Let's Calculate
Church’s charges $300 on average for each pair of its bespoke shoes and sells 3,000 pairs in a week, thefirm’s total sales revenue will be?
$900,000 (i.e. $300 × 3,000)
Marketing by non-profit organizations (NPOs) tends to be less informative than the commercial marketing used for for-profit organizations.
False.
What are the main functions of a business?
- Marketing
- Finance
- Operations
- Human Resources
business owned by shareholders with limited liability but whose shares cannot be bought by or sold to the general public on a Stock Exchange
What is a Privately Held Company?
Staff members are underqualified to perform their jobs, this is an example of which part of the SWOT analysis? and WHY?
Weakness - because it is internal.
What is the formula for gross profit?
Gross profit = Sales revenue – Cost of goods sold
Distinguish between mass and niche market.
Niche and mass markets are alternative approaches to marketing. Niche marketing is an approach that involves businesses focusing on a relatively small segment or a specific segment of the market. An example is minority sports (such as snowboarding or curling) within the larger sports market.
By contrast, mass marketing is an approach that involves businesses targeting all customers (all segments) in the market for a particular product. It focuses on selling standardized (homogeneous) products to the generic public or a large and broad group of customers.
The limitations or drawbacks of being a publicly held company include the following points:
There is a lack of privacy because the general public have access to the financial accounts of publicly held companies.Limited liability companies must produce an Annual Report and Final Accounts, which includes details such as the reporting of profits (or losses) in the Profit & loss account, as well as the assets of the business and where cash has been spent during the last twelve months in the Balance sheet. These final accounts are scrutinised by an external auditor (usually chartered accountants) before the information is distributed to shareholders. As a legal requirement, this can be quite an expensive and time-consuming task, especially for larger multinational companies.
Publicly held companies are the most administratively difficult and expensive form of commercial for-profit business to set up and run. For example, there are high costs of complying with the rules and regulations of the stock market.
As the general public can buy and sell share freely, there is always a potential threat that a rival company will make a takeover bid.
Large companies can suffer from diseconomies of scale. Being too large can cause inefficiencies in the company, and hence higher average costs of production.
an organization that operates in two or more countries, with its head office usually based in the home country.
What is a multinational company (MNC)?
Initial public offering (IPO) refers to a business converting its legal status to a publicly held company by floating (or selling) its shares on a stock exchange for the first time.
Sales revenue $78600
Cost of Sales:
Opening stock $5000
Purchases $25000
Closing stock $3800
Calculate Gross profit
[78600 - (5000+25000+38000)]
= 52400
Mass market businesses can tailor-make their marketing to appeal to customers, thereby avoiding wasting time and money on marketing activities that are not relevant to customers.
False
Distinguish between a vision and mission statement.
Although vision and mission statements are quite oſten confused, they do serve complementary purposes. Te main differences are:
• The vision statement addresses the question ‘what do we want to become?’ whereas the mission statement deals with the question ‘what is our business?’
• Vision statements are focused on the very long-term, whereas mission statements can focus on the immediate time period.
• Hence, mission statements are updated more frequently than vision statements.
• Vision statements do not have to be actual targets that must be achieved (this is the purpose of setting mission statements). Instead, vision statements allow people to see what could be.
• Te mission statement tends to outline the values of the business, i.e. its beliefs and guiding principles that set the framework for how managers and employees operate on a daily basis.
• Mission statements are therefore about what the business does ‘each and every day’ and why it does this, whereas vision statements are about ‘some day’ (in the distant future).
A restriction on the amount of money that owners of a company can lose if the business goes bankrupt, i.e. shareholders cannot lose more than the amount they invested in the company.
What is Limited Liability?
Identify the most risky quadrant in the ansoff matrix and the least. (Must get both correct for the points)
Least - Market Penetration
Most - Diversification
Distinguish between the two ratios:
PROFIT MARGIN and GROSS PROFIT MARGIN
Te profit margin ratio is a better measure of a firm’s profitability than the GPM ratio as it accounts for both cost of sales (direct costs) and expenses (indirect costs). Te difference between a firm’s GPM and its profit margin represents the expenses and therefore the larger the difference between these two ratios, the more difficult overhead control tends to be.
Define a marketing audit.
A marketing audit is a review of the current position of an organization’s marketing mix, in terms of its strengths and weaknesses and consideration of opportunities and threats.
What is the purpose of a business plan?
Business plan refers to the document that sets out a business idea or proposition, including the objectives, resources (marketing, operations, personnel and finance) and corporate strategies
PURPOSE:
To serve as a roadmap for achieving the business's goals, To attract funding and investment from investors or financial institutions, and. To provide a framework for managing and monitoring the business's performance over time.
organization’s portion of the total value of sale revenue in a specific industry.
What is market share?
Distinguish between market orientation and product orientation (with examples).
Market orientation is a marketing approach adopted by businesses that are outward looking by focusing on making products that they can sell, rather than selling products they can make.
Product orientation is a marketing approach used by businesses that are inward looking as they focus on selling products that they can make, rather than making products that they can sell.
Describe two limitations of ration analysis
- Ratios are a historical account of an organization’s
performance.
- Changes in the external business environment (see Chapter 46) can cause a change in the financial ratios without there being any underlying change in the performance of a business. For example, higher tax rates will reduce profitability, although sales revenues may have actually increased.
- Tere is no universal way to report final accounts so this means that businesses may use slightly different accounting procedures and policies. Tis makes inter-firm comparisons more difficult.
Define 3 of the following:
DINKY
DINKER
NILK
OINK
GLAM
OPAL
DINKY – double income, no kids yet
• DINKER – double income, no kids, early retirement
• NILK – no income, lots of kids
• OINK – one income, no kids
• GLAM – greying, leisured, affluent, middle-aged
• ORCHID – one recent child, hugely in debt
• OPAL – older people with active lifestyles
• WOOF – well off older folk
• RAP – retired affluent people
• Kidults – adults who purchase products aimed at
children, e.g. certain toys or computer games
• Tweenagers – children aged 7– 12
• SITCOM – Single income, two children, outrageous
mortgage
• SINBAD – Single income, no boyfriend and desperate!
External diseconomies of scale occur once there is an increase in the average cost of production when a firm grows due to factors beyond its control, which impacts the entire industry.
Provide 2 examples of external diseconomies of scale.
Too many businesses locating in a certain area causes land to become even more scarce thereby causing higher rents.
Since workers have greater choice from a large number of employers in the local area, businesses might have to offer higher pay and financial rewards to retain workers or attract new staff. Tis will increase costs without necessarily increasing output, thereby raising average costs of production for all firms in the industry.
Traffic congestion results from too many businesses being located in an area. Deliveries are likely to be delayed due to the overcrowding. This increases transportation costs for businesses, thereby contributing to an increase in unit costs of production.
businesses that provide a diverse range of products and operate in a range of different industries.
What is a conglomerate?
Distinguish between backward and forward vertical integration?
Forward vertical integration is a growth strategy that occurs with the amalgamation of a firm operating at a later stage in the production process, such as a book publisher acquiring book retailers.
Backward vertical integration occurs when a business amalgamates with a firm operating in an earlier stage of production, such as a car manufacturer taking over a supplier of tyres or other components.