BUSINESS STUDIES

IGCSE FINAL
SUMMARY
By You Know Who ;)
List of analysis to use, note (I DON’T need that much lmao)

Motivated Staff  Low Labor Turnover  Less Money Spent On Training Higher Profit
Motivated Staff  High Productivity and efficiency  Less Waste  Achieve Lean Production
Skilled Staff  Motivated Staff  Higher Quality  Customer Satisfaction  Brand Image
Demotivation High Labor Turnover  Lower Reputation  Less Customers Less Sales
1.1 Business Activity
The Economic Problem

Needs : A Good Or Service Essential For Wants : A Good Or Service People Would
Living Like To Have, However It Is Not
Required For Living

Food Cars
Water Movies
Shelter Watches
Etc.
1.1 Business Activity
Factors Of Production:
Resources required to produce goods or services. Four Factors

Land Labor Capital Enterprise

The resources that The actual work being The Finance, Enterprise : The risk
can be obtained from put in by the workers machinery and taking ability of the
nature. This includes to produce the item. equipment needed to person who brings all
minerals forests oil REWARD : produce goods these factors together,
and gas, land is to WAGES/SALARY REWARD : INTEREST also known as an
PLOT the art RECEIVED ON entrepreneur
REWARD : RENT CAPITAL REWARD : PROFIT
1.1 Business Activity
Specialization :
When a person or company focuses on a job/task that they are best
at, for example ; not everyone doing all the jobs, one task is done by
this dude and the other is done by that dude because he/she is good
at that which he is working towards

Advantages : Disadvantages :

• Workers are more efficient : because they are
doing that which they’re good at, they don’t waste time
doing this and can decrease waste~
• Quicker to train the workers : Less money
wasted since they start working and producing output
quickly and get paid for that rather than they get paid
while still being trained simultaneously having no output
• Can Get Demotivating for the workers:
Because they keep repeating the same task repeatedly
• Over-Dependency : If the worker/s responsible
to finish that job, production can be stopped, and
output could be lost.
 1.1 Business Activity
Added value : Difference between COGS and the selling
price of the product,
the amount of value the business wants to add

How To Increase Added Value

• Reducing Production Cost,

Could lead to cheaper labor and lower quality overall

• Raising Prices
Could lead to customer loss
1.1 Definitions
• Scarcity : It is the basic economic problem, basically when there are unlimited
wants but limited resources
• Opportunity Cost : The next best alternative when choosing another item, usually
due to scarcity people are forced to make choices, when these are made this is
known as opportunity cost.
SCARCITYCHOICE OPPORTUNITY COST
• Business: Any organization that uses the factors of production to create goods and
services to satisfy human wants and needs/attempting to solve the problem of
scarcity
 1.2 Classification Of A Business
Primary Sector Secondary Sector Tertiary Sector

 Involves the extraction  Involves, manufacturing  Services provided in an

of natural resources, of goods while utilizing economy
examples: the resources for the  Examples:
Fishing, Lumberjack, Mines primary sector, Gyms, Barber Shops, Spas
 Examples : Furniture
Companies, Car
Companies
1.2 Classification of a Business
Private Sector
When private entities own a
business in aims to raise profit,
and all costs and risks are
accounted for by that entity
Public Sector
When the government owns and runs a
business in aims to provide essential and
public goods and services such as schools and
hospitals and police stations
Funded by tax – paying citizens
ADV: Reduces waste in an industry (two
railway lines),
Provide Essential services
Dis : Motivation is low due to no profit aim
No incentive to improve bcs no comp
1.2 Definitions
No definitions. Like, there are no
external definitions/terms
1.3 Enterprise, Business Growth and Size
Entrepreneur Characteristics

Entrepreneur : A risk – taking person who organizes and operates a business

venture
 Risk Taker
 Creative
 Optimistic
 Independent
 Hard Working
1.3 Enterprise, Business Growth and Size
Why do governments want to support startups?
 Employment Rate : More people are working meaning there is less
unemployment rate.
 Economic Growth : When a business pops up, the economy increases
(GDP) (Gross Domestic Product) Increasing Economic Growth
 Can Contribute Exports Of Country
 Can Introduce fresh ideas and technologies into the business industry
1.3 Enterprise, Business Growth and Size
How Do governments support a business?
 Organize Advice : Provide useful information on how to start a venture.
 Give Grants for training : Provide financial support for workforce training
 Give loans with low interest rates
1.3 Enterprise, Business Growth and Size
Measuring Business Size

Number Of Employees: Larger Firms tend to have a larger workforce

Value of output : Larger Firms are likely to produce more output than smaller
ones
Value of capital employed: Larger business got mad cash, so they’re able to
employ more capital than smaller ones
1.3 Enterprise, Business Growth and Size
Business Growth : Business want growth because it reduces average costs in
the long run also helps develop market share.
Internal Growth External Growth
Happens when a business expands its Happens when it takes over or merges with
existing operations. another business, aka integration.
For example: When a fast - food chain opens a Merger : When the owners of two business
branch in another country, or in another city agree to join firms
etc. A takeover : occurs when one business buys
out another business
 1.3 Enterprise, Business Growth and Size
Types Of Mergers
Horizontal Mergers
Merges at :
Same Industry, Same Stage Of
Production
Benefits :
Opportunities of EOS
Decreases Competition
Increase In Market Share
Vertical Merger Conglomerate Merger
Same Industry, Different Production Merges at a completely different
Stage industry
Forward : Merges “Ahead”
2 to 3 Benefits :
Benefits:
~More Control Over Product
~Increases Brand Recognition
Increase in profit margin
(absorption) Transfer of Ideas
Backwards : Merges “Back”
Gives Assured Supply Of Goods
Increase in profit margin
(absorption)
1.3 Enterprise, Business Growth and Size
Drawbacks of growth
• Difficult to control staff : More divisions & department come with growth
this will increase amount of employees
• Diseconomies of scale
• Lack of funds
1.3 Enterprise, Business Growth and Size
Why businesses decide to stay small

Personal preference due to owner’s objectives

Market size could be too small for growth

Type of industry
1.3 Enterprise, Business Growth and Size
Why Businesses Fail

Poor Management : Lack of experience and planning

Failure to plan for change : The demands of customers keep changing
Over-expansion : Could lead to diseconomies of scale
Poor financial management : If owner of firm doesn’t manage finances
properly, he could have cash shortages meaning employees wouldn’t get paid,
rent doesn’t get paid, and this poor cash-flow causes failure.
1.3 Enterprise, Business Growth and Size
Why they are at a greater risk of failure
• Less experience
• New to market : Might not understand the nuances and trends of the
market while other competitors have mastered it.
• Lack of Sales : If they don’t obtain sales, they miss out on a lot of potential
finance which increases risk of failure.
• Not enough finance to support the business yet.
1.3 Definitions
• Business Plan : A document containing a business’s objectives and details
about future tasks, operations, finance and owners of the new business
This plan contains all the details about the plans underway over the next
few years, Has :
Executive summary, Costs, Expansion, Cash flow forecast.
• Startup : A company typically in the early stages of its development
• Capital employed : Amount of capital used for a project or terminal of a
business
1.4 Types of business organizations
Sole Trader : Owned and controlled by one person, can employ other
workers but only he/she invests and owns the business.
Advantages Disadvantages

 Easy to set up  Unlimited Liability

 Full Control  Decisions  Lack of continuity
 Sole Trader receives all profit  Full Responsibility
 Personal  Lack of capital
1.4 Types of business organizations
Partnership : Agreement between two or more (up to twenty) people to
own and run a business jointly.
Advantages Disadvantages

 More capital investments  Unlimited Liability

 Lack of continuity
 Lack of capital
 More Ideas and skill involved  Conflicts
1.4 Types of business organizations
Companies ( LLCs ) :

Advantages Disadvantages

 Can Sell Shares Leading to  Required to disclose financial

increase in capital statements
 Limited Liability  Priv.L.Cs cannot sell shares to
the public
 Divorce in ownership and
control
1.4 Types of business organizations
Franchises : When the owner of a business gives a license to another
business to use their business idea
Advantages to franchisor Disadvantages to franchisor

 Low - Cost Method Of Expansion • Loss of control over business

 Increase in brand recognition~ • If a franchise fails, the entire brand
could lose reputation
1.4 Types of business organizations

Advantages to franchisee Disadvantages to franchisee

 An established brand and • Cost of setting up

trademark, low chance of failing • Lack of control Need to follow
 Franchisor will supply the raw strict standards and rules
materials/ products • Shared Profits
1.4 Types of business organizations
Joint ventures : An agreement between two or more organizations or
business to work together on a project
Advantages Disadvantages

 Reduces Risks and lowers costs
 Each business brings different area
of expertise to the joint venture
• Any mistakes will reflect ‫ انعكاس‬on
all parties involved damaging
reputations
• The decision making process may
be ineffective due to different styles
of leadership
1.5 Business Objectives and Stakeholder
Objectives
Business objectives Benefits

Setting objectives increases motivation

Easier Decision making as there are set targets to base decisions on
Allows for a united business with decreasing conflicts
1.5 Business Objectives and Stakeholder
Objectives
Business objectives
• Survivability : In a highly competitive market, survival is very important, to
achieve this prices would be decreased in and profit would be
compensated for survival
• Profit : Profits are required for further investment into the business also for
the payment of return to the shareholders
• Growth : Ensures greater job security
• Market share : setting up a more established brand image
• Serve the society
1.5 Business Objectives and Stakeholder
Objectives
A stakeholder is any person or group that is interested in or is directly affected to or
by the performance of a business. Usually external,
Intern Stakeholder objectives
Owners/Shareholders: Managers:
• Rate of Return on capital invested • Job Security
• Business Growth • Higher Salaries
Workers: • Business Growth
• Job Security
• Regular Payment
1.5 Business Objectives and Stakeholder
Objectives
A stakeholder is any person or group that is interested in or is directly affected to or
by the performance of a business. Usually external,
Ext. Stakeholder objectives
Customers: Banks:
• Price that reflects quality • Expect them to repay debt +
• Reliable products and safe interest
Governments: Community :
• Improve employmnt increase tax • Environment Friendly
• Expect firms to abide rules and reg. • Socially responsible
1.5 Business Objectives and Stakeholder
Objectives
Business objectives
• Financial : They will need to still raise some amount of capital in order to
reinvest and satisfy societal needs
• Service : Decrease unemployment rate
• Increase GDP
1.5 Definitions
Job Security : the ability to work without the fear of dismissal
2.1 Motivating Workers
Motivation : Reason why employees want to work hard and work
effectively for the business.
Why people work

 Have a better standard of living : earning incomes to satisfy needs and

wants.
 Be secure : Having a job means they can maintain that standard of living
 Gain Experience and status : work allows people to get better at the job
and earn a reputable status in society
 Have Job satisfaction
2.1 Motivating Workers
Motivation : Reason why employees want to work hard and work
effectively for the business.
Why Motivate Workers?

Motivated Staff become:

 Highly productive and effective
 Less absenteeism
 Less labor turnover
All of these contribute to higher profit
2.1 Motivating Workers
Theories of motivation
F. W. Taylor

This theory involves that you are motivated by personal gains mainly money
is that which increases productivity. Thus, he proposed a piece rate system, so
to gain more money : you gotta work more.
2.1 Motivating Workers
Theories of motivation
Maslow’s Hierarchy ( P.S.S.E.S ) (mnemonic to remember can be *pisses* (haha..)
2.1 Motivating Workers
Theories of motivation
Hygiene Factors: Motivators
Status Achievement
Security Work Conditions Recognition
Salary Promotion
Work Itself
These wear off quick after obtainment Personal growth

These are what actually motivate

2.1 Motivating Workers

Financial Motivators
Bonus : additional amount paid to
Wages: Weekly basis, Divided into 2:
workers
Time Rate : Amount of hours worked
Performance related pay: Based on
Piece Rate : Based on output number
Performance
Profit Sharing : Some paid to workers
Salary : Paid annually or monthly
and they will want to make more profit
Commission : Paid to salesperson as a
Share ownership: Increases loyalty
percentage,
2.1 Motivating Workers

Non-Financial Motivators
Fringe Benefits :
Company vehicle
Free Healthcare
Paid for education fees
Free Holidays
Discount on firms products
2.1 Motivating Workers
How To increase Job Satis.
Definition : Enjoyment feeling that a
worker feels when good job is done
Job Rotation : Workers swapping
around jobs increasing variety.
Job enlargement : Extra tasks of
similar work are added making work
more interesting
Job enrichment : Adding more tasks
that require more skill and
responsibility, make it more interesting
Team-working : A team can decide
how to carry out tasks sense of
commitment
Opportunities of promotion : Self
actualization and lead to job satis.
2.2 Organization and Management
Organizational Structure
Definition : Basically means the levels of management and division of
responsibilities within a business
Advantages :
• All employees are aware of which communication channel is used
• Everyone knows their position
• Shows links and relationships between different departments
• Gives everyone a sense of belonging which could decrease labor turnover
2.2 Organization and Management
Advantages of a Short COC
• Way Quicker Comms
• Top managers are less remote from lower employees:
More motivated staff, always stay in touch
• Wider span of control encourages delegation
2.2 Organization and Management
Role of managers
• Planning : Setting Targets
• Organizing : Manager organize the resources allocating responsibilities and
possibly delegating
• Coordinating : Ensure each department is coordinating with each other
• Commanding : Guide, lead and supervise employees
• Controlling : assess and evaluate the performance of employees

Mnemonic : Planning Organisms Coordinate offensive(as if they are saying something

offensive where a command involves speech) capabilities (signifies control)
Mnemonic 2 : POCCC Planning Organizing Coordintate Command Control
2.2 Organization and Management
Advantages of Delegation
To Managers
• Can’t do all work by themselves,
thus this increases efficiency
• Managers can measure efficiency
and effectiveness of their
subordinate’s work.
To Subordinates
• The work becomes more
interesting and rewarding,
increases job satisfaction
• Employees feel more trusted
increasing loyalty to firm
 2.2 Organization and Management
Leadership Styles
Autocratic Democratic Laissez-Faire
• Not involving • Managers Involve • Slow Decision Making
employees employees • Motivating
• Demotivated Staff • Motivated Staff
• Quick because he is • Slow decision making
making the decisions can lead to waste
• Lean method
2.2 Organization and Management
Trade Unions
• A Group of workers who have joined together to ensure their interest are protected
Benefits to workers of joining a trade union:
• Improved Conditions of employment, better pay, hours of work etc.
• Improved working conditions, better health and safety and hygiene
• Financial Support
Disadvantages:
• Costs money to be a member
• May be asked to take industrial action, if man disagrees, he not getting paid during
a strike
2.2 Definitions
Span Of Control (SOC): Number of subordinates working directly under a manager
Chain Of Command (COC) : structure of an organization that allows instructions to be
passed on from senior managers to lower levels of management
The wider SOC the shorter the COC because more people will appear horizontally rather
than vertically.
Line managers: have authority over people directly below them in the organizational
structure
Staff managers : Specialists who provide support, information and assistance to line
managers, IT department managers in most organizations act as staff managers
Delegation : Giving a subordinate the authority to perform some tasks
2.3 Recruitment, Selection and Training of
Workers
Role of H.R
Recruitment and Selection : Attracting and selecting the best candidates for job
posts
Wages and Salaries : Set wages and salaries that attract and retain employees
Industrial Relations : Solve complaints and disputes via comms between workforce
and management
Training Programmes : Give employees programmes to increase productivity and
efficiency
Health and safety
Dismissal : Unsatisfactory workers get fired and sacked
Mnemonic : RWRTHD (Right when Rizzler thought he dissed)
2.3 Recruitment, Selection and Training of
Workers
Internal Recruitment

Benefits :
Money saved as no need for advertising and interviewing
Person already knows how business works
Drawbacks :
Jealousy among workers
No New skills and experience coming in the business
2.3 Recruitment, Selection and Training of
Workers
External Recruitment
Vacancy filled by Non-Existing employee (new guy).
Benefits :
New Skillset and expertise acquired
NO Jealousy amongst workers meaning no demotivation between previous
staff
Drawbacks:
Expensive Process, need to get advertisements
~Waste of time as you could quickly replace vacancy with internal employee
2.3 Recruitment, Selection and Training of
Workers
Selection
Interviews allow manager to assess:
Ability to do the job
Personal Qualities of applicant
The Character of applicant

Skills test can be conducted to select best candidate and group situation tests
to see group and teamworking skills,
Aptitude tests can show potential skill gain
2.3 Recruitment, Selection and Training of
Workers
Contract of employment content
Name of employer and employee
Holiday entitlement
Payment Dates and Plans
Hours to work
2.3 Recruitment, Selection and Training of
Workers
Advantages of Pt Employment Dis. of FT Employment

More Flexible Hours Of Work Less Flexible Hours Of Work

Easier to extend business operating Harder to Extend business operating

hours to evenings or weekends hours to weekends

2.3 Recruitment, Selection and Training of
Workers
Advantages of FT Employment Dis. of PT Employment

More Likely to be trained as worker Less likely to be trained as worker

doesn’t see job as temporary, sees job as temporary,

More Committed to business Less Committed to business

2.3 Recruitment, Selection and Training of
Workers
Induction Training
Definition: An introduction given to a new employee, explain the firms
activities, and procedures, and introduce to colleagues
Advantages :
Helps Settle Employees into Job Quickly
Less Mistakes
Disadvantages :
Wages still need to be paid during training
2.3 Recruitment, Selection and Training of
Workers
On The Job
Definition: Occurs by watching an experienced worker doing the job
Advantages:
Trains according to specific needs of business
Worker makes less mistakes
Disadvantages :
Trainer loses production because he spends time training trainee
Trainee could pick up bad habits from trainer while observing him
2.3 Recruitment, Selection and Training of
Workers
Off The Job
Definition: Occurs by getting trained away from workplace
Advantages :
Variety of skills learnt
Can do various jobs in company
Disadvantages:
Costly, as you need to pay the specialist trainer
Wages Get Paid regardless of whether the trainee is producing output or not
2.3 Recruitment, Selection and Training of
Workers
Workforce Planning
Definition : establishing of the workforce need by business for the
foreseeable future in terms of number and skills of employees required.
May have to downsize workforce due to :
Automation
Falling Demand
Factory Closure
Relocating factory
Mnemonic : A FALLING FACTORY RISES AFFR
2.3 Recruitment, Selection and Training of
Workers
Methods of Downsizing
Dismissal:
Where a worker is told to leave their job because their behavior and or work
is no longer satisfactory
Redundancy :
No longer needed so he loses his job not because of a certain fault. May be
given some money in compensation
2.3 Recruitment, Selection and Training of
Workers
Legal controls over employment issues
Employees Are Protected Against:
Unfair Discrimination
Unfair Dismissal
Wage Protection (Minimum Wage)

Industrial Tribunal is a legal meeting which considers worker’s complaints of

unfair dismissal and/or discrimination at work. Compensation may be given if
dismissal was unfair
2.3 Definitions
H.R. : Human Resource Department : Group that is responsible for managing the employee life cycle
(Hiring, Recruiting,
Recruitment : ~
Job analysis : identifies and records the tasks and responsibilities relating to the job.
A job description : outlines responsibilities that need to be undertaken by employee
Job Specification : A Doc that outlines experience and skills needed to take the job. qualification
requirements
Internal recruitment : vacancy is filled by an existing employee within the business
Contract of employment: A legal agreement between the employer and employee listing rights and
responsibilities of workers
Industrial Tribunal : is a legal meeting which considers worker’s complaints of unfair dismissal and/or
discrimination at work. Compensation may be given if dismissal was unfair
2.4 Internal and External Communication
Effective Comms
Transferring of a message from the sender to the receiver who intercepts and understands the
message.
Internal comms : between members of the same organization
External comms : between 2 different organizations
Effective Comms Includes :
Transmitter/Sender [Person X wants to say smth]
Medium Of Comms [Person X uses his email]
Receiver of message [Person X sends to Person Y]
Feedback [Person Y says “Affirmative”]
2.4 Internal and External Communication
Effective Comms
One Way Comms:
Involves a message that doesn’t require feedback [deliver this product to X address]

Two Way Comms:

Involves a message that does require feedback[Status Update?]

Downward : From Managers  Subordinates from the top to the bottom of an organizational structure
Upward : From Subordinates  Managers from the bottom to the top of an organizational structure
Horizontal : Same Level of organizational structure, Manager  Manager, Subordinate  Subordinate
2.4 Internal and External Communication
Communication Methods
Verbal Advantages Disadvantages
(e.g telephone face-face interactive) • Discussions can happen Wasting
• Quick Time
• Speaker can reinforce message • No Written Record is kept
by changing his tone
2.4 Internal and External Communication
Communication Methods
Written Advantages Disadvantages
(e.g letters, e-mails, social media etc.) • Direct feedback not always
• Evidence of message for later possible
reference • Can’t ensure acknowledgement
• Can include details
2.4 Internal and External Communication
Communication Methods
Visual Advantages Disadvantages
(e.g Graphs, Bar charts etc.) • Direct feedback not always
• Appealing and attractive grabs possible
attention • Can’t ensure understanding
• Can have further detail
2.4 Internal and External Communication
Factors that affect choice
Speed of project : If speed doesn’t matter an email would be a good choice
Cost : If the company wants to maintain low costs then letters or text
messages would be a good way to communicate
Leadership style : In autocratic feedback wouldn’t be necessary
Details within Message : If It’s too much then a written or visual form would
be good
Mnemonic/s : SCOLD no vowels (bro.. business is business I need to find a
funny way to remember it srsly)
 2.4 Internal and External Communication
Comms Barriers Comms Barriers
Problems with Sender: Problems with reciever:
Jargons Language Barrier
Uses Verbal but speaks too quickly Not paying attention
Problems with medium: Problem with feedback:
Slow Wi-Fi Connection Feedback Long chain of command alters
Long chain of command alters meaning meaning.
No feedback
3.1 Marketing, Competition and the
Customer
What is Marketing

The management process responsible for identifying and anticipating

consumer’s requirements profitably
In My Words:
The process that identifies and satisfies potential customer needs profitably
3.1 Marketing, Competition and the
Customer
Role of marketing :
Identify Customer needs
Satisfy customer needs
Maintaining customer loyalty
Gain information
Anticipate changes in demands
3.1 Marketing, Competition and the
Customer
Objectives of a marketing department
Raise awareness of product
Increase sales revenue and profits
Maintain or increase market share
Enter new markets
Develop new products or improve existing products
3.1 Marketing, Competition and the
Customer
Why some markets get more competitive
Globalization : products are being sold in markets all over the world so
there basically is more competitors in the market
Improvement in transportation infrastructures : Better transport system
ensure the ability to easily distribute products everywhere
E-Commerce : It is now easy for customers to buy products online making
market more competitive
3.1 Marketing, Competition and the
Customer
How to respond to increased competition
Maintain Good Customer Relationships
Keep Improving existing products
Introduce new products
Keep costs low

These are basically, ways to ensure survivability in such a competitive market with ways like maintenance of good customer relationships and
improving existing products and introducing existing products, because in essence what you’re doing is looking for the best ways to boost
customer satisfaction, and that is through ; maintaining relationships, low costs as you know with stakeholder objectives these customers want
a price that reflects quality and they want safe products so you’re achieving that target by lowering cost. Also introducing new products and
improving existing products are ways to adapt and change in order to fit the needs of customers and allow them to be more satisfied with your
product.
3.1 Marketing, Competition and the
Customer
Niche Market Advantages Niche Market Disadvantages
Lower Competition Less potential customers

Over-dependance risk : Because, if

Ability To Sell For Higher Prices due the demand for the product falls, the
to exclusivity and inelasticity firm wont have a plan B to fall back
on
3.1 Marketing, Competition and the
Customer
Mass Market Advantages Mass Market Disadvantages
Economies of scale   Diseconomies of scale

Larger number of sales Too much Competition

3.1 Marketing, Competition and the
Customer
Market Segmentation
Is the process of dividing a market of potential customers into groups or
segments based on different characteristics and interests, e.g Diet Coke for
health-conscious market segment
Segmented by:
Age
Gender
Lifestyle
Income range
3.1 Marketing, Competition and the
Customer
Market Segmentation Advantages
Makes marketing Cost-effective as it only targets a small segment while
simultaneously meeting their needs.
Ability to Directly Satisfy Customer Needs.
3.2 Market Research
Product - Oriented
Product  Market
Firms Produce the product
first and then find a market
for it e.g
Fridges, Computers
Market Oriented
Market  Product
Firms will conduct market
research to see needs &
wants of customers then
develop solutions to it.
e.g cell phones
3.2 Market Research
Why’s It Important/Needed?

It is the process in which information is collected, analyzed, interpreted about

a market in order to successfully promote the product.
Needed because:
Ensure products will sell successfully
generate profit
If they don’t, they could lose a lot of money and lose survivability.
Data Can Be : Qualitative (opinion/ judgement based)
Or it Can Be : Quantitative (numerical)
3.2 Market Research
Categories of Market Research

Primary Market Research:

Collection of original data involves directly collecting information from sources
Process:
Sample is a subset of a population that is used to represent entire group,
Sampling is when you select a sample
Random sampling occurs when people are selected randomly for research
Quota Sampling When selected based on certain characteristics like age or
gender
3.2 Market Research
Methods of Primary Market Research

Questionnaires : Can Be done face to face through telephone, or internet as

online surveys.
Advantages:
Cheaper
Collect Detailed Information
Disadvantage:
Unreliable Answer, due to misinterpretation of question
Time Consuming
3.2 Market Research
Interviews

Advantages:
• Ability To Explain Questions  More Accurate Data
• Can gather Detailed responses from body language etc.

Disadvantages:
• Time Consuming
• Could lead to influenced answers
3.2 Market Research
Interviews

Advantages:
• Ability To Explain Questions  More Accurate Data
• Can gather Detailed responses from body language etc.

Disadvantages:
• Time Consuming
• Could lead to influenced answers
3.2 Market Research
Focus Groups

A group of people representative of the target market

Advantage:
Detailed Information

Disadvantage:
Expensive
Time Consuming
3.2 Market Research
Observation

Advantages:
Cheap

Disadvantage:
Not enough detail
3.2 Market Research
Secondary Market Research

Internal Sources of Info:

Sales Department
Opinions of distributors
Finance Department
External Sources:
Newspapers
Government Stats : Age structures
Internet
3.2 Market Research
Factors of accuracy for SMR

How carefully the sample was drawn up

Who carried out the research
Bias
Age of information
3.3 Marketing Mix
Product

MM : the different elements involved in marketing a good or service

Product : A good or service being produced and sold in a market
What makes a successful product:
Satisfies Needs of Customers
Inexpensive
Stands out
3.3 Marketing Mix
New Product Development

1. Generate Ideas
2. Select Best Ideas for further research
3. Decide if the firm will be able to sell enough units for the product to be a
success
4. Develop a prototype
5. Test Launch
6. Full Launch
Mnemonic : GSD DTF (GAIN SOME DEVELOPED DELTS TONIGHT FAM!)
3.3 Marketing Mix
Developing new Products Advantages
• Can Create a USP
• Charge Higher Prices (Price skimming)
• Increase Potential sales
Disadvantages :
• Expensive market research
• Time Consuming Market research
3.3 Marketing Mix
Importance of Brand Image

Is an identity given to a product that differentiates it from competitor’s

products

Customers recognize a product more easily

Product can be charged higher
Easier to launch new products
3.3 Marketing Mix
Importance of Packaging

Protects Product
Has Information about the product (for food nutrition facts)
Can Be Eye – Catchy for customers
Keeps Product Fresh (food)
3.3 Marketing Mix
Product’s Life Cycle
3.3 Marketing Mix
3.3 Marketing Mix
Extension Strategies

Definition : Marketing Technique used to extend the maturity stage of a

product
Finding new markets for the product
Finding new uses for the product
Redesigning the product
Increasing advertising
3.3 Marketing Mix
Price Skimming

Advantages :
High Profit
Helps Recover costs
Disadvantage :
May backfire and scare customers away
3.3 Marketing Mix
Penetration Pricing

Setting a very low price to attract customers to buy a new product

Advantages:
Competitive advantage
Attracts Customers
Disadvantages:
Low revenue
Recovering Inability with Costs
3.3 Marketing Mix
Competitive Pricing

Setting a price similar or just below competition

Advantage :
Business can compete by other means, such as service and quality

Disadvantages:
Still Need to find a way to stand out
3.3 Marketing Mix
Cost Plus Pricing

Advantages:
Ensure Profit
Quick way to work out price

Disadvantage:
The Price could be set too high  lowering competitive advantage
3.3 Marketing Mix
Promotional Pricing

Advantages:
Helps to sell off unwanted stock before it becomes out of date
Good way to increase short term sales and market share

Disadvantages :
Revenue on each item is lower so profits may also be lower
3.3 Marketing Mix
Factors affecting pricing method use

New Or Existing Product?

Unique?

Competitive Market?

How is the brand image?

Mnemonic : Nap! U Competitive Bro

3.3 Marketing Mix
Elasticity

The responsiveness of the quantity demanded for it’s change in price

When there is a high change in demand after price fluctuations then :

Price is elastic

When there is low change in demand after price fluctuation then :

Price is inelastic

e.g. Apple is inelastic, Al Marai is elastic

3.3 Marketing Mix
Place
3.3 Marketing Mix
Promotion

Advertising : Paid-for comms with consumer using printed and visual media
like television
Sales Promotion: using techniques like BoGofs or vouchers to encourage sales
Below the line : Promotion that is not paid for but uses incentives to
encourage sales like BoGofs and vouchers
Direct Mail : Known as mailshots printed materials like flyers and brochures
sent directly to the address of customers
Sponsorship : Payment by a business to have it’s name associated with an
event,
3.3 Marketing Mix
What Affects promotional decisions

Stage of product on PLC

Nature of the product
Nature of Market
Cost-Effectiveness

Mnemonic : SNPMC
SNAP MINECRAFT
SNPMC
3.4 Marketing Strategy
A marketing Strategy

Is A plan to combine the right combination of the four Ps to achieve

marketing objectives
3.4 Marketing Strategy
Legal Controls On Marketing

Protect Customers from being sold faulty goods

Prevent firms from using misleading information in advertising
Protect customers from being exploited
3.4 Marketing Strategy
Problems of entering foreign markets

Difference in language and culture

Lack of market knowledge
Economic differences
High Transport Costs
Social and ethical differences
4.1 Production of Goods and Services
Production

It is the effective management of resources in producing goods and services

Operations department : Overlooks the production process and must ;
Use resources in a cost-effective manner
Manage inventory effectively
Meet Quality Standards expected by customers
4.1 Production of Goods and Services
Productivity

Is a measure of the efficiency of inputs used in the production process

Productivity = (Output Quantity)/(Input Quantity)
Labor Productivity = (Output over a given period of time)/(N.O of employees)
Businesses look to increase this as the output will increase per employee
and so the average costs of production will fall.
4.1 Production of Goods and Services
How to increase productivity

Training them makes them waste less resources

Introducing automation

Improve employee motivation

Improve quality control and assurance

Mnemonic : TAMQ ( TRAIN ALL MEN QUALIFIED)
4.1 Production of Goods and Services
Inventory Management

Buffer inventory level is the level of inventory that the business should hold at
the very minimum to satisfy customer demand at all times.
Time taken to reorder supply is known as lead time
Reorder level is when inventory gets to a certain point then they get
reordered by the firm to bring back inventory level
4.1 Production of Goods and Services
Lean Production

Transportation : moving goods around unnecessarily

Inventory : too much inventory takes up valuable space
Motion : unnecessary movement between employees and operation of
machinery is a waste of time
Waiting : in between production stages because one stage is too slow
Over processing : Complex machinery to perform simple tasks
Over-production : too much inventory costs due to too much products
Defects : halt production
Mnemonic : TIMWOOD
4.1 Production of Goods and Services
Kaizen

Japanese term meaning continuous improvement, aims to increase efficiency

and reducing wastage by getting workers to get together in small groups to
discuss problems and suggest solutions. They can reposition machinery so
that production can flow smoothly
Benefits :
Increased Productivity
Improved factory layout
Reduce amount of space needed for production
4.1 Production of Goods and Services
Just in time inventory control

Technique that eliminates ;

The need to hold any inventory by ensuring that products arrive just in time
they are needed for production eliminating the waste element of unnecessary
inventory
Benefits:
Reduce Storage Cost
Ability to Utilize Free Space
4.1 Production of Goods and Services
Cell Production

The production line is divided into separate, self contained units making a
part of the finished good, allows concentration on one part alone
4.1 Production of Goods and Services
Methods of production

Job Production : Customized

Most Suitable for one – off products and personal services
Advantages :
The Product meets customer requirements
Better Employee Motivation
Disadvantages:
Costs are higher as they are labor intensive
Time consuming
4.1 Production of Goods and Services
Methods of production

Batch Production : similar products are made in batches or blocks

Advantages :
Motivating to workers
More variety means more customer choice Satisfying
Disadvantages:
Machines have to be reset  time consuming
Expensive as raw material variety is high
4.1 Production of Goods and Services
Methods of production

Flow Production: Large quantity of products are produced in a continuous

process on the production line
Advantages :
Can Benefit from Economies Of Scale In Purchasing
Goods produced Cheaply
Disadvantages:
Demotivating as staff are repeating the same thing over and over again
If one machinery breaks down the entire production line gets affected
4.1 Production of Goods and Services
Methods of production

Factors affecting which method to use:

Nature of Product
Nature of Demand
Size of Business
Size of Market

(N Y P D) and (SBMM) skill-based match making

4.1 Production of Goods and Services
Methods of production

Technology:

Automation
CAM
CAD
4.1 Production of Goods and Services
Methods of production

Advantages of tech:

Greater Productivity
Less mistakes

Disadvantages:
Unemployment increase
Expensive
4.2 Costs, Scale of Production and Break-
even analysis
Costs
Fixed Costs do not vary with output aka overhead costs

Variable costs : Directly vary with output

Total cost = fixed costs + Total Variable cost

TC = AVG COST * TOTAL OUTPUT
AVG COST = TC/TO
4.2 Costs, Scale of Production and Break-
even analysis
Scale of Production
Economies of scale
4.1 Production of Goods and Services
Methods of production
Brand Image Importance
Questions To Ask
• Does specialization decrease waste as there is less time wasted by the worker trying to figure task out.
• Can “More Control Over Product” be a knowledge for forward merger (only for manufacturers to retailers) as the manufacturer now has
more flexibility? with his product since he is the one retailing it.
• Can conglomerate merging increase brand recognition as there is a new group of potential customers that are hearing about our product
when expanding to another industry.
• LLCs Definitions
• Can brand recognition increase be used as knowledge for a franchisor when he sells out the license for his brand
• Can satisfied shareholders boost brand image
• How can a short chain of command cause more motivated staff
• What analysis can be used for loyalty to a firm
• Can I use this as a disadvantage : Less potential customers in a niche market as market is small
• Can I say an importance of packaging is it being eye catchy
• Can penetration pricing give a competitive advantage (like, can I use it as KN?)
• Can I say there are ethical differences when accompany enters a foreign market
Questions To Ask
• Are Skilled staff (usually) Motivated
• Does the HR Department Scout workers (c)
• IGCSE Definition of recruitment
• Is external recruitment a Waste of time as you could quickly replace vacancy with internal employee
• Can I use less mistakes as KN advantage for off the job and off the job training
• For communication methods can I say “For Written methods of communication (Disadvantage incoming ) You
cannot ensure understanding from receiver because feedback is not always there”
• Is feedback necessary for autocratic leadership style (I don’t think so?)
• Can Slow Wi-F and language barriers i Be A communication barrier
• Is this a good definition for market research? : It is the process in which information is collected, analyzed,
interpreted about a market in order to successfully promote the product.
URGENT REMINDER TO REVISE
• MARKETING MIX
• Place from marketing mix