Business » Obolynx Educator

Marketing

Business No Responses »

Jan 292009

Marketing is finding what consumers want, creating what consumers want, and telling them about it.

There are two way to approach marketing. You can

First find out want consumers want and then provide it. This is called asset-led marketing.
Create your product or provide your service, and then make consumers want it. This is product-orientated marketing.

With a product orientated approach, there is:

A greater risk of failure, because consumers may not want the product or service and may already be getting it from elsewhere.
If there is nothing special or unique about the product, people won’t leave what they are already using.

Market research is essential to successful marketing:

To understand current customers in depth.
Understand competitor in depth
Predict changes in the market
Plan a marketing strategy.

Stakeholders

Business No Responses »

Jan 292009

Stakeholders are people who are in someway affected by the business; shareholders are one group of stakeholders, and not the same thing.

Stakeholders may be:

Owners / Shareholders
Managers (if the managers are not the owners)
Employees
Customers
Suppliers
The local community

Government and society

Business strategy

Business No Responses »

Jan 292009

For a business to know its current position and plan a strategy, the business may do a SWOT analysis. SWOT is Strengths, Weaknesses, Opportunities and Threats.

Strengths and weaknesses are internal factors, opportunities and threats are external factors.

Strengths are the things in the business’ favour, what they are good at, what they have available for their use so they can maximise on these things.

Weaknesses are the things which they are not so good at, things against them.

Opportunities are things that are outside the business and that the business has no control over, but is in their favour, and is helping them.

Threats are things which are obstacles to the business but are external to the business and the business has no control over them.

Most businesses have Mission statements, Business aims and Business objectives.

A Mission statement is the purpose of the business, why it was created, e.g. To create value for our customers, to earn their lifetime loyalty ; Tesco. To benefit and refresh everyone who is touched by our business; Coca-Cola.

Business aims are the basic goals of the business, what they ultimately want to achieve. E.g. to meet the needs of customers.

Business objectives are a more detailed version of business aims. Business objectives are SMART.

SMART stands for Specific, Measurable, Achievable, Realistic, Time-specific.

E.g. To increase profitability by 20% in the next year. This is specific (says what they want), Measurable (you can wok out 20%), Achievable (they could do it), Realistic (not impossible in the time specified), time-specific (mentioned a time frame).

Public Limited Companies (Plc)

Business No Responses »

Jan 292009

This is a large company that has its shares on the share market. This is called floatation. A Plc must publish a prospectus for the company and the public can buy and trade share in the company.

Advantages:

More sources of finance

Expansion because of the capital available

Credibility with lenders and suppliers

Continuity and can continue when the owner dies

Limited Liability

Disadvantages

Costs

Legal requirements

Loss of privacy

Loss of control because business ownership is decided by who owns the most shares and others could take major shareholdings

Business size could cause management problems, lack of flexibility, and the personal touch.

Private Limited Company

Business No Responses »

Jan 292009

A private limited company had limited liability status (Ltd). It is called private because its shares cannot be sold on the share market, only people who are invited can buy shares in an Ltd.

Advantages:

Limited Liability

More sources of finance

Continuity

Disadvantages:

Legal requirements, more taxes, greater costs and more paperwork.

Loss of privacy because external auditing has to be done and company accounts can be checked by any member of the public.

Limited growth, because the shares cannot be sold to the public on the share market or advertised.

Partnership

Business No Responses »

Jan 292009

This is a business owned by 2 to 20 people. A Deed of Partnership should be made when going into a partnership because it states what share of the profits each partner gets, how to solve disagreements between partners and what the vote of each partner counts for in decision making. If there is no Deed of Partnership, everything will have to be shared equally, profits, losses and responsibility.

Advantages:

Easy to set up
Privacy
More Financial Capital because the money is coming from one than one person.
Shared Workload

Disadvantages:

Unlimited liability
Share Profits
Arguments
Not enough capital

Sole Traders

Business No Responses »

Jan 292009

They are owned only by one person and are the most popular business type for people who want to start a business. There are few forms to fill and the owner person is the only person in charge. There are no other owners so all profits go to the owner and because the business is owned and run by the same person, the owner can get to know the customers and offer personalised service.

Advantages:

Easy to set up the business, quick and cheap.
Complete control because the owner makes all the decision.
Keep all profit
Get to know customers
Privacy because financial information does not have to be published for the public

Disadvantages:

Unlimited Liability
Shortage of finance because loans may not be easy to get and the owner’s money may be the only source.
Pressure of responsibility because the owner has to do all the work or employ people.
Lack of continuity because the business must be closed down if the owner dies.

Legal Status

Business No Responses »

Jan 292009

The Legal status of a business affects what is legally required of the business and the ability of a business to expand, who owns the business, what happens should the business fail and the continuity of the business.

There are four different types of business ownership and they are:

Sole trader
Partnership
Private Limited Company (Ltd)
Public Limited Company (Plc)

These four are categorised into the two groups of unincorporated businesses and incorporated businesses.

Unincorporated:

These are businesses which do not have limited liability status. These have unlimited liability and this means that if the business falls into debt, their personal possessions can also be taken to pay off the debt.

Unincorporated businesses cannot be called companies and these are Sole traders and Partnerships. They are relatively easy and cheap to set up, and less is required of them legally.

Incorporated:

These are businesses that are registered as companies. They have limited liability status. Limited liability means that if the businesses fall into debt, they can only lose anything which was put into the business and none of their personal possessions can be taken. This also means that anyone owed money and the money in business were unable to pay for it, they would remain unpaid.

Incorporated businesses are not so easy to set up and are expensive to start up.

To become incorporated, a business must submit a Memorandum of Association to Companies House. This has in it the basic details about the business like the name, objectives and how much money they have to start.
The must then send in their Articles of Association to Companies House. This has much more detail, like how the Company is going to be run and how much power shareholders and directors will have and as much detail as possible.
If accepted, the Registrar of Companies then issues a Certificate of Incorporation.
Auditing will then have to take place every year and a copy of company accounts will have to be sent to the registrar and to all shareholders. Shareholders must be told about annual general meetings which they have a right to attend.

Business Functions

Business No Responses »

Jan 292009

There are certain things that all businesses have to do to survive and succeed. They are called business functions and the main ones are:

Marketing:
This is how you tell people about your product and service and convince them to buy. This controls the image that people have about the business. This is finding out what consumers want and providing for the needs. This is finding the best way to promote, distribute and sell the product.
Finance:
The business function is concerned with all money going in and out of a business. All transfers of funds must be recorded and monitored. Accounts should also be kept because predictions can then be made and problems spotted.
Production:
The designing and making or provision of a service. Focuses on high quality while using efficiently the materials.
Personnel:
Managing the workforce and people involved with the business, like customers. Ensuring that the workforce stays motivated and that customers are happy.
Administration:
Managing of business bureaucracy. If the paperwork and communication is handled well, this will help ensure smooth operation and cooperation in and between departments, good relations with suppliers and customers.

Specialisation

Business No Responses »

Jan 292009

Specialisation is when a business focuses on just one product or service.

Advantages are that:

The business can focus on a product in which they have expertise in and are not trying to provide something they know nothing about or are not very good at making. So the business can be based on the skills of the workforce or owner.
The business can use or have specialist equipment made to help them create their product or provide their service. Having equipment which is made especially for the product they make or the service they provide mean that the business can become more efficient and reduce costs.
With time and practice, the business can become more efficient in their product or service.
The business can employ people who are skilled in the product being made or service being provided. The business can develop their expertise and make them specialists.
It creates an image and is associated in the mind of the public with what they specialise in. This could help the business add value and retain customer loyalty.

Disadvantages:

This limits the business to the one product or service and if the economy was not doing well, they would have no other products to make a profit from.
It restricts the business to just one market and so the business has less avenues and ways of making profit.
If the business focuses on just one product or service, the work could be repetitive and the workers will become bored and unmotivated. This may results in slower production, reduced quality and higher levels of staff turnover (number of people who leave).

The opposite of specialisation is diversifying and some businesses do well with this but it is very risky. This is when the business provides many completely different products and services and trying to enter many markets. Virgin is an example.

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