List of Mnemonics

TCQLEGG Technology, costbased, quality expectations, legal regulation,

environmental sustainability, government policy, globalization
SEEL-Social Responsibility, Ethical responsibility, Environmental
sustainability, Legal compliance
4Vs of Transformation
QCPET for Improvement
Qantas Should Definitely Fix Cabin Crew for performance objectives
RQPOSTING: Resistance, Quality management, Performance objectives,
Outsourcing, Technology, Inventory management, new product, Global
factors
PEGS:Psychological, Economic, Government, Sociocultural
WIPD: Warranties, Implied conditions, Price discrimination, Deceptive and
misleading advertising
PEGST: Products that may damage health, Engaging in fair competition,
Good taste, Sugging, Truth and accuracy in advertising
PIMFL:Planning, Implementing, Monitoring and Controlling,
Financial Ratios, Limitations of financial reports
ADDMIE: Address current financial position, Determining financial needs,
Developing budgets, Maintaining record systems, Identifying financial
risks, Establishing financial controls
JTPWRGRL: Job design, Training and development, Performance
management, Workplace disputes, Recruitment, Global strategies,
Rewards, Leadership styles

OPERATIONS
Role of Operations
Operations: Processes that transform business inputs into business outputs
-

Tangible inputs: Raw materials, capital e.g. machinery and technology

Intangible inputs: Ideas, information, business name etc.

Customer Focus: The focus on customers and customer relationships within

operations processes by satisfying customer demands e.g. ethical issues,
affordability
-

Lean production: Eliminating waste at every stage of production by

analyzing each stage, detecting inefficiencies (bottlenecks) and
correcting the issues relevant in these sections
Fair compensation for labor: Proper payment, working conditions and
local sustainability
Maximise affordability: Reduce costs throughout operations

Ecological sustainability: Ensuring and improving the ecological

sustainability of operating processes throughout the system
Reflect changes in demand: Meet the changing demands of customers
by inventing or innovating

Strategic role
Strategic: affecting all key business areas (interdependence)
-

Operations is strategic as it is the main cost center in a business,

controlling the costs of a business and subsequently the further
decisions of a business.
Economies of scale: The bigger the businesss operations, the cheaper
the overall cost of production for an equivalent amount of goods and
the greater the cost leadership
Cost leadership: Having the lowest costs in the market and therefore
improve the price competitiveness, while maintaining profitability
Good/Service differentiation: Services are more often created around
existing demands e.g. blue ocean market while goods are made to
create demand for a product

Goods in different industries

-

Standardised goods: Mass produced, usually on an assembly line.

Uniform in quality and characteristics, with a product focus
Customised goods: Created for the needs of a customer, with unique
characteristics according to unique demand. Created with a market
focus with varying quality and typically in small quantity

Intermediate goods: Goods produced for further use within other goods as
inputs, which can also be sold directly to the consumer
Services in different industries
Standardisation and customization are the same except customization is
more common by far
Self service: Allowing customers to perform most or all of the businesss
service for them, meaning that the business can focus on specific cases

Operations Influences
TCQLEGG Technology, costbased, quality expectations, legal regulation,
environmental sustainability, government policy, globalization
Technology: The design, construction and application of innovative devices,
methods and machinery

Operations management: Technology can be used with operations

management in order to improve the organizing, planning and decision
making systems used within the business. They can also be used in
manufacturing, logistics and distribution, quality management, all
aspects of inventory management, supply chain management and
sourcing
Manufacturing: The making of a physical product
Logistics: The organization and implementation of a system
Distribution: The physical delivery of the product to the consumer
Quality management: The control of quality throughout the operations
process
Inventory management: the management of inventory throughout the
operations process

Cost-Based: Competition derived from the breakeven point then applying

strategies to create cost advantages over competition rather than increasing
prices for profitability
-

Fixed costs: Costs that do not change regardless of level of business

activity
Variable costs: Costs that change according to level of business activity

Quality Expectations: Expectations derived from certain expected aspects of

a product
Design: How well the concept has been developed
Fitness of purpose: How well the product fulfills its purpose and ease of
use
Durability: How reliable and long lasting it is, including ease of
maintenance
Professionalism: Physical evidence, staff interactions
Reliability of provider: Efficiency and competence
Level of customization: How well unique needs are met
Legal: Regulations and laws restricting the operations of a business
Compliance costs: Costs accrued when meeting the regulatory
requirements of the legal environment of operation
WHS: Workplace health and safety, requires training, protective
equipment etc.
Environmental sustainability: Shaping business practices that consume
resources today without compromising access for future generations
Carbon footprint: Amount of carbon produced and entering the
environment

 Renewable resources: Resources that can constantly be renewed as they

are consumed
Non-renewable resources: Resources that cannot be replaced as they are
used
Government Policy: Policies put in place by the government in order to
manage and regulate business operations within their jurisdiction
Carbon pricing: A proposed levy on carbon emissions for businesses
designed to encourage a reduction of carbon footprints
Globalisation: The removal of distinct barriers of trade between nations,
characterized by an increasing integration between national economies and
a high degree of transfer of all assets
Regions: Middle East and African, North Asian, South Asian and Oceania,
South American, North American, European
Supply Chain: The range of suppliers a business has and the nature of its
relationship with those suppliers
Global web: the network of suppliers chosen due to advantageous
characteristics such as cost, risk, quality and timing
Reverse engineering: Taking the product of a competitor and
deconstructing it in order to imitate the production
Innovation: Creating a new product and leading the market
Corporate Social Responsibility: A corporations responsibility within
regards to social, ethical, and legal spheres of its influence
Legal Compliance: The act of meeting legal requirements within business
operations
Labour Law compliance
Environmental and Public Health compliance
Business Licensing rules
Taxation
Trade practices and fair dealing
Migration and outsourcing labour
Onshore outsourcing: Outsourcing labor to local providers
Offshore outsourcing: Outsourcing labor to offshore providers, esp. to
take advantage of regulatory differences
Intellectual property
Financial and accounting regulations and corporate law esp. fiduciaries
Human rights

Ethical Responsibility: Following and exceeding legal requirements, and

subsequently fulfilling the spirit of the law
ILO: International Labor Organization, devoted to advancing opportunities
for women and men to obtain decent and productive work in conditions of
freedom, equity, security and human dignity.
ILO often guides ethical responsibility decisions, set according to their
guidelines, or choose to take input from several global bodies
Environmental sustainability: The ability to continue business operations
without lasting harm to the environment or to the detriment of access for
future generations
Can be seen as a form of product differentiation
Improves goodwill
Can result in government support
Social Responsibility: Providing for the greater good of society
Social responsibility is good business
Social responsibility also promotes the product of the business and is
therefore rewarded
Poor social responsibility can actually imply illegal practices
Operations Processes
Inputs: Resources used in the transformation (production) process
Common direct inputs:
Labour: Human effort, mental and physical
Energy: Electricity or fuels, converted into useful forms
Raw Materials: Basic materials used for the creation of products
Machinery and technology (capital equipments): Bodies that allow for
the actual transformation process
Capital Labour substitution: Machines replace people
Transformed Resources: Resources that are changed in the processes of
operations
Materials: Basic elements used in production in order to create the final
product
Intermediate goods: Goods already manufactured and used in
further processing
Information: Knowledge gained from research, investigation and
instruction, used in order to understand processes
KPIs: Key performance Indicators, criteria used to measure
efficiency and effectiveness

 Customers: Choices that customers make become part of the process

of transformation when they influence the inputs. This is done with a
CRM system, (Customer relationship management) in order to meet
customer demands
Transforming Resources: Resources that are used in order to change other
resources
Human Resources: Work provided by staff, mainly labor, both mental
and physical. Staff condition is corresponding to product quality
Facilities: The plant (factory or office) and the machinery used in order
to transform the transformed inputs. Some considerations are:
Distribution of sites
Zoning and other legal restrictions
Special requirements
Plant design
Process/product layout
Transformation processes: Inputs to outputs
The influence of volume, variety, variation in demand and visibility
(customer contact)
Value adding
Sequencing and scheduling
Sequencing refers to the order in which activities in the operations
process occur.
Scheduling refers to the length of time activities take within the
operations process.
The Gantt chart is a type of bar chart that shows both the scheduled
and completed work over a period of time. It is often used in
planning and tracking a project.
The Critical Path Analysis (CPA) is a scheduling method or technique
that shows what tasks need to be done, how long they take and
what order is necessary to complete those tasks. (shortest possible
timeframe)
Technology: Technology is the application of science or knowledge that
enables people to do new things or perform established tasks in new and
better ways. (effectiveness and efficiency)
Up to date technology essential for competitiveness
High capital cost, admin, retraining/hiring
Office technology
computer (mainframe, personal or laptop)
keyboard (data entry) and mouse
CD ROM, USB and other data storage devices
modem (communications device that allows formation of wide area
networks and enables email and internet access)

mobile telephones/hands-free telephones/wireless enabled phones,

car phones
paging service and answering machines
personal organiser or personal digital assistant (PDA)
combined printer, photocopier, scanner and facsimile machine
ability to electronically transfer funds (EFT) and EFTPOS machines
Teleconference: Meetings can be arranged by videoconferencing
using Skype. The meeting is virtual in that it is electronically
created and only lasts while the people are electronically linked.
Telecommute: To telecommute is to commute, or travel to work,
electronically. This means that home or another location becomes
the worksite and work is delivered via email or the internet.(working
from home)
Manufacturing technology: Technology in physical transformation
Robotics applies to highly specialised forms of technology, capable
of complex tasks. High quality, consistent, efficient.
Computer-aided design (CAD) is a computerised design tool that
allows businesses to create product possibilities from a series of
input parameters. Can also calculate material usage, redesign for
flaws, can be printed, cheaper.
Computer-aided manufacturing (CAM) is software that controls
manufacturing processes. Can be linked to CAM. Also regulates
material usage.
Task design involves classifying job activities in ways that make it easy
for an employee to successfully perform and complete the task

Define the job in simple terms

Distinguish separate duties of the job
Allocate time and difficulty
Match tasks to real life certificates relevant e.g. licensing, degrees
Articulate the task with a job description and a general pay scale
Task design -> Job description -> Person specification -> Recruitment
-> Selection
Plant Layout: Plant layout is the arrangement of equipment, machinery
and staff within the facility (either a factory or an office)
The process layout is the arrangement of machines such that the
machines and equipment are grouped together by the function (or
process) they perform. (customizable products, low volume)
Product layout is where the equipment arrangement relates to the
sequence of tasks performed in manufacturing a product. (assembly
line) Must set times, consistent quality, work sequencing.
A fixed position layout is where a product remains in one location
due to its weight or bulk

Workstations are the desk areas required by office workers, usually

fitted with access to a computer monitor, keyboard, telephone,
mouse and mouse pad, storage, and close access to a printer,
scanner, and facsimile.
Monitoring, Controlling, Improvement
Monitoring is the process of measuring actual performance against
planned performance. Planned performance are goals set by the
business.
KPIs are used (Key performance Indicators)
Control occurs when KPIs are assessed against predetermined targets
and corrective action is taken if required.
Improvement refers to systematic reduction of inefficiencies and
wastage, poor work processes and the elimination of any bottlenecks
A bottleneck is an aspect of the transformation process that slows
down the overall processing speed or creates an impediment leading
to a backlog of incompletely processed products.
Time, through the minimisation of bottlenecks, an assessment of
the necessity in all transformations processes and wait times
(including lead times)
Process flows and smoothness of transitions between transforming
processes
Quality, through the pursuit of quality goals, measurement of
product standards and quality and an assessment of returns and
warranty claims
Cost, through an assessment of per unit costs of production, a
review of expenses (fixed and variable) and an assessment of per
unit costs of delivery
Efficiency, through the reduction of waste and the creation of
greater output per unit input.
QCPET (Quality control Pet)

Outputs: The end result of the business efforts the good or service that is
provided or delivered to the customer.
Goods/services that are the final result of the operations of the business
Customer service is how well a business meets and exceeds the demands
of customers in all areas of operations
A warranty is a promise made by a business that they will correct any
defects in the goods that they produce or in the services that they deliver.
Can be used to assess the problems within a product and improve
transformation processes.
Operations Strategies

Performance objectives: Goals that are for specific sectors of the

transformation processes
Quality
Quality of Design: Quality of design relates to an understanding of
consumers and their needs and wants. It is also how well the product is
made/service is delivered. This begins before creation, with inputs and
transformation processes determining quality. Varies market to market,
must consider.
Quality of Conformance: How well the product meets the standard and
prescribed conditions of a design with certain specifications: regardless
of actual overall quality e.g. a low quality toy with a low quality design
has a high quality of conformance
Quality of service: The application of the previous two to services
Speed: the time it takes for the production and the operations process to
respond to changes in market demand. Needs smooth communications
and minimal bottlenecks
Dependability: Dependability, as a performance objective, refers to how
consistent and reliable a businesss products are. Duration of use is a
good marker. Also consistency.
Flexibility: Flexibility refers to how quickly operations processes can adjust
to changes in the market, esp. demand. Best achieved by efficient use of
production
Customisation: Customisation refers to creation of individualised products
to meet the specific needs of the customers. It includes mass
customization, where standardized products are customized to certain
customer requirements (optional extras)
Cost: The minimization of expenses so that operations processes operate
as cheaply as possible. Improvements in efficiency are key.
New product or service design and development
Steps in product design
Market research, product concept and specification development
Product design and prototype development, with quality parameters
decided
Prototype testing and assessment (includes market testing)
Product refinement and production processes refined
Production, product launch, distribution and, over time, product line
extension
Quality, supply chain management, capacity management and cost must
be considered
Product utility is defined as the usefulness and value that a product has
from the consumers point of view.

 Service design must be based on customer needs

Explicit service is also called the tangible aspect of the service being
provided, such as the application of time, expertise, skill and effort
Implicit service is based on a feeling and is therefore intangible. The
implicit aspects of a service are the psychological wellbeing the feeling
of being looked after that comes with the provision of the service.
Supply Chain Management: integrating and managing the flow of supplies
throughout the inputs, transformation processes (throughput and value
adding) and outputs in order to best meet the needs of customers.
Sourcing: the purchasing of inputs for the transformation processes.
Factors influencing choice of sources:
Consumer demand
Flexibility and timeliness of supply
Quality of inputs required
Cost of suppliers
Supplier rationalization: Assessing all suppliers with their unique
advantages/disadvantages then culling unfavorable candidates to the
minimal amount, then increasing demand on the remaining suppliers.
Increases efficiency and clear communication channels, better
timelines
Vertical integration: Purchasing suppliers for complete control of supply
operations. Must assess whether this is advantageous. It will also
become an asset in itself.
Cost minimization: Using low-price labor, esp. offshore labor, in order
to reduce costs.
Lean supply chain: Minimises waste, improves speed, by not carrying
inventory but instead doing JIT stocking so that storage expenses are
not incurred. Only ordering needs to be considered.
Global Sourcing: Sourcing that is not constrained by location, esp. with
regards to sourcing from the best relevant suppliers globally.
Advantages are localized: experience, laws, labor costs, materials
costs, tax benefits, technology
Long distances increase difficulty in sourcing and costs, regulatory
differences esp. trade agreements, increased complexity overall
E-Commerce: Buying and selling of goods over the internet
E-procurement: The use of internet based systems to manage supply.
Suppliers can access business stocks digitally and send stocks as
required.
E-commerce to consumer: B2C transactions are more common, similar
to wholesalers. In addition, specialist sites may compile deals in
order to more effectively sell products. Supply management is key to

success, as the complexity of several avenues of purchase may

confuse demand. In addition, stock levels must be accurate
Logistics: Transport, storage and distribution
Distribution: The manner in which a product reaches the customer
Distribution Channels
Producer to consumer
Producer to retailer to consumer
Producer to wholesaler to retailer to consumers
Producer to agent to wholesaler to retailer to consumer
Transportation: The physical movement of inventories, e.g. bike, truck,
van, train, plane, ship. Type of product, e.g. size, fragility, cost, and the
cost of transportation must be considered.
Storage: A secure location to hold inventory
Warehousing: The use of a facility for the storage and protection,
and subsequently the distribution, of stock (long-ish term)
Distribution centers: Facilities used to store, in the short term,
inventory, to divide for distribution to several outlets. They act as a
transportation hub for several different outlets
Technology
Leading edge technology is the most advanced or innovative technology
available at the time. These can provide an advantage to the operations
processes, e.g. process sequencing quality, efficiency, time. Higher cost
though.
Bleeding edge: Technology so new that it is unreliable and risky to use
Established technology: Standard technology that is accepted and widely
used, due to reliability and usability and are functionally sound in all
applications.
Inventory Management
Holding stock
Advantages of holding stock
Flexibility to change in demand
Alternative stock can be offered
Reduced lead times
Older stock can be sold at a
discount as loss leaders
Assets on balance sheet (loans etc.)
Economies of scale in bulk buying

Disadvantages of holding stock

Costs of storage
Invested capital cannot be
redirected as it is not liquid
Cost of unsold stock will be higher

Inventory valuation: The value of unsold stock

 LIFO: Last in First out. Units will be recorded at the last cost of the good
FIFO: First in First out. Units will be recorded at the first cost of the
good
WAC: Weighted average cost. Units will be recorded as the average
price of the good over the time period
JIT: Lean production where inputs only arrive as they are needed. This
requires very flexible operations with flexible processing. Speed and
supplier reliability are core to JIT stock management.
Quality Management: Processes that a business undertake to ensure
consistency, reliability, safety and fitness of purpose
Quality control: Inspections by quality controllers at checkpoints
throughout the production process to ensure that all standards are being
met at every stage, both with intermittent inspections on samples or
constant inspection on all product. Intervention is undertaken when the
product does not meet standards.
Quality assurance: The use of a system to ensure that set standards are
met in production. This is done by measuring real values and comparing
them to set quality standards, often set by a global association.
Quality improvement: Improvement of quality throughout the production
process
Continuous improvement: The constant improvement of processes
over time to be more effective and efficient, both through innovation
and persistence. Staff training is key to this, promoting personal
initiative and involvement. Generally improve competitive advantage.
Total quality management: A holistic approach to quality management,
wherein every employee has a responsibility to manage and regulate
quality in the operations processes. This requires benchmarking,
employee empowerment, customer focus and continuous improvement
Overcoming Resistance to Change: Adapting a business to changes in its
environments
Financial costs and resistance to change: Barriers to change involving
financial limitations
Purchasing new equipment: The cost associated with investment in
capital equipment can be a significant barrier to change. Market
advantages have to be significant for action to be taken
Redundancy payout: The payout to employees whose job skills are no
longer relevant, due to changes in the business. This payout is
normally quite high, due to the calculation resulting in a significant
amount, and as such causing redundancy is costly.

 Retraining: The retraining cost may involve employees learning new

skills, which is costly for the business, or it may involve the retraining
of existing skills on new platforms e.g. software.
Reorganising Plants: Major changes in the business can require costly
renovations of the production facilities, involving construction and
transportation costs, and also costs involved in both non-productivity
during this period of inactivity, and low productivity during staff
reorientation with new machinery
Psychological resistance to change-inertia: Barriers occurred when
businesses and employees fear the consequences of changing, especially
the unknown and uncertain future involved. This can result in employee
non-productivity and resistance to change.
Change management strategies:
Identification of sources of change, and assess the need for
accommodating the change through adjustments within the business
Inform employees about the need for change and encourage change
Change agents can be used
Global Factors
Global Sourcing: businesses purchasing supplies or services without
geographic constraints. Global sourcing allows outsourcing to explore all
markets for possibilities. It has aforementioned advantages, such as cost
advantages, new technology, expertise, specialization and 24 hour service
utilizing time zones. Disadvantages are regulatory differences and
increased costs within transport, storage and distribution. In addition,
prices may fluctuate according to exchange rates.
Economies of scale: Cost advantages made by large scale production. PPU
(price per unit) can be reduced. The use of global markets allows for the
largest economy of scale, improving profitability and product life spans
through mass production
Scanning and learning: Studying the global market environment and
learning from the successful practices of global businesses. For example,
kaizen, a form of total quality management and general strategy, was
highly successful, and was adopted globally. Learning from other
businesses is key to success. The diversity of experience available allows
for flexibility in all situations.
Research and development: Research and development can create cutting
edge technology that can then be used by the business to gain an
advantage. Globally, governments may provide grants to undertake R&D
and provide tax incentives.

MARKETING

Role of Marketing
Strategic role of marketing: Profit Maximisation
Marketing Plan: list of strategies (activities to achieve goals)
Marketing Approaches: Different perspectives with which to create marketing
plans
Production approach: focusing on the production of goods and services,
with little to no regard to appealing to specific customer bases
Sales approach: With more competition, focusing on selling the existing
product rather than producing to sell, more advertisements, more
marketing strategies implemented
Customer/market approach: An approach focusing on creating a product
to sate an existing demand, fulfilling wants and needs, which are
discovered through market research.
Markets
Types of markets

Resource Market (Primary production)

Industrial Market (Buying secondary/tertiary production)

Intermediate Market (Buying/selling finished goods)

Consumer Market (Consumers for final use)

- Mass Market (To any and all buyers)

- Niche Market (specific buyers with specific wants and needs)
Marketing Influences
Customer choice/Buying behavior: Decisions and actions of the customer
when looking to purchase a product e.g. evaluation, selection. Closely
monitored. Why do they buy?. Successful marketing needs a good
understanding of the reasons behind specific customer choices.
PEGS acronym-Psychological, Economic, Government and Social REMEMBER
Psychological
- Internal influences that control buying behavior in a customer
PAMPL
- Perception is how people choose to select, organize and interpret
information to create meaning (personal perception in marketing). This is like
goodwill, brand name etc. Must promote image through marketing e.g. Coke

is fun and lifelong. This image is cultivated regardless of reality e.g. Marlboro
Man.
- Motives are a reason for someone to do something. In customer choice
there are many influences e.g. comfort, health, safety, ambition, taste,
pleasure, fear, amusement, cleanliness, and the approval of others. This is
part of Maslows hierarchy of needs. It can be influenced through triggering
the customer.
- Attitudes are the overall feeling about an object or activity. Customer
attitudes e.g. goodwill (social and ethical issues etc.) can affect the
purchasing choices of a customer. Negative attitudes can affect a business
and force a strategy change.
- Personality and self-image are the behaviours and characteristics of a
person, and how they see themselves. This self-image can control who buys
what, and therefore through marketing the product in a certain manner (e.g.
you are what you buy) by highlighting the image of their products, people
with certain personalities and self-images are compelled to buy them to
make them look like what they want to be. This is also why celebrities/other
role models are used to sell products.
- Learning is the changes created in an individuals behavior caused by
information and experiences. Teaching a customer about their product in
their marketing can affect the perception of the customer of the product.
Successful positive education of a customer can encourage brand loyalty.
Social Influences
- External influences made by people around the consumer
- Social class is socioeconomic status: income, education, occupation. The
quality, type and quantity of products purchased is different between
different social class. High class buy prestige products e.g. Mercedes Benz,
rather than low income, low education, consumers.
- Culture is all the learned values, beliefs and traditions of segments of
general society. It affects buyer behavior by controlling what is culturally
acceptable to eat, wear, and where and how they live. For example lean
meats are in.
- Family and roles are the different positions in a family. Different roles in the
family buy different things, therefore marketers must aim to market to the
niche within a family. For example, kids can often control purchasing
decisions, even with products purchased with their parents income and
therefore are often targeted.

- Peer groups are essentially cliques. These cliques control the customers
buying behavior, with essentially their own specific culture. These peer
groups often teach the customer about products and create a pre-formed
attitude and perception to certain products. In addition, depending on the
culture of the peer group, the customer might be more compelled to
purchase certain products.
Economic Influences
- Boom is when there is low unemployment and high income. Buyers are
optimistic and subsequently more likely to purchase in the markets.
Businesses increase production and marketing efforts in order to take
advantage of the larger amount of revenue available. Sales are much more
likely during a boom.
- Recession is when there is high unemployment and low income. Buyers are
pessimistic and are much less likely to purchase, especially depending on the
duration of the economic slump. Spending in all markets reduces. Customers
become more practical. Marketing plans should pander to that, emphasizing
the practicality of their product. It must also focus on maintaining market
share and surviving.
Government Influences
- Economic policy measures are implemented to control economic activity.
This is used to reduce the risk and effect of a boom/recession and maintain
competitiveness within a market. These laws have a very direct effect on
marketing plans, especially due to the fact that many of these laws target
relevant sectors of a business. These laws are implemented by regulatory
bodies that can influence business behaviour. They have major control over
the actions of marketing bodies as they can inflict severe financial penalties.
Some examples are the CCA (Competition and Consumer Act), SGA (Sale of
Goods Act).
WIPD
Warranties
Implied conditions
Price discrimination
Deceptive advertising
PEGST
Truth and accuracy
Good taste

Products that may damage health

Engaging in fair competition
Sugging
SUMMARY

Marketers closely examine the behaviour of customers (consumers) to

understand what influences customer choice.
Customer choice is influenced by four main factors:
Psychological:
influences within an individual that affect his or her buying behaviour
psychological factors include the buyers perceptions, motives, attitudes,
personality and self-image, and learning.
Sociocultural:
influences exerted by other people and groups that affect an individuals
buying behaviour sociocultural factors include the buyers social class,
culture and subculture, family role, and peer groups.
Economic:
economic forces influence a businesss capacity to compete, and a
customers willingness and ability to spend
the level of economic activity fluctuates from boom to recession.
Government:
policies directly or indirectly influence business activity and customers
spending habits
laws such as the Competition and Consumer Act 2010 (Cwlth), Sale of
Goods Act 1923 (NSW) and the Fair Trading Act 1987 (NSW) influence
marketing decisions.
Extra
-Fines for breaching CCA are 1.1 million cap and 220000 cap for businesses
and individuals respectively
Marketing Processes

SMEIDI: Situational Analysis, Market research, Establish objectives, identify

markets, develop strategies, Implementation monitoring and controlling
Situational Analysis
SWOT
PLC and BLC
Market Research
Three steps: determining needs, collecting data for needs, analyzing data
Survey

Focus Group

Positives
- Easier to create
than other forms of
research
- Easier to
implement than
other forms of
research (remote)
- Allows significant
control over
information given

Samples

Better gauging of
customer reaction
of product
Allows control of
customer groups
interviewed to
gauge different
groups reaction to
product
Faster collection
time of information
of a large amount
of skimmed data
about general
reaction.
Easier to coerce
involvement from
general population
Form of sugging

Negatives
- Questions lock the
person being
reviewed in several
lanes of feedback
- Often the answers
are not honest or
thought out
- Questions do not
bring into question
circumstances or
personal
sensitbilities
- Data can be
skewed due to
donkey votes
- Very expensive,
with extensive
renumeration
involved for all
participants
- Interviewer will
create bias through
types of questions,
creating result
inaccuracy
- Unrealistic
representation of
market feedback
due to bias of free
products
- Less time during
each sampling to
gauge reaction to
product and less
detailed

Experiment/testing

Customer feedback/Data
collection

Observation

Essentially
complete control
over variables
being tested
Very linear result of
research
Allows for causality
through
exploration of
variables involved
No bias at all in
data collection as
all data collected is
personal
Very little work
input needed by
researchers until
collation of final
results
Creates a large
data pool available
for multiple
purchases
Can be used to
gauge customer
perception over
time in a very
direct format
Easiest way of
studying basic
human behavior to
products
Can be used to
supplement other
research
Data has no bias
(other than
observer bias)
Cost-effective

information
Much more
expensive than
other methods
Much more time
consuming due to
the level of depth
required in
experimental
research
Expensive to
implement with a
high long term cost
for implementation
Customer feedback
is mostly biased by
circumstances
Data collection is
seen as intrusive
and can result in a
negative
perception of a
company

Purely
assumptions, no
empirical evidence
from customers
No customer
opinions are gained
through this form
of research
Data collection
requires a large
amount of time

Establishing market objectives: SMART objectives that are relevant to the

business
SMART: Specific, Measurable, Achievable, Realistic, Time-based
Increasing market share

 Expanding the product mix (keep up with changing wants and needs)
Maximising customer service (responses to the wants and needs of the
customer
Identifying target markets: Specific potential and present customers that
have traits that would be conducive to the purchase of a businesss products
Primary target market: The main market that a business wishes to sell to,
with marketing focused there
Secondary target market: A smaller and less significant market that is also
aimed at
Target markets improve efficiency, success, and general processes
Mass marketing: Marketing to the entire range, or a significant portion of
customers
Market segmentation: Subdividing markets into groups with one or more
common characteristics
Niche marketing: Subdividing subdivisions for a very specific set of people
with specific demands and subsequently avoiding significant competition
and often engaging in a blue ocean approach
Developing Marketing Strategies

Price
Product
Promotion
Place
Service Ps
Balancing the 4 Ps depending on positioning

Implementing the marketing plan: Putting strategies into actual operation

Monitoring and controlling the plan
Making a financial forecast for revenue and cost
Comparing actual vs planned
Revising the strategy: Changing 4 Ps, adding and removing products
KEY WORD: TOTAL PRODUCT CONCEPT
Marketing Strategies:
4 main Ps, Process Ps, Global and E marketing (You know this)
Marketing Mix-Promotion

FINANCE

Role of Finance
Strategic Role
Objectives: Outcomes that can be measured, formed by dividing goals
Strategic Plan: A plan that outlines strategies to meet objectives and
eventually goals
Financial Management
Financial resources: Resources that are worth money or are money
Working capital: Capital that is available at the current period for use
(assets-liabilities)
Financial management: The planning and monitoring of financial
resources to meet financial goals

Financial Objectives
PLEGS
Profitability: Ability to maximize profits
Liquidity: Ability to meet short term financial commitments
Efficiency: Ability to use financial resources with minimal loss and
maximum effect
Growth: Ability to grow its size in the long term
Solvency: Ability to meet long term financial commitments
Short term/tactical: 1-2 years
Long term/strategic: 2+years
Financial Influences

Owners
Equity

Short Term

Long Term

Commercial
Bills

Mortgage

Bank
overdrafts
Factory

Retained
Profits
Internal

Sources of
Unsecured
Finance
notes
Leasing
Deb Debentures

External

Ordinary
Shares

Private
Equity Equity

Terms

Definitions

Mortgage

Example

Advantages
Can be paid
over a very
long time

Debentures

Long term
loan that can
be traded
with security

Fixed rate of
interest

Unsecured
note

Long term
loan that can
be traded
with no
security
A business
leases assets
instead of
buying it
(doesnt have
to pay all at
first)

No security
required

Short term
loan from a
bank
Used for
large loans of
100000<

Flexible (7180 days

maturity)
It can last
long term
with
renegotiation
Tradeable
Improves
short term
liquidity as
the business
will receive
<80% in 48
hours
Less
administrativ
e costs

Leases

Bank
overdraft
Commercial
bill

Factory

Ordinary
Shares

Short term
debt
financing
that involves
selling a
businesss
accounts
receiveable
to a financial
institution
Liquidity for
profitability
Shares that
give owner
rights over
the business

Improves
liquidity by
freeing up
short term
funds
Can update
technology

They dont
have to pay
dividends
Variable size
of dividends

Disadvantag
es
Large
repayment
from original
capital
Risk of losing
collateral
Security
required
Rigid
obligation to
pay
Higher rate
of interest

No ownership
during lease
so cant be
security
Pay more
than the
asset
Repayable on
demand
Need a high
credit rating
Highly
regulated

Receives less
than the
amount owed
Factoring
companies
aggressive
tactics may
drive some
customers
away

Costly and
time
consuming
Infinite
number of

ASIC:
-

An independent statutory commission accountable to the

Commonwealth Parliament
Enforces & administer the Corporations Act
Protects consumers in the area of investments, insurance, banking and
supers
Aims to reduce fraud and unfair practices by regulating financial
markets and financial products

Financial Processes
PIMFL:Planning, Implementing, Monitoring and Controlling,
Financial Ratios, Limitations of financial reports
ADDMIE: Address current financial position, Determining financial needs,
Developing budgets, Maintaining record systems, Identifying financial risks,
Establishing financial controls
Financial Need: Determined by a number of factors

Size of the business

Stage of business life cycle
Plans for growth
Access to funds
Ability to assess needs and planning

Developing Budgets
Quantitative representation (facts and figures)
Shows requirements for fulfillment of goal
Record Systems: Must be accurate for effective planning
e.g. double inputted numbers
Financial Risks: Risk that a business might not be able to meet financial
commitments, due to internal and external factors
Financial Controls: Policies established to ensure the objectives are met
efficiently
Debt vs Equity
Advantages of debt

Disadvantages of debt

Increased funds should lead to

increased
earnings and profits

Increased risk if debt comes from

financial
institutions because the interest,

bank
charges, government charges and
the
principal have to be repaid
Funds are usually readily available

Security is required by the

business

Tax deduction for interest

payments

Regular repayments have to be

made
Lenders have first claim on any
money if
the business ends in bankruptcy

Advantages

Disadvantages

Does not have to be repaid unless

the owner
leaves the business

Lower profi ts and lower returns for

the
owner

Cheaper than other sources of fi

nance as
there are no interest payments

The expectation that the owner will

have
about the return on investment
(ROI)

The owners who have contributed

the equity
retain control over how that fi nance
is used
Low gearing (use resources of the
owner and
not external sources of fi nance)
Less risk for the business and the
owner
Tldr: Debt is more money but riskier and more expensive, Equity is cheaper
and safer but less money
Monitoring

Cash Flow statement

Three sections: Operating activities, Investing Activities, Financing
Activities
Income Statement: Statement of Financial Performance
Operating Income, COGS, Gross profit Operating expenses, Profit before
and after tax, dividends paid, retained profits
Balance Sheet: Statement of Financial Position

Current Assets
Non-Current Assets
Current Liabilities
Non-current Liabilities
Shareholders equity
Must equal according to accounting equation: assets= liabilities+equity

Financial Ratios
- Writing the formula
- Show working out when calculating the ratio
- Identify sources of information
- What the ratios should be compared to (benchmarks)
- Understand whether a high figure is good or bad
- Link to objectives/goals
- Propose strategies for improvement
OBJECTI
VE

RATIO

FORMUL
A

SOURCE OF
INFORMATI
ON

Profitabili
ty

Gross
profit

Gross
profit/net
sales

Income
Statement

WHAT THE
ANALYSIS SHOWS
US
It shows the changes
in finances from one
accounting period to
another and indicates
the effectiveness of
planning policies
relevant to
profitability

INTERPRETA
TION OF
RATIO
RESULTS
The higher
the ratio the
better
If it is low,
solutions
must be
found to
maintain
profitability
and viability.]

STRATE
IMPROV

Some st
improve
profit ar
impleme
short te
solution
changin
pricing s
the valu
stock or

Net
profit

Net
profit/Net
sales

Income
statement

Return
on
total
equity

Net
profit/Shar
eholders
equity

Income
statement,
Balance
sheet

Liquidity

Curren
t ratio

Total
assets/tot
al
liabilities

Balance
sheet

Efficienc
y

Expen
se
ratio

Expense/
accounts
receivable
turnover
ratio

Income
statement,

Net profit shows how

much the business
owners earn from
their businesss
operations

The higher
the ratio the
better

Return on equity
shows how effective
equity has been at
returning in the form
of profit

The higher
the ratio, the
better the
return for the
owner

Current ratio shows

the short term
financial stability of a
business, the ability
for it to meet its short
term financial
commitments

A ratio should
be around 2:1
for it to be
considered
financially
stable,
significantly
greater or
lower
indicates an
issue
Expense
ratios must be
consistent.
Higher ratios
indicate
issues with
expenditure

The ratio shows the

quantity of sales that
are equivalent to
various sectors of
expense

supplier
Strategi
target th
expense
business
to reduc
adminis
general
Alternat
can also
increasi
by simp
increasi
etc.
If the ra
the busi
attempt
improve
returns
reducing
through
business

Should t
be abov
2:1, a bu
must se
reduce o
its asset
liabilitie
short te
by inves
changin
term loa
If the ex
ratio is t
the sign
expense
address
business
a variety
strategie
need to
reducing
sectors

Accou
nts
receiv
able
turnov
er
ratio

Solvency

Debt
to
equity

Sales/Acco
unts
receivable

Total
Liabilities/
Owners
Equity

Balance
sheet

Balance
sheet

It measures the
effectiveness of a
businesss policy
regarding credit and
debt and how
efficiently it collects
debt from its debtors

A high ratio
indicates that
the business
has an
efficient debt
collection
system while
a low ratio
indicates the
opposite

If a busi
low ratio
either re
its debt
system
debts to
factoring

Shows how heavily a

business is relying on
external/debt
financing in order to
maintain the
operations of the
business

The higher
the ratio, the
riskier the
operations of
the business,
therefore the
lower the
ratio, the
better

If the ra
high, the
is opera
very hig
must att
reduce i
on debt

Limitations of Financial Reports

Normalised Earnings: Unusual expenditures/earnings are removed from
the balance sheet in order to approximate regular financial performance
Capitalising Expenses: Categorising R&D and development expenditure
(capital expense) as an asset rather than an expense
Valuing assets: Estimation means that accuracy cannot be assured
Timing Issues
Debt repayment details
General notes
Ethical Issues
Audited Accounts: Accounts that have been checked for accuracy esp.
fraud and theft
Internal audits: Audits conducted by employees to check accuracy and
procedures
Management audits: Audits conducted by higher management to
review the strategic plan and determine if changes need to be made
External audits: Audits conducted by third parties to guarantee
authenticity

Record Keeping: Accuracy and honesty in record keeping (tax evasion by not
recording cash flow)
GST obligations: Even in a cash economy, businesses will struggle to avoid
tax when declaring GST, and they must report their GST
Reporting practices: Must be fair and accurate, both for legal and ethical
reasons (can be seen as fraud) and can be counterproductive
Financial Strategies
Cash Flow Management
Cash flow: The movement of money in and out of business over a period
of time
Management strategies:
Distribution of payments: Distributing payments over a period of time
rather than compressing it to
Discounts for early payment: Incentivizes early payment to keep cash
flow efficient
Factoring: Increases short term working capital and reduces effort
Working Capital management
Working capital: Funds available for short term financial commitments
Net working capital: Assets minus liabilities
Control of current assets:
Cash
Accounts receivable
Inventories
Control of current liabilities:
Accounts payable
Loans
Overdrafts
Strategies:
Leasing
Sale and lease-back
Profitability management
Cost controls
fixed and variable
Cost centres: Areas costs can be attributed to
Direct costs: Costs that can be allocated to a product, activity,
department or region
Indirect costs: Costs that are shared by more than one product,
activity, department or region

 Expense minimization
Revenue controls
Marketing objectives
Global Financial Management
Exchange rate/currency fluctuations
Exchange rate is the ratio of one currency to another
Fluctuation makes exports more expensive for overseas buyers/imports
cheaper and vice versa
Depreciation is good
Interest rates: Tax havens etc. Interest rates vs exchange rates
Methods of international payment:
Payment in advance: Exporter receives payment then arranges for
goods to be sent
Letter of credit: A commitment by importers bank, which promises to
pay when shipment of goods is proved
Clean payment: Payment is sent before goods are sent (requires trust)
Bill of exchange: A document drawn up by the exporter demanding
payment at a certain time
Bill of acceptance: Importer can only get the product when they pay
Bill of payment: Product can be collected before payment
Hedging: Process of minimizing the risk of currency fluctuations
Natural hedging: Minimising risk of currency fluctuations by a variety of
strategies, esp. purchase and sales in the same currency, establishing
off shore subsidiaries etc.
Financial instrument hedging: Derivatives can be used to minimize the
risk
Derivatives:
Forward exchange: Agreement to exchange currency in the future at
the current exchange rate
Options contract: Gives the buyer the right but not obligation to buy or
sell foreign currency in the future
Swap contract: Agreement to exchange currency in the spot market
with an agreement to reverse the transaction in the future