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• Sample: the group of people taking part in a market research survet selected to be
representative of the overall target market
Advantage Disadvantage
often very cheap - apart from market intelligence may not be updated frequently → out of date
reports
identifies the nature of market and assists with originally collected for another purpose → may not
planning of primary research be suitable or presented in the most effective way
obtained quickly without the need to devise data collection methods and accuracy of these may
complicated data-gathering methods be unknown
allows comparison of data from different sources might not be available for completely new product
development
Primary research: collection of first-hand data that is directly related to a firm’s needs
Advantage Disadvantage
up to date → more useful than most secondary costly → market research agencies can charge
data thousands of dollars for reports
confidential → no other business has access to this doubts over accuracy and validity → risk of sample
data not being fully representative of population
• Quantitative research: research that leads to numerical results that can be statistically
analysed
• Observation and recording
• results can be distorted if people are aware of being watched & behave differently
• Test marketing
• business can produce a limited quantity of a new product before a full-scale national launch
• involves promoting & selling product in a limited geographical area and recording consumer
reaction and sales figures
• evidence is not always accurate if region is not representative of the rest of the country
• Consumer surveys
• directly asking consumers or potential consumers for their opinions and preferences
• who to ask? researcher has to select a ‘sample’ that reflects the characteristics of the survey
population (potential members of a target market) to increase the accuracy of data
• what to ask? questions must be unbiased and unambiguous to obtain useful results
• how to ask? self completed and return by post/filled in by interviewer in face-to-face session
• how accurate is it? assesing the likely accuracy and validity of results
• Trade organisations
• Operations planning: preparing input resources to supply products to meet expected demand
• cost of building on a ‘greenfield’ site (one that has not been developed) must be compared
with costs of adapting existing buildings on a developed site
2) Labour costs
3) Transport costs
• business that use heavy materials should consider locations that are close to supplier
• secondary firms should choose locations that are close to the market
• certain locations can add status and image to a business → adds value to product in the eyes
of consumer
5) Government grants
• existing business can be provided with financial assistance to retain existing jobs or attract
new employment to deprived areas of high unemployment
• (+) helps determine the site with the highest annual potential profit
• (–) annual profit forecasts are not enough - must be compared with the capital cost of buying
and developing the site
2) Investment appraisal
• to identify locations with the highest potential returns over a number of years
• (–) require estimates of costs and revenues for several years for each potential location
3) Break-even analysis
• calculates level of production that must be sold from each site for revenue to just equal total
costs
• the lower the BE, the better that site is, other things being equal
• (+) important for businesses that face high levels of fixed costs and that may benefit from a
location with lower overheads
• limiting the chances of an accident that risks public safety → avoids potential risk to the
public and damage to company’s reputation
3) Managers’ preferences
4) Ethical considerations
• relocating will make workers redundant → bad publicity, violates ethical code of the business,
may be viewed by stakeholders as being immoral
• relocating to a country with weaker control over worker welfare and environment can lead to
further claims of business as unethical
5) Environmental concerns
• setting up in locations that are sensitive from an environmental viewpoint → poor public
relations and action from pressure groups
6) Infrastructure
• IT infrastructure is important for companies that need quick communication with their different
sites or customers
• growing popularity of online shopping may lead to retailers opening fewer stores and more
warehouse operations to supply consumers
• Locational issues
1) The pull of the market
• the market is still important for service industries and the power of the car has taken many of
these out of the convenient centres of towns and on to the ring roads
2) Planning restrictions
• cost reductions that can benefit a business as the industry grows in one region
• firms that are clustered in the same region will benefit from attraction of a pool of qualified
labor to the area and network of suppliers whose own EOS should offer lower costs
• easier to arrange cooperation and joint ventures when businesses are located close to each
other
• Cash flow: the sum of cash payments to a business less the sum of cash payments
• business proposal will be rejected if investors and bankers don’t have access to CF forecast
• Overdraft
• bank agrees to a business borrowing up to an agreed limit and when required
• business can ‘overdraw’ on its account by writing cheques or making payments that are
greater than the balance in the account
• this overdrawn amount should always be agreed in advance and it has a limit
• banks can ‘call in’ the overdraft and force the firm to pay it bank if they become concerned
about the stability of the firm → liquidation → business failure
• Cooperative
• producer or worker cooperative → making goods
• cooperative often buys the produce of the members and then sells it collectively in order to
obtain a better price
• Features
• all members contribute to the running of the business → sharing workload, responsibilities
and decision-making
• Advantage
• buying in bulk
• good motivation for members to work hard as they will benefit from shared profits
• Drawback
• Ethical code of conduct: a document detailing a company’s rules and guidelines on staff
behaviour that must be followed by all employees
• Drawback
• using ethical and Fairtrade suppliers adds to costs
• not taking bribes to secure business contracts can mean failing to secure significant sales
• accepting that it is wrong to fix prices with competitors → lower prices and profits
• paying fair wages raises wage costs and reduce a firm’s competiveness against businesses
that exploit workers
• Benefit
• ethical businesses attract ethical customers who are increasing in number as world pressure
grows for CSR