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Questions and Answers
A flat structure allows for quicker decision-making due to fewer layers of management.
A flat structure allows for quicker decision-making due to fewer layers of management.
True (A)
In a matrix structure, workers report to only one department.
In a matrix structure, workers report to only one department.
False (B)
A disadvantage of a flat structure is that it can lead to managers being overwhelmed with a wider span of control.
A disadvantage of a flat structure is that it can lead to managers being overwhelmed with a wider span of control.
True (A)
Employees in a tall structure often experience slower decision-making due to multiple layers of management.
Employees in a tall structure often experience slower decision-making due to multiple layers of management.
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A benefit of a matrix structure is the potential for skill development through exposure to diverse projects.
A benefit of a matrix structure is the potential for skill development through exposure to diverse projects.
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A flat organizational structure typically offers fewer opportunities for career advancement.
A flat organizational structure typically offers fewer opportunities for career advancement.
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Power struggles are a common disadvantage in a flat structure.
Power struggles are a common disadvantage in a flat structure.
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Flexible communication is a key advantage of a tall organizational structure.
Flexible communication is a key advantage of a tall organizational structure.
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Product differentiation aims to make a business's products indistinguishable from its rivals.
Product differentiation aims to make a business's products indistinguishable from its rivals.
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Adding value refers to the gap between the selling price and the total cost of production inputs.
Adding value refers to the gap between the selling price and the total cost of production inputs.
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Two benefits of product differentiation are creating a unique selling proposition (USP) and reducing production costs.
Two benefits of product differentiation are creating a unique selling proposition (USP) and reducing production costs.
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A key purpose of product differentiation is to prevent consumers from perceiving any differences in products.
A key purpose of product differentiation is to prevent consumers from perceiving any differences in products.
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Demand is defined as the ability but not the willingness of consumers to purchase a good or service at a specific price.
Demand is defined as the ability but not the willingness of consumers to purchase a good or service at a specific price.
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Rigid hierarchies can limit innovation and employee autonomy.
Rigid hierarchies can limit innovation and employee autonomy.
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A flat structure may lead to role clarity and increased guidance for employees.
A flat structure may lead to role clarity and increased guidance for employees.
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Motivated employees are less likely to contribute innovative ideas.
Motivated employees are less likely to contribute innovative ideas.
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An entrepreneur is someone who sets up a business and avoids taking risks.
An entrepreneur is someone who sets up a business and avoids taking risks.
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High motivation levels generally result in improved morale among employees.
High motivation levels generally result in improved morale among employees.
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Delegating tasks is an essential skill when moving from being an entrepreneur to a leader.
Delegating tasks is an essential skill when moving from being an entrepreneur to a leader.
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A matrix structure simplifies decision-making processes.
A matrix structure simplifies decision-making processes.
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Increased motivation leads to reduced absenteeism and turnover rates.
Increased motivation leads to reduced absenteeism and turnover rates.
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A leader should only focus on their own ideas and not listen to the opinions of their team.
A leader should only focus on their own ideas and not listen to the opinions of their team.
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Trusting your team without any verification is crucial for effective leadership.
Trusting your team without any verification is crucial for effective leadership.
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Cost savings can result from higher motivation levels.
Cost savings can result from higher motivation levels.
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Employees in a flat structure may not feel involved in decision-making processes.
Employees in a flat structure may not feel involved in decision-making processes.
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Developing emotional intelligence is important for leaders to understand and manage emotions.
Developing emotional intelligence is important for leaders to understand and manage emotions.
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A business plan should include financial projections and strategies for achieving objectives.
A business plan should include financial projections and strategies for achieving objectives.
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Having an open mind as a leader means resisting new ideas and sticking to traditional methods.
Having an open mind as a leader means resisting new ideas and sticking to traditional methods.
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Market research involves analyzing the competition and understanding the target audience.
Market research involves analyzing the competition and understanding the target audience.
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Performance-related pay directly ties employee earnings to company performance.
Performance-related pay directly ties employee earnings to company performance.
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One advantage of performance-related pay is its ability to increase motivation among employees.
One advantage of performance-related pay is its ability to increase motivation among employees.
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Bonuses are recurring payments awarded to employees for consistent performance throughout the year.
Bonuses are recurring payments awarded to employees for consistent performance throughout the year.
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A disadvantage of bonuses is that they can lead to a sense of entitlement among employees.
A disadvantage of bonuses is that they can lead to a sense of entitlement among employees.
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Commission-based pay is primarily focused on compensating employees based on their participation in team activities.
Commission-based pay is primarily focused on compensating employees based on their participation in team activities.
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One disadvantage of commission-based pay is that it may lead to unpredictable income for employees.
One disadvantage of commission-based pay is that it may lead to unpredictable income for employees.
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Delegation involves transferring both responsibility and authority from an employee to a manager.
Delegation involves transferring both responsibility and authority from an employee to a manager.
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One advantage of delegation is that it allows for skill development and career growth opportunities.
One advantage of delegation is that it allows for skill development and career growth opportunities.
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Profit maximization aims to generate maximum financial gains.
Profit maximization aims to generate maximum financial gains.
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Social entrepreneurship prioritizes financial gains over positive social impact.
Social entrepreneurship prioritizes financial gains over positive social impact.
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Adaptability refers to the ability to adjust to changing environments or market conditions.
Adaptability refers to the ability to adjust to changing environments or market conditions.
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The desire to align business practices with ethical standards is known as profit satisficing.
The desire to align business practices with ethical standards is known as profit satisficing.
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Problem-solving is the skill in addressing challenges and finding effective solutions.
Problem-solving is the skill in addressing challenges and finding effective solutions.
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Independence refers to the desire for autonomy from traditional employment.
Independence refers to the desire for autonomy from traditional employment.
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Home working is preferred by those who want a traditional work environment.
Home working is preferred by those who want a traditional work environment.
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Resilience involves the capacity to learn from failures and bounce back from setbacks.
Resilience involves the capacity to learn from failures and bounce back from setbacks.
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Study Notes
Mass Market
- A large group of consumers with similar needs and preferences for a product or service.
- Consumers are willing and able to purchase at an affordable price.
Niche Market
- A small, specialized group of consumers with unique, specific needs and preferences.
- A smaller segment of a larger market.
Mass Markets: Benefits and Drawbacks
-
Benefits:
- Economies of scale, leading to lower costs per unit.
- Wider customer base, increasing sales and revenue.
-
Drawbacks:
- Intense competition and price wars.
- High advertising and marketing expenses to reach a large, diverse customer base.
Niche Markets: Benefits and Drawbacks
-
Benefits:
- Less competition than mass markets.
- Easier to target specific customer needs.
-
Drawbacks:
- Higher unit costs due to lack of economies of scale.
- Riskier as demand may not be constant.
Market Size
- The total number of potential customers or sales revenue available for a specific product or service in a particular market.
Market Growth Calculation
- Example: If a market size is $10 million at the start of a year and increases to $12 million at the end of the year, the growth is calculated as follows: [($12 million - $10 million) / $10 million] x 100 = 20%.
Market Share
- The percentage of total sales revenue/customers of a specific product or service generated by a particular company.
- Example: If a company sells $10 million worth of smartphones in a market with $50 million total sales, their market share is: ($10 million / $50 million) x 100 = 20%.
Brand Definition
- A name, logo, or symbol that distinguishes a product or service from competitors.
Strong Brand Benefits
- Increased customer recognition and loyalty, leading to higher sales and revenue.
- Ability to charge a premium price, improving profit margins.
Online Retailing
- The process of selling products or services through a website or online platform to reach a wider customer base.
Online Retailing: Benefits and Drawbacks
-
Benefits:
- Increased accessibility and convenience for customers, leading to higher sales and reduced costs.
- Ability to reach a global audience.
-
Drawbacks:
- Increased competition from other online retailers.
- Potential for technical issues and security concerns regarding online transactions.
Product Innovation
- The development or creation of products not previously available.
Product Innovation: Benefits and Drawbacks
-
Benefits:
- Increased customer satisfaction and loyalty, leading to higher sales and market share.
- Ability to charge a premium price for unique and innovative products.
-
Drawbacks:
- High costs and risks associated with research and development.
- Potential for failure if the product does not meet customer needs or gain market acceptance.
Dynamic Market
- Markets characterized by frequent changes in consumer preferences, technological advancements, and competitive forces.
- These changes create both challenges and opportunities for businesses.
Business Response to Market Changes
- Flexibility
- Market research
- Niche development
Risk vs. Uncertainty
- Risk: The possibility of a lower than expected profit or a loss.
- Uncertainty: The inability to predict external shocks or future events.
Market Research Definition
- The process of collecting and analyzing data about consumer preferences, market trends, and competitive forces.
- This data informs business decisions and strategies.
Primary vs. Secondary Research
- Primary Research: Collecting new, original data directly from consumers or the market.
- Secondary Research: Analyzing existing data from published sources or databases.
Quantitative Market Research
- Using numerical data collection and analysis to measure and quantify consumer behavior and preferences.
Qualitative Market Research
- Collecting and analyzing non-numerical data (e.g., focus groups, interviews, observation).
- Aims to understand consumer attitudes, perceptions, and motivations.
Methods of Primary Research
- Surveys/questionnaires
- Focus groups/consumer panels
- Face-to-face/telephone interviews
- Product trials/test marketing
Methods of Secondary Research
- Websites/social media
- Newspapers/TV/Radio reports
- Databases
Sampling Methods
- Random
- Quota
- Stratified
Random Sampling
- Selecting individuals from a group completely randomly, giving everyone an equal chance of being chosen.
Quota Sampling
- Selecting a specific number of people from different groups to ensure each group is fairly represented in the sample.
Stratified Random Sampling
- Dividing a population into groups based on certain characteristics and randomly selecting people from each group to create a well-rounded sample.
Market Positioning
- Identifying a company’s product or service on a graph compared to the competitor's products or services to see if there is a gap in the market.
- An approach where businesses concentrate on understanding and satisfying customer needs, aligning strategies and activities accordingly.
Market Orientation
- Approach where businesses center on understanding and meeting customer needs and wants.
- Aligning their activities with these to be responsive.
Product Orientation
- Businesses focusing on improving products and production without considering customer needs directly.
- Emphasis is placed on product development and improvement.
Benefits of Product Orientation
- Low cost, avoided market research.
- High quality, innovative products achievable.
- Easier to achieve economies of scale through efficient manufacturing processes
Drawbacks of Product Orientation and other approaches
- Ignored customer preferences and needs, leading to products not being demanded.
- Possibility of being outcomped by rivals who are more customer-centric.
- Market mapping difficulties mean the process is not always accurate, and data can be hard to come by in certain sectors.
- Difficulty of making decisions and changes swiftly.
- Increased costs.
Market Segmentation
- Dividing a market into smaller groups of consumers with similar needs or characteristics.
Benefits of Market Segmentation
- Targeted marketing strategies tailored to specific customer groups.
- Increased customer satisfaction.
- Identification of niche markets and opportunities for profit maximization.
Drawbacks of Market Segmentation
- Expensive and time-consuming to conduct.
- Narrow focus can limit potential audience.
Methods of Market Segmentation
- Demographic
- Psychographic (lifestyle)
- Geographic
- Behavioural
Demographic
- Using factors such as age, gender, income, education, occupation, and family size.
Psychographic
- Using personality traits, values, interests, opinions, and lifestyles.
Geographic
- Dividing the market based on location, climate, and cultural differences
Behavioural
- Dividing the market based on consumer behavior, such as purchasing habits, usage rate, loyalty, and attitude towards the product
Marketing Mix in Exam
- Understand the objectives: Business objectives are to maximize profit, increase revenue or market share, or build a brand.
- How market research supports objectives: Use the case studies and show how market research is used to analyze the price, place, promotion, product (the 4 Ps) to determine the marketing mix.
- The four Ps (product, price, place, promotion): Analyze how each is important in a particular market.
- The importance of segmentation: Use case studies to show how different segments of the market impact each of the 4 Ps (product, price, place, promotion)
- How market positioning is crucial for determining pricing strategies, places, advertising.
Competitive Advantage
- Ways companies gain a competitive edge in the marketplace.
- Examples: Price, added value, innovation, reliability, quality, reputation/branding, advertising/marketing, convenience, and customer service.
Product Differentiation
- Setting products apart from rivals to appeal to a unique segment (or segments) of the market.
- A way to gain a competitive advantage
Adding Value
- This is the difference between the price charged and the total cost of inputs to create the product.
- Ways to add value include packaging; customer service; and frequent buyer offers..
Definitions from other sections in the notes
• Demand: Willingness and ability of consumers to purchase a good or service at a particular price over a given period.
• Supply: Willingness and ability of producers to sell goods and services at a particular price over a given period.
• Market equilibrium price: The price at which supply equals demand.
• Price elasticity of demand (PED): Measures the responsiveness of quantity demanded to a change in price.
- How much quantity demanded changes when price changes
• Income elasticity of demand (YED): Measures the responsiveness of quantity demanded to a change in income.
- How much quantity demanded changes when income changes
• Normal Goods: Goods that increase in demand when income increases.
• Luxury Goods: Goods that have a high YED, demand increases significantly when income increases.
• Inferior Goods: Goods that decrease in demand when income increases.
• Product Life Cycle (PLC): The stages a product goes through over its life, from development to decline. Phases include: development, introduction, growth, maturity, decline. • Product portfolio: A range of products that a company sells. • Boston Matrix: A management tool that helps a company to analyze its range of products based on market share and market growth. • Customer loyalty: Continued and repeat purchase of goods and services from a specific seller.
• Marketing Mix: (The 4 Ps) Product, Price, Place, Promotion.
• Delegation: Transferring authority and responsibility for tasks from managers to employees.
• Consultation: Seeking input from employees in decision-making.
• Job Enrichment: Adding tasks, responsibilities, or challenges to an employee's role.
• Job Enlargement: Expanding an employee's role by adding more tasks.
• Team Working: Employees working collaboratively toward common goals.
• Flexible Working: Employees adjusting their work schedule or location.
• Leading: Inspiring, guiding, and influencing individuals or groups towards achieving goals.
• Managing: Overseeing processes, coordinating resources, ensuring operational efficiency to achieve specific objectives.
• Entrepreneur: A person who sets up a business and takes risks to make a profit.
• Intrapreneur: An employee who thinks entrepreneurially and initiates ideas and innovation within a company.
• Barriers to entrepreneurship: include lack of idea capacity, access to finance, training/know how, fear of failure, lack of confidence, trade-offs.
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Description
This quiz explores various organizational structures such as flat, tall, and matrix systems. It also examines the concept of product differentiation and its impact on businesses. Test your knowledge on the advantages and disadvantages of these structures and differentiation strategies.
