesson 1 finance q and 18 marker
Lesson 2 34 marker under timed conditions
Lesson three - go through essays. Read A grade essays.

Extra sessions EVERY Monday - 4 until food runs out.
As has been the case other extra session by appointment.

Benefits of successful R&D
Monopoly: New ideas can dominate the marketplace. Dyson enjoyed near monopoly status in the bagless vacuum market due to patents protecting their design. This allows for premium pricing to be set.
High price - skimming - as highlighted above - new mobile phones.
Reputation - organizations that consistently developed new technologies gain a reputation for having the very latest technology. "Apple".

Unsuccessful R&D
No guarantees - huge amounts of investment can lead to no gain.
New technology developments always lead to commercial benefits.
Lots of organizations fail to invest enough in to R&D due to the level of risk associated with R&D. This tends to lead to only large organizations having the resources to undertake R&D.

R&D and international competitiveness
The level of R&D taking place in a country is a measure of economic success. Higher levels of R&D suggest long term growth opportunities. This should be considered when deciding which new markets to enter or where to locate a new factory.
UK - has fallen behind many other countries in terms of innovation as british companies have failed to invest enough in R&D.
Major innovation can completely change a companies competitive environment. Unforeseen innovations can leave organizations floundering.
Good management requires having a long term plan and being aware of developments that impact upon the firms long term performance.
Organizational culture, recruitment, financial budgets, attitudes towards risk all contribute to the level of innovation that organization enjoys.

Evaluation - time! Innovation requires long term strategic planning. Any organization that fails to take a long term view of innovation will not be successful in innovating.
Long term vs short term.
Kaizen (Continuous improvement)
A Japanese word that relates to all employees taking responsibility for the improvement of the organization. In all aspects of the production process.
The philosophy is made of three main aspects
One employee two jobs - job 1 = the jobs you have. Job 2 = find a way to improve it. Those who work on production line are experts and have opinions that are worth listening to. Experience is more relevant that theoretical expertise.
Teamworking - must works as a team and not as an individual. These teams are known as "cells" they are made up of employees who work in the same section of the factory. These teams will meet regularly to discuss ways to improve the processes. These methods are then brought to the management to be considered.

Empowerment- Encouraging employees to take greater responsibility. By enhancing employees decision making responsibilities employees ideas can be implemented quicker.
Teamworking relies upon empowerment. This is an important point. The effectiveness of Kaizen relies upon empowerment being embraced by employees.
Look up quality circles.
Problems of implementing Kaizen
Culture -Absolutely key - the orgnsiation as a whole has to embrace Kaizen. All employees have to be willing to contribute. They need to ensure employees who are committed and have a long term view of their employment. Managers with autocratic leadership style may resist its implementation.
Employees may resist if there's a history of poor employee relations. If there have been disputes that have shattered trust between employees and management Kaizen will be difficult to implement.
Training costs - Cultural change is a long term and expensive project. For kaizen to work employees must be motivated and have the expertise about the production process. This makes it a very costly process.
Justifying the cost of Kaizen - opportunity cost could be huge. The time and cost of implementing a rather intangible project can often put management off. It will also take a significant period of time to see the full results. Budget holders may be difficult to convince.
Diminishing returns - Biggest benefits at the start of the process. Over time the benefits reduce as the the bigger efficiency have already been implemented. harder to maintain employee motivation.
Radical solutions - some of the best money saving ideas may require fundamental changes. Irradiate the old to implement an entire new system. Technology change may force some industries to this. Kaizen and therefore is not appropriate in these cases.
Analysis - incremental gains. Many small improvements. Therefore most appropriate in established industries.
It can't be imposed upon employees. Employees must be willing participants.
Kaizen most be effective when first implemented.

Marketing objectives -
Give four examples
Small business - are marketing objectives as important?
Factors that prevent marketing objectives being met?
Internal -
External -
Marketing decision making model -
Analyzing a market - what is it?
Consumer usage and behavior - knowledge.
What is a consumer profile?
Draw a market map for mens or womans fashion industry
Use of IT - Database analysis how can it be used?
Product positioning -
Target market -
Marketing revision
Moving averages - Wednesday 5th of may lesson Revision question.
Forecasting methods:
Extrapolation - Draw a graph that shows extrapolation.
What are the advantages of extrapolation.
Correlation - Draw a graph with strong correlation.
Be aware of:
Test markets-
Scenario planning -
Variables to consider -
Climate - weather changes
Legal changes
Internal competence -
Strategy -
Key aspects -
Future planning-
Achievable -
company specific-
What is the difference between tactics and strategy.

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