Setting Up a Business and Creativity Concepts
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Questions and Answers

What is one disadvantage of an organizational structure that forces accountability at the top?

  • Increases employee and manager morale
  • Enhances delegation of authority
  • Leads to short term, narrow thinking (correct)
  • Encourages career development

    • Which of the following is a characteristic of the divisional structure?

  • Minimizes career development opportunities
  • Promotes delegation of authority (correct)
  • Internal competition among divisions is non-existent
  • Accountability can be unclear

    • What is a noted disadvantage of the matrix structure?

  • Improves communication between departments
  • Violates the unity of command principle (correct)
  • Duplication of functions is avoided
  • Eases budget authority management

    • What is an advantage of the divisional structure?

    <p>Clear accountability</p> Signup and view all the answers

    Which of the following is a disadvantage of a divisional structure?

    <p>Leads to costly duplication of functional activities</p> Signup and view all the answers

    Why might the matrix structure be considered costly?

    <p>It involves complex reporting structures</p> Signup and view all the answers

    Which of the following advantages is not associated with the matrix structure?

    <p>Encourages unified budget authority</p> Signup and view all the answers

    What is a disadvantage related to communication in the matrix structure?

    <p>Requires excellent vertical and horizontal communication</p> Signup and view all the answers

    What is the first stage in the process of setting up a business?

    <p>Develop a Business Plan</p> Signup and view all the answers

    Which of the following best defines creativity?

    <p>A combination of aptitude, process, and environment leading to novel and useful products</p> Signup and view all the answers

    How can an organization improve its creativity according to the content?

    <p>By encouraging a culture that fosters novel ideas</p> Signup and view all the answers

    Which of the following is NOT a stage in setting up a business?

    <p>Analyze Competitors</p> Signup and view all the answers

    What is a distinctive feature of a creative organization?

    <p>Sourcing income from novel and appropriate ideas</p> Signup and view all the answers

    What is a common misconception about creativity at the individual level?

    <p>It solely relates to artistic expression</p> Signup and view all the answers

    Which of the following techniques could help improve the creativity of a team?

    <p>Implementing new creativity techniques</p> Signup and view all the answers

    What does the process of determining the level of creativity refer to?

    <p>Assessing one's own and others' creative capabilities</p> Signup and view all the answers

    What does exclusive distribution involve?

    <p>One retailer offering the product without carrying competing brands.</p> Signup and view all the answers

    Which type of distribution allows for the product to reach as many markets as possible?

    <p>Open/Intensive distribution</p> Signup and view all the answers

    What is the primary purpose of promotion in marketing?

    <p>To communicate with customers and create brand awareness.</p> Signup and view all the answers

    In the context of people in marketing, what role does customer service play?

    <p>Supporting customers post-purchase.</p> Signup and view all the answers

    What does the process aspect of marketing focus on?

    <p>Management of service delivery and quality assurance.</p> Signup and view all the answers

    Which of the following is NOT a form of promotion mentioned?

    <p>Quality control</p> Signup and view all the answers

    What is meant by 'physical evidence' in marketing?

    <p>Tangible proof that a product is available and effective.</p> Signup and view all the answers

    How does direct distribution differ from other distribution strategies?

    <p>It eliminates intermediaries altogether.</p> Signup and view all the answers

    What is included in physical evidence?

    <p>Internet/webpages and brochures</p> Signup and view all the answers

    Which of the following best defines a production plan?

    <p>A schedule of events and actions to achieve organizational goals</p> Signup and view all the answers

    What is the first stage in the production process as defined in the content?

    <p>Inbound logistics</p> Signup and view all the answers

    What does a production/operations plan communicate within an organization?

    <p>Priorities and accountability across departments</p> Signup and view all the answers

    How does a production plan impact service delivery efficiency?

    <p>It can optimize processes and reduce costs</p> Signup and view all the answers

    Which element is NOT considered part of a production plan's communication?

    <p>Customer relationship management</p> Signup and view all the answers

    What role does a production plan play in managing materials and personnel?

    <p>It enables efficient direction of flow and utilization of resources</p> Signup and view all the answers

    In manufacturing, what are the initial inputs for the production process?

    <p>Raw materials that undergo transformation</p> Signup and view all the answers

    What is the main role of a financial plan in relation to a business plan?

    <p>It confirms that the business's finances support its goals.</p> Signup and view all the answers

    Which of the following is a type of equity financing?

    <p>Selling company shares to investors.</p> Signup and view all the answers

    What is a key advantage of debt financing?

    <p>Interest payments can be written off for tax purposes.</p> Signup and view all the answers

    Which of the following is considered a source of finance?

    <p>Family and friends.</p> Signup and view all the answers

    What is a major disadvantage of debt financing?

    <p>It requires regular expense payments.</p> Signup and view all the answers

    What describes a venture capitalist?

    <p>An investor supporting startup ventures or small businesses.</p> Signup and view all the answers

    Which option is NOT a form of debt financing?

    <p>Financing through equity shares.</p> Signup and view all the answers

    Which financing option involves selling company shares?

    <p>Equity financing.</p> Signup and view all the answers

    Study Notes

    Setting Up A Business

    • The process of setting up a business involves three stages:
      • Developing a business plan
      • Acquiring finances
      • Meeting legal requirements (including ownership, registration, and intellectual property rights)
    • Organizations are increasingly seeking ways to improve creativity and efficiency to gain and maintain a competitive advantage.
    • Creativity can be defined as the interaction of aptitude, process, and environment leading to a novel and useful product within a social context.

    Creativity

    • Individual Level: Associated with being artistic, generating new ideas, and solving problems.
    • Societal Level: Associated with inventions, social programs, and scientific discoveries.
    • Organizational Level: Is considered a function of creative outputs from individuals and contextual effects such as organizational culture, rewards, and resources.
    • A creative organization is one whose primary income source comes from generating novel and suitable ideas, processes, products, or services to address client problems or opportunities.

    Types of Organisational Structures

    • The Divisional Structure/ Decentralized Structure:

      • Can be organized in four ways: by geographic area, by product/service, by customer, or by process.
      • Advantages:
        • Clear accountability
        • Creates career development opportunities
        • Promotes delegation of authority
        • Leads to an internally competitive environment
        • Allows for strict control and attention to products and customers.
      • Disadvantages:
        • Duplication of functional activities
        • Can be costly
        • Requires skilled management
        • Internal competition between divisions can be dysfunctional
        • Can lead to limited sharing of resources and ideas

    • The Matrix Structure:

      • A complex structure with dual reporting. It depends on both horizontal and vertical flows of authority.
      • Often used in construction, healthcare, and research.
      • Advantages:
        • Clear project objectives
        • Easy to shut down a project
        • Facilitates the use of special personnel
        • Shared functional resources
      • Disadvantages:
        • Costly
        • Violates the unity of command principle
        • Creates dual lines of budget authority
        • Requires excellent vertical and horizontal communication
        • Creates shared authority and reporting
        • Creates dual sources of rewards and punishment

    The Marketing Mix (7 Ps)

    • Place: Where the product/service will be sold (e.g., distance learning, online learning, or classroom).

    • Distribution Strategy (Place): How the product reaches the final consumer:

      • Selective: Distributing a product or group of products in specific markets only.
      • Exclusive: A single retailer carries the product in a given market, and no other retailer carries competing brands.
      • Open/Intensive Distribution: Distributing the product line as widely as possible.
      • Direct Distribution: No intermediary.
      • Internet Marketing: Advertising, selling the actual product online.

    • Promotion: How customers find out about your brand, using methods such as:

      • Advertising, public relations, sponsorship, sales promotion, personal selling, direct mail, social media, and digital content.

    • People: Individuals involved in selling and supporting the service to the customer, including:

      • Advice and sales support
      • Customer service
      • Aftersales backup

    • Process: How the service is delivered to the customer, including:

      • Quality assurance and quality management techniques

    • Physical Evidence: Tangible proof of product presence and successful marketing, such as:

      • Packaging, paperwork (invoices, tickets, delivery notes), vehicle signage, internet/webpages, furnishings, brochures, uniforms, buildings, and awards.

    Production/Operations Plan

    • Is the foundation for managing business processes, scheduling events, programs, and responsibilities to achieve organizational goals and objectives.
    • Defined as any activity or group of activities that transforms inputs into outputs with added value for customers.
    • In manufacturing, the process starts with raw materials as inputs and transforms them into products ready for purchase.
    • Benefits of a Production Plan:
      • Determines the efficiency and profitability of service delivery.
      • Allows the company to assess its capacity to deliver promised offerings.
      • Enables managers to efficiently direct material flow, utilization of people and equipment, and response to customer requirements.

    Sources of Finance

    • Personal savings/bootstrapping: Using personal funds.
    • Family and friends: Borrowing from loved ones.
    • Banks: Obtaining loans from financial institutions.
    • Government-guaranteed loans: Loans backed by the government.
    • Offices of economic development: Financing provided by economic development organizations.
    • Finance companies: Loans from non-bank financial firms.
    • Venture capitalists: Investors who provide capital to startups or expanding companies.
    • Angels: Individuals who invest in new businesses.
    • Grants: Financial assistance awarded to individuals or organizations.

    Debt vs. Equity Financing

    • Debt Financing: Borrowing money (like loans) that must be repaid with interest.
      • Advantages:
        • Lender generally has no control over the business.
        • Interest payments are tax deductible.
        • Loan payments are predictable.
      • Disadvantages:
        • Requires future repayment, or the business could face consequences.
        • Loan repayment is a constant expense.
    • Equity Financing: Raising capital by selling company stock/shares to investors.
      • Sources:
        • Owners' savings
        • Shares offered to family, friends, or small investors
        • Venture capitalists or angel investors
    • Venture Capitalists: Investors who fund startups or companies seeking growth.

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    Description

    This quiz explores the essential stages of setting up a business, including planning, financing, and legal requirements. It also delves into the various levels of creativity, from individual to organizational, and how creativity can influence business success. Gain insights into improving creativity and efficiency in a competitive market.

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