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107 Cards in this Set
- Front
- Back
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What is a small business? |
⦁ Capital is supplied and ownership held by individual ⦁ Area of operation is local⦁ Management is independent |
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Models illustrate how industries develop and how business react to pressures |
⦁ Industry Growth Models |
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⦁ Large Business Growth Models |
showed characteristic changes in businesses as they grow into large multidimensional units (decentralized |
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⦁ Small Business Growth Models |
develop models for small businesses |
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Stages of a Business |
Inception, Survival, Growth, Expansion, Maturity |
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Inception |
⦁ Main values driving firmly from founders⦁ Developing a commercially acceptable product ⦁ Establishing a place in market for it Most likely crisis” emphasis of profit, administration demands, increased activity |
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Survival |
⦁ Financing emphasis will swing to working capital and need to finance increased inventories/receivables⦁ Established creditability with suppliers⦁ Bank over-drafts / short term loans Most likely crisis” over trading, increased complexity of expanded distribution, channels, change in basis of competition |
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Growth |
⦁ Should be profitable (no cash for owner)⦁ Accounting systems in place⦁ Formal research and development to expand product range ⦁ “Most likely crisis” – entry of larger competition, demands of expansion into new markets/products |
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Expansion |
⦁ Regular management reports, decentralized authority, formalized accounting systems⦁ Opportunities to sell out and capital gain⦁ Firm not well managed go back to “growth” Most likely crisis” – distance of top management from action, need for external focus |
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Maturity |
⦁ Still constantly growing ⦁ Verge of moving out of being small businesses⦁ Expense control, productivity, and finding growth opportunities⦁ Productivity = success⦁ Major investments, plant upgrading and maintenance |
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Managers |
⦁ Decide how to use resources ⦁ Inspire others ⦁ Provide vision/directionPlanning figuring out where to and how to get there Organizing determine a structure for both individual jobs + overall organizationLeading directing and motivating people to achieve goals Controlling checking performance and making decisions adjustments as needed |
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⦁ Top Management |
(CEO, President) – sets the overall direction of the company, articulate vision, establish priorities, allocate time/money |
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⦁ Middle Management |
(Director, Head) – manages the managers and communicates up and down pyramid. Coordinating teams and special projects with coworkers from other departments |
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⦁ First-line Management |
(Supervisor, leader) – manages people who do the work, train, motivate, and evaluate non-management employees. Involved in day-to-day production |
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Technical Skills (Front-Line Management) |
⦁ Expertise in specific functional area/depart⦁ Might not relate to technology itself ⦁ (Sales, copy writing, accounting)⦁ Front-line managers must have high degree of tech skills (help hire, train, evaluate employees) |
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Human Skills (Middle management |
⦁ Ability to work with and through⦁ Other people in different relationships⦁ Communication, leadership, Coaching ⦁ Empathy and team building ⦁ Middle managers high level of human skills (coordinating people/projects) |
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Conceptual Skills (Top Managers) |
⦁ Ability to grasp a big-picture view of the overall firm and the relationship between its parts⦁ Help managers understand how their company fits into the broader competitive environment ⦁ Good at strategic planning ⦁ Top managers must have conceptual skills to format a vision, interpret market trends/plan for future |
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Theory X |
Workers dislike work and avoid it Fear is motivating People perfer to be directed avoiding responsibility and seeking security |
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Theory Y |
Work is natural as play and rest Different rewards can be motivating Accept responsibilities |
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Job Enrichment |
focused on creating jobs with more meaningful content, under assumption that challenging, creative work will motivate employees to give best effort ⦁ Skill Variety: workers can use a range or different skills ⦁ Task Identity: workers do complete tasks with clear beginnings and endings⦁ Task Significance: workers understand impact of tasks on others⦁ Autonomy: workers have freedom and authority regarding their jobs⦁ Feedback: workers receive clear, frequent information about their performance |
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Expectancy Theory |
centers on the relationship among individual effort, individual performance and individual rewards |
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Stacey Adams) centers on how the perception of fairness directly impacts worker motivation |
Equity Theory |
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Strategic Planning (Top Level Managers) |
⦁ Establish a vision for company⦁ Define long-term objectives⦁ Action steps and allocate resources⦁ Should we acquire a new company |
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⦁ Applying the strategic plan to their specific areas of responsibility⦁ Should we invest in new production equipment |
Tactical Planning (Middle Management) |
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⦁ Applying tactical plan to daily, weekly and monthly operations⦁ How should we schedule employees |
Operational Planning (first-line management) |
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Contingency Planning (senior management) |
⦁ Planning for unexpected events ⦁ How should we respond if our company starts a price war |
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Strategic Planning Process: |
⦁ Define mission of organization⦁ Evaluate organizations competitive position⦁ Set goals⦁ Create strategies for competitive differentiation⦁ Implement strategies⦁ Evaluate results |
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Centralization |
the degree of centralization related directly to the source of power and control Small number of people has power to make decisions Respond slower to customer needs and lower employee morale, results = strong corporate image |
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Departmentalization |
breaking the workers into logical groups ⦁ Functional: dividing employees into groups based on areas of expertise (marketing/finance)⦁ Product: dividing based on the products that a company offers to help workers develop expertise about products⦁ Customer: groups based on the customers that a company serves, helps companies focus on the needs of specific customer groups⦁ Geographic: groups based on where customers are located (international firms)⦁ Process: groups based on what type of work employees do is common in manufacturing |
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Line Organization: |
⦁ Has a clear, simple chain of command from top to bottom⦁ Each person directly accountable to the person immediately above (small business) |
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Line & Staff Organization: |
⦁ Incorporates benefits of line organization without drawbacks⦁ Line Managers: supervise functions that contribute directly to income and marketing⦁ Staff Managers: supervise the functions that provide advice/assistance to line departments (legal, accounting, HR) |
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Matrix: |
⦁ Build on line and staff approach by adding a lot more flexibility⦁ Brings together specialists from different areas of the company to work on individual projects (high tech/aerospace firms)Leadership |
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Autocratic Leaders |
hoard decision making power for themselves, they typically issues orders without consulting followers |
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share power with followers, take-in input from others, but still make decisions |
Democratic Leaders |
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Free-Rein Leaders |
set objectives for themselves, give freedom to choose how to accomplish goals |
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Mission Statement |
focuses on current business activities⦁ Market scope⦁ Product scope⦁ Geographic⦁ Unique scope |
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Value Statement |
Are ideally connected to and reinforces a companies vision, strategy and operating practices Broad beliefs of what you think is right |
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Values vs. Vision |
a statement of values is often provided to guide a company’s pursuit of its vision (benefits, principles, way of doing things) Value |
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Mantra |
a sacred verbal formula repeated in prayer, meditation or incantation not a “tag line”Ex: Tag line “just do it” Mantra authentic athletic performance |
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Controlling: Dashboard |
Daily report of what matters to the company (highly visual, sales, weather, alerts, sales/time) |
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Promotion: |
The power to influence customers and remind them, inform them and persuade them Creating powerful bonds to draw consumers |
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Marketers |
Can’t control powerful promotion tools: publicity |
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Adoption & Diffusion (5 traits that effect) |
⦁ Observation – how visible is the product to other potential customers? Trailability – how easily potential customers sample a new product (ex. Grocery store samples ⦁ Complexity – can potential consumers easily understand what your product is/how it works? ⦁ Compatibility – how consistent is your product with the existing way of doing things (ex. Cordless phone vs. cord phones) ⦁ Relative Advantage – how much better are the benefits of your product compared to others |
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Integrated Marketing Communication: |
Used by smaller companies to coordinate their message through every promotional vehicle (ex: ad, websites) |
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Positioning Statement |
a brief statement that articulates how you want your target market to envision your product relative to the competition *rational/emotional |
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Promotional Channels |
advertising, sales promotion, direct marketing and personal selling Digital |
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Digital Communications |
now includes mobile/cell communication, email/online communities, blogs etc.. |
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Product Placement |
the paid integration of branded products into movies/TV shows (American Idol – Coke) |
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interactive games (video games) exposed to embedded ads |
Advergaming |
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transfer of information from someone who is in the know to someone who isn’t word-of-mouth marketing |
Buzz Marketing |
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Sponsorships |
provide a deep association between a marketer and a partner |
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Traditional Promotional Tools |
⦁ Advertising: paid, non-personal communication designed to influence a target audience with regard to a product, service, organization/idea ⦁ Sales Promotion: stimulates immediate sales activity through specific short-term programs aimed at either consumers/distributers ⦁ Consumer Promotion: designed to generate immediate sales (ex: premiums, promo products, samples, coupons) ⦁ Trade Promotion: designed to stimulate wholesalers and retailers to push specific products more aggressively (ex: special deals, allowances, trade shows, contests |
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Public Relations |
Relations involves the ongoing effort to create positive relationships with all of the firms different “publics” to generate positive publicity |
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Personal Selling (Direct-Selling) |
person-to-person presentation of products to potential buyers |
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promoting goodwill for a company by providing information and assistance to customers |
Missionary Selling |
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The Sales Process – 6 Steps |
1.Prospects and Qualify2. Prepare 3. Present 4. Handle Objectives5. Close Sale6. Follow Up |
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Consultative Selling |
shifting the focus from the products to the consumers ⦁ Involves deep understanding of customer needs ⦁ Salespeople offer practical solutions to customer problems⦁ Generates customer loyalty, but involves expensive time investment from sales force |
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Team Selling |
effective for large, complex accounts⦁ Group of specialists from key areas of company goals undercover opportunities that wouldn’t be found with 1 salesperson |
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Product Characteristics: |
⦁ How can you best communicate the features of your product?⦁ Simple/complex?⦁ High/low price? |
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Product Life Cycle: |
⦁ Where does your product stand in its life cycle?⦁ Developing awareness? |
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Target Audience: |
⦁ How big is your T.A?⦁ Where do they live/work? |
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Push/Pull: |
⦁ does your industry emphasize push or pull strategies? ⦁ PUSH: motivating distributers to “push” product to customers ⦁ PULL: creating demand from customers to they “pull” product through distribution channels |
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Competitive Environment: |
⦁ How is your key competition handling their promotional strategies? |
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⦁ What are your promotional goals?⦁ How much $$ to achieve them? |
Budget |
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⦁ Channels of Distribution |
the path that a product takes from producer to consumer |
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⦁ Physical Distribution: |
actual movement of products along that path |
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Channel Intermediaries |
to help their products move more efficiently and effectively from factory to consumer |
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Role of Distributers: Adding Value |
⦁ Charge for adding value (charge less than it would cost for consumers and producers to add value themselves) ⦁ Ex: travel agents losing customers for online bookings ⦁ Reduce the number of transactions and associated costs – for goods to flow from producers consumers |
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Form Utility |
provides customer satisfaction by converting inputs into finished products (Kellogg’s wheat cereal) |
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Time Utility |
making products available at a convenient time for customers (1 hour dry cleaning, vending machines) |
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Place Utility |
providing the right products in the right place (ATM |
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Ownership Utility |
making it easier for customers to actually posses the goods & services they purchase (Delivery, credit) |
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Information Utility |
boosts customer satisfaction by providing helpful information (EB Games hiring specialists) |
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Service Utility |
providing fast, friendly and personalized service (placing special order on car part) |
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Retailers (90% of total retail) |
⦁ The distributers that most of us know and use on a daily basis⦁ Sell products directly to customers⦁ Represent the last stop on the distribution path⦁ Must keep close touch with rapidly changing consumer needs/wants⦁ Ex 7/11, Tim’s, Canadian Tire⦁ Store vs. Non-Store |
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Multichannel retailing |
encouraging consumers to buy from different venues |
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Store Type Retailers |
Category Killer home depot, best buy Convenience Store 7/11 Department Store The Bay, Sears Discount Store Wal Mart, TargetOutlet Store Nike, Gap Specialty Store La Senza, Running RoomSupermarket No FrillsSupercenter Walmart SupercentersWarehouse Costco |
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Intensive Distribution |
⦁ Placing your products in as many stores as possible ⦁ Works best with low-cost convenient goods that customers wont travel too far to find |
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Selective Distribution |
⦁ Placing products only with preferred retailers⦁ Works best for medium/high priced products that customers don’t expect to find on every street corner |
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Exclusive Distribution |
⦁ Establishing only one retail outlet in a given area ⦁ Luxury goods (Bentley, Rolex) |
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Online Retailing |
use technology to create a persona to reach customers anywhere anytime |
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Direct Response Retailing |
catalogues, telemarketing, and advertising |
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Direct Selling |
selling directly to customers in homes or workplaces (hiring independent contractors) |
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Vending machines |
Non- In store retailers |
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Wholesalers |
⦁ Buy products from producer and sell them to retailers and other sellers ⦁ Some can work be both (Staples/Costco) ⦁ Some are owned by producers, some owned by retailers |
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Independent Whole selling Businesses (2 Categories) account for 2 thirds of all wholesale trade |
⦁ Merchant Wholesalers take legal position or title of the goods they distribute ⦁ Agents/Brokers which don’t take title of the goods ---- Connects buyers and sellers and facilitate transactions in exchange for commission ----Don’t take legal ownership of the goods they distribute (brokers = real estate) |
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Merchant Wholesalers |
⦁ 80% of all wholesalers⦁ Reduce risk for producers that their products might be damaged or stolen (wont sell)⦁ Allows to have own marketing strategies |
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Full-Service Merchant Wholesalers |
provide a complete array of services to retailers or business users that purchase their goods (example: warehousing, shipping) |
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Limited Service Merchant Wholesalers |
provide fewer services to customers (example: some might warehouse products but not deliver) |
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Drop shippers: |
take legal title of merchandise but never physically posses it (ex- Amazon) |
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Cash/Carry Wholesalers: |
service customers that are too small to merit in person sales calls from wholesaler reps |
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Truck Jobbers: |
working with perishable goods and drive products to customers |
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Supply Chain Management |
planning and coordinating the movement of products along a supply chain S.C.M can build a competitive advantage because of its complexity Many firms outsource their S.C activities (example: UPS have been successful in supply chain management |
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Decisions marketers |
must consider what each mode of transportation offers, right choice depends on the needs of the business and product ⦁ Warehousing⦁ Materials handling⦁ Inventory control⦁ Order processing⦁ Customer Service⦁ Transportation⦁ Security |
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Logistics |
the tactics involved in moving the products |
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Elements of the Supply Chain |
Raw Materials Logistics (transportation) Warehouse/Storage Production Warehouse/Storage Logistics Distributors |
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Pricing Objectives and Strategies |
⦁ Pricing plays a key role in demand for products⦁ Price is a tough variable: legal constraints and intermediary pricing ⦁ Stable pricing in not the norm, and prices must constantly be evaluated ⦁ Building profitability & Boosting volume⦁ Matching the competition ⦁ Creating prestige |
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Breakeven Analysis |
the process of determining the number of units that must be sold to cover costs Total Fixed Cost/ Price- Variable Cost |
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Fixed Margin Pricing |
cost-based pricing, demand-based pricing |
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Profit Margin: |
the gap between cost and the price per product |
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Different Types of Pricing |
Penetration PricingLow price- in the beginning so it attracts volume Every day low pricingConsistently having low pricesCreate loyalty in the brand or the store High/Low PricingDifferent types of products Skimming PricingHigh price for maximum profits then later as a discounts Odd Pricing; ending numbers below even dollars reception of greater value |
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Distribution |
Intensive, Selective, Exclusive |
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KITA THEORY OF MANAGEMENT |
Stands for Kick In The Ass Hygienic- dissatisfactory up to neutralMotivational factors get you too neutral to satisfy. |
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Expectancy Theory |
We make choices believes on the outcome of the choice |
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Equity Theory |
Person that works the same as you but does not works as hard.Fairness between input and output |
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The New Product Development Process |
Customer feedbackTalk to people idea generationBody language- incorporate ideas and into messageAnalyze- Development- TestingExtract the right information to get the message acrossHow can I develop something that worksFocus groupsStart selling at IDEA GENERATION |
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Advertising and Media Spending |
Have a budget and work through a channelFragmentedNot everything can be advertised on TelevisionSales |
