Business Management

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  In order to be a price leader you must be able to manage and lower costs ○ Competing on price ã CPI= Core performance indicator ã Low tech grows aroudn 8-10% with 65% market share ○ High tech grows at 15-20% with 35% ○ Growth rate ã Price ○ Age ○ MTBF ○ Size ○ Purchasing criteria ã Rand d ○ Marketing ○ Prodution ○ Hr ○ Finance ○ Order ã Sales forcast-inventory= production level ã R+D= 1.2M ○ Plant= 2.5 ○ Marketing= 1.0 ○ Sales chanels= .5M ○ Estimate costs of launching a product ã Simulation September 11, 20148:40 AM  New Section 1 Page 1  What is a business: a system of intergrated acinos designed to ensure that an organization grows a market for a good/service which creates additional wealth for its shareholders ã Markets being served ○ Products being offered ○ Needs of of the market ○ Comercial endevours ã Success of business depends on the value creating skills of its employees ○ Employee interaction ã Organizational efficiency and structure ã These 3 things allow a business to function ã Assets+labout+capital+managerial accumum= business model ã The role of management is to anticipate, recgonize and sense an opportunity to create a product which is felt to be unique to a targeted custoemr ã Capabilities ○ Competencies ○ 3 c assesmtn allows management to determine what it is capable of doing in terms of exploiting an opportunity in the market  Capacity ○ 3c assesment ã When a company can offer a product/service that has more value to the consumer than other competng products ○ Comparative advantage ã Pg 6 fig 1.3 ○ Business planning cycle ã Short term profit ○ Long term growth and profitability ○ Social enviromental ○ Fundemental obectives of business managers ã Profit= bottom line profit ○ Return on equity  Profitability= how effectivley an organization uses its assets to create profit ○ Profitvs profitability ã A statement that summeries whom a product or service is geared towards ○ Indicates the benefits that the purchaser will realize as a result of buying the product ○ Communicates how the product differs from competetiors ○ What is the cost base for producing and supplying the good □ Brand strenght □ Emotional benefits □ Servicce benefits □ Do I have a strong enough value proposition to compete in the market segment □ In determining value proposition the management team must ask 5 questinos  Value proposition = service + emotional + cost + brand + product benefits ○ Value propisition ã A component of the value proposition ○ Price ã The more unique and important the product the greater the opportunity to communicate the value proposition ○ Difference between value proposition and price of product is the percieved positive value of the product ○ Price/quality relationship ã Chapter 1 September 14, 20147:48 PM  New Section 1 Page 2  Productivity gains, business investment, tech improvements, wage increases and good exchange rates are necessary for an economy to remain competitive ã Political stability, low national debt, established factors of production, national banking system (monetary policy), good level of investment, low inflatino, low corruption, legal system, comparative advantage ã Inelastic demand= steep curve ○ Elastic demand = shallow curve ○ Inelastic supply= steep ○ Elastic =shallow ○ Demand and Supply ã If there is too much of one it is not a good thing ○ Economic activity= expenditures+ savings+ investment(house or asset investment for business) + credit ã includes: goods/ services produced domestically, business investments, goods produced for export, gov spending ○ Canada and usa are driven by consumer spending  China is driven by exports  Different countries rely on different aspects to drive gdp ○ Gdp growth= more profits= reinvestment= greater gdp growth ○ Gdp growth = more people employed ○ Higher wages= more consuption= more gdp growth  Gdp growth = higher wages because of higher demand for labour ○ GDP cycle pg 50 (2.11) ○ GDP ã Inflation: inflation in the energy and food sector will significantly increase the costs of many consumer items ○ Geographic clustering: Certain regions develop their own economies and since they differ from other regions it is difficult for the governemtn to implement policies that will not negativley effect some provinces ○ What impacts the canadian economy ã Revenue from energy companies grows because they are traded in american dollars □ Pro: reduction in price of imported goods  Cons: Tourism, manufacturing exports  Canadian dollar increase in terms of usd ○ Currency rates ã Foreign owned entriprises are a growing trend and many Canadians are alarmed that the economy is turning into a branch market ○ Branch market impact ã Creates a position advantage and cost advantage ○ Sustanability and green initatives ã Need for imigration to repace retired workers ○ Aging population ã Canadain business will have to rely on managerial accum to stay competetive ○ Developing countries have lower wages and operating costs ○ Long term competetiveness ã Small business account for a majority of corporations ○ Small businesses ã More competetitors= more pressure to increase effeciency and productivity ○ Globalization ã UE ○ Inflation ○ CPI ○ Housing Stats ○ Manufacturing inventory ○ Cpi ○ Price of crude oil ○ Stock market indices exchange rate ○ Retail sales ○ Global markets ã PESTEL ã Chapter 2 September 14, 20147:50 PM  New Section 1 Page 3  How much influence does the governemtn have  Protectism?  Political ○ Socially ○ Enviromental ○ Technological ○ Economic ○ Legal ○ No market leader  No product differientation  Few barriers to entry  Unable to create distinctions to increase value proposition  Pure competition ○ Many compaines producing a similar product  True differientation is allowed to set in through advertising  Monopolistic competition ○ Few large players  Signifigant capital investment required  Large economy of scale required  Control over price  Oligopoly ○ Only one player  Large capital investment  Utlities  Monolopy ○ Pg 65 2.18  Rivalry among competetors  New entrants  Threath of subsitutes  Can they charge us more □ Can they supply of competetors □ Power of suppliers  Will buyers switch products □ Power of buyers  Porters 5 forces ○ Competetive models ã Little gov involvement ○ Free movement of labour and capital ○ Principals of private ownership ○ Demand and supply ○ Weealth creation ○ Open systems ã .  New Section 1 Page 4
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