Post on 02-Jan-2017
CIMA E1 ORGANISATIONAL MANAGEMENT
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Aim of Paper
• This paper focuses on the structure and principles underlying the operational functions of the organisation, their efficient management and effective interaction in enabling the organisation to achieve its strategic objectives.
• It will prepare candidates for Paper E2, Project and Relationship Management, and Paper E3, Strategic Management.
• Paper E1 is mainly a discursive paper.
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Syllabus
Introduction to organisations 25%Managing the finance function 15%Managing technology and information 15%Operations management 15%Marketing 15%Managing human resources 15%
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Exam Format
E1 is tested in two exams:
90 minute computerised objective test exam Test comprises 60 questions of equal weighting. Each component learning outcome will be tested and the syllabus weightings will be reflected in the
exam. A range of question types will be used. The main types will be multiple choice, multiple response,
number entry, drag and drop, drop down and hot spot. Some questions might relate to a common scenario.
3 hour computerised operational level integrated case study 4 sittings per year Made up of a number of timed sections Consists of a pre-seen scenario and supporting resources such as emails, articles or meeting
minutes Each section will have one or more tasks for candidates to complete and will require a written
response
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1Session The Different Purposes of Organisations
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Overview Session One
The different purposes of organisations• What is an organisation?• Different types of organisation• Mission, vision and objectives• Creating value for stakeholders
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What is an organisation?
Organisations are social arrangements for the controlled performance of collective goals.
Organisations allow people to:Share skills and knowledgeSpecialisePool resourcesThis results in synergy.
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Different types of organisation
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Mission, vision and objectives
Mission is the most generalised type of objective and can be seen as an expression of the organisation’s reason for being.
Vision sets out how an organisation sees itself in the future.
Detailed objectives will help in the achievement of the mission. Objectives should be SMART:specificmeasurableachievablerelevant andtime-constrained.
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Creating value for stakeholders
Stakeholders are virtually everybody who has anything to do with an organisation.
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2Session Organisational Structure
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Overview Session Two
Organisational structure• What is organisational structure?• Mintzberg’s effective organisation• Types of structure• Structural dimensions• Organisational forms and boundaries
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What is organisational structure?
Organisational structure is concerned with the way in which the work is divided up and allocated. It outlines the roles and responsibilities of individuals and groups within the organisation.
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Mintzberg’s effective organisation
Mintzberg said that an organisation is made up of a number of distinct parts.
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Types of structure
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Structural dimensions
Factors influencing organisational structure:size strategyorganisational typetechnological change.
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Organisational forms and boundaries
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Organisational forms and boundaries
Outsourcing means contracting-out aspects of the work, previously done in-house, to specialist providers.It may not be wise to outsource aspects of the work in which the organisation has a core competency.
Offshoring is the relocation of corporate activities to a foreign country.
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Organisational forms and boundaries
A tall organisation has many levels of management (a long scalar chain and a narrow span of control).
A flat organisation has few levels of management (a short scalar chain and a wide span of control).
A shared service approach involves restructuring the provision of certain services within the organisation so that the service is centralised into one specific part of the organisation.
A strategic alliance is a co-operative business activity, formed by two or more separate organisations for strategic purposes, that allocates ownership, operational responsibilities, financial risks and rewards, to each member, while preserving their separate identity/ autonomy.
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3Session Governance, regulation, ethics and corporate social responsibility
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Overview Session Three
Governance, regulation, ethics and CSR• Stakeholders• Ethics• Corporate social responsibility and sustainable development• Corporate governance• The impact of regulation on the firm• Business/ government relations
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Stakeholders
A stakeholder is a group or individual, who has an interest in what the organisation does, or an expectation of the organisation. There are three categories of stakeholder:
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Ethics
Ethics is the system of moral principles that examines the concept of right and wrong.Business ethics is the application of ethical values to business behaviour.In order to achieve the objectives of the accountancy profession, CIMA qualified accountants have to observe five fundamental principles: 1 Integrity 2 Objectivity 3 Professional competence and due care 4 Confidentiality 5 Professional behaviour
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CSR and sustainable development
Sustainable development: aims to balance economic, environmental and social needs.
Corporate social responsibility: the company is sensitive to the needs of all stakeholders and not just shareholders. Benefits to the company include:
• Method of differentiation• Attract and retain quality staff• Brand strengthening• Lower costs• Identify new market opportunities and changing social expectations Increase in profitability as a result of the above
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Corporate governance
Corporate governance is the set of processes and policies by which a company is directed, administered and controlled. It includes the appropriate role of the board of directors and the auditors of the company.
The need for corporate governance arises because of the separation of ownership and control.
It helps the business to achieve its objectives in a way that is acceptable to ALL stakeholders.
Governance should lead to sustainable wealth creation.
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Corporate governance continued
Systems of corporate governance
UK principles-based approach: guidance on the role of the chairman and CEO, NEDs, remuneration , nomination and audit committees
US rules-based approach: the Sarbanes-Oxley Act requires auditor independence, an audit committee, an internal control report, increased financial disclosures and adherence to the US stock exchange regulations
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The impact of regulation on the firm
Regulation should be:
Effective – ensuring a safe and effective product/service is delivered, whilst not inhibiting the function of the business
Efficient– the total benefit to the nation should be greater than the total cost
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Regulation continued
Regulation in the UK
Regulation of the level of competition:1.Competition Act prohibits anti-competitive agreements or abuse of a dominant position2.Office of Fair Trading investigates businesses suspected of breeching Competition Act3.The Competition and Markets Authority deals with cases referred by the Office of Fair Trading
Regulation of people in business:1.To prevent insider trading2.To prevent trading if the company is insolvent
Regulation of externalities: i.e. costs or benefits of production experienced by society but not by producers or consumers themselves. Regulation using:1. max/ min prices2. taxes/ subsides3. fines and quotas
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Regulation continued
International regulation
The US Sarbanes-Oxley Act 2002: only impacts UK companies that are registered on the US stock exchange
Regulation of trade:1.Free trade supported by the World Trade Organisation2.Regional trading organisations, e.g. EU and NAFTA, allow free trade between specific countries
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Business/government relations
Two types of CPA:
Buffering – proactive political actions on behalf of firms, e.g. by employing lobbying
Bridging – a more reactive form of behaviour, e.g. tracking the development of new laws/regulations so that compliance is in place when the legislation is passed
Corporate political activity (CPA) refers to the involvement of firms in the political process, with the aim of securing particular policy preferences.
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4Session The Purpose of the Finance Function
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Overview Session Four
•Activities•Components•Conflict within the finance function
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Activities
Five key activities are fundamental to the role of the finance function:1.accounting operations2.analysis3.planning 4.decision making5.control
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Components
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Conflict within the finance function
Three key factors can result in conflict:1.interdependence versus independence2.short-term versus long-term3.capital versus revenue expenditure.
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5Session The Contemporary Transformation of the Finance Function
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Overview Session Five
• Changes in the finance function• Driving forces for change• Bureaucratic to market orientation• Outsourcing• Offshoring• Business process re-engineering (BPR)
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Changes in the finance function
Focus has changed from financial control and reporting to business support.
New role called the hybrid accountant.Accountants don’t necessarily work in a
separate accounting function.
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Driving forces for change
Management structureTechnologyCompetition.
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Bureaucratic to market orientation
Traditional function of finance staff
Modern function of finance staff
Transaction processing, i.e. number crunching.
Transformational role, i.e. contributing to strategy and business decisions and focusing on value adding activities such as outsourcing, offshoring and BPR.
Bureaucratic nature Market orientated, i.e. focused on meeting customer’s needs.
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Outsourcing
For most organisations, financial services are non-core and there are benefits from outsourcing these services.
Internal outsourcing (i.e. the formation of a shared service centre) may be carried out as the first step to full outsourcing.
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Outsourcing continued
Benefits of internal outsourcing Drawbacks of internal outsourcing
Headcount reductions Fall is staff morale
Reduction in cost of premises Cost of redundancies
Systems consolidation Lack of systems integration
Tax savings Major set up costs
Favourable labour rate Full outsourcing may be a better option
Improvements in quality
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Offshoring
Cost savings may be achieved through offshoring some aspects of the finance function.Alternatives to offshoring include:retention of the finance function in-house.near-shoring, i.e. moving tasks to a neighbouring country.
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Business process re-engineering (BPR)
BPR is the fundamental rethinking and radical redesign of business processes. The main stages of BPR are as follows:
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6Session The Purpose and Management of the Technology and Information Function
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Overview Session Six
• The relationship between data, IT and IS• Evaluating a new information system• Systems development• Systems implementation• System maintenance• IS implementation – avoiding user resistance and non-usage• IS outsourcing• Privacy and security• Ethics and IT/ IS• IT enabled transformation
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Information and information systems
Data consists of numbers, letters, symbols, raw facts, events and transactions which have been recorded but not yet processed into a form that is suitable for making decisions.
Information is data that has been processed in such a way that is has a meaning to the person who receives it, who may then use it to improve the quality of decision-making. Good information should be ‘ACCURATE’ (accurate, complete, cost-effective, understandable, relevant, accessible, timely and easy to use).
Information systems (IS) refers to the provision and management of information to support the running of an organisation.
Information technology (IT) is the supporting equipment (hardware) that provides the infrastructure to run the information systems.
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Evaluating a new information system
Costs of a new system
Benefits of a new system
Initial costs:• design and development costs or purchase costs• testing and implementation• trainingRunning costs:• labour time• cost of material, e.g. replacement parts• cost of service support
• Enhanced efficiency and capacity• More ‘accurate’ information• Better access to information• Better sharing of information• Improved communication• Better decision making and customer service
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Systems development
Systems development follows a cycle called the systems development life cycle (SDLC):
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Systems implementation
Four methods of system changeover
Direct: appropriate when there is confidence in the new system or it is not a critical business system
Parallel: appropriate when the system has not been used elsewhere or it is a critical business system
Pilot: appropriate when the system can be operated in different geographical regions
Phased: appropriate when the system can be implemented in distinct parts
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Systems implementation continued
Advantages Disadvantages
Direct QuickCheap
High risk
Parallel Low riskOutput can be verified
ExpensiveSlowUsers rely on old system
Pilot Less risk than directLess costly than parallel
Slower than directRiskier than parallel
Phased Staff have time to adjustLess risky than direct
Slower than directLinks between parts of the system make it difficult
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System maintenance
Three methods of system maintenance
Corrective: the correction of technical difficulties, e.g. due to virus infection, hardware failure
Adaptive: changes to the system are made to reflect the changing needs of the organisation
Perfective (preventative): upgrades the hardware and software to maximise speed and functionality of the system
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IS implementation – avoiding user resistance and non-usageReasons for project failure:Insufficient user involvementLack of management supportProject too complexPoor planningUnrealistic deadlinesPoor monitoring and controlIT staff don’t have the necessary management skills
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IS implementation – avoiding user resistance and non-usage continuedKotter, Schlesinger and Sache identified six methods of
dealing with resistance:Education and communicationParticipationFacilitation and supportNegotiationManipulation and co-optationPower/ coercion
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IS outsourcing
IS outsourcing involves purchasing from outside the organisation the IS services required to perform business functions.
A service level agreement (SLA) setting out the terms and conditions of the outsourcing arrangement, should be drawn up between the client and the supplier.
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Privacy and security
General controls Application controlsPersonnel controls Completeness checksAccess controls Validity checksComputer equipment controls
Identification and authorisation checks
Business continuity planning
Problem management facilities
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Privacy and security continued
Potential threat Possible solutionNatural disasters Fire proceduresMalfunction Back-up proceduresViruses Virus softwareHackers Firewall softwareElectronic eavesdropping
Data encryption
Human errors TrainingHR risk Ergonomic design of
workstation
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Ethics and IT/ IS
Ethical issues connected with IT/IS
Data protection, e.g. of customer information
Incorrect systems use, e.g.
downloading improper materials
or violating copyright laws
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IT enabled transformation
IT enabled transformation
Virtual companies:1.Operate with little physical presence 2.IT has allowed people to collaborate without meeting face to face3.Outsource most/ all functions
Virtual teams within organisations:1.A team of people not present in the same office or organisation2.Work independently but are guided by a common purpose3.IT allows information to be sent/ shared remotely and for virtual meetings to be held
HomeworkingIT developments have enabled employees to work at home rather than being based in an office. Hot desking has also become common
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IT enabled transformation continued
Benefits of virtual companies
Drawbacks of virtual companies
• Can exploit opportunities• Look bigger than they are• Flexibility• Lower costs
• Difficult to negotiate revenue sharing agreement• Loss of control may result in a fall in quality• Loss of competitive advantage if outsourcing company work for competition
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IT enabled transformation continued
Challenges of virtual teams
Potential solution to these challenges
1. Forming a team can be difficult
2. Knowledge sharing
4. Difficult to establish processes/ goals
5. Cultural differences
5. Leadership6. Morale
1. Spending time getting to know each other, e.g. team identity, jokes
2. Regular and predictable communication patterns
3. Training in technology and teamwork plus clear roles and responsibilities
4. Detailed, timely feedback between the leader and the team members
5. Pay attention to cultural differences6. Choose independent and self-reliant people
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7Session Emerging IS Trends and their Role in Supporting Organisational Strategy and Operations
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Overview Session Seven
• E-business• Managing knowledge• Customer relationship management (CRM) systems• Wireless and hand-held technology• Cloud computing• Social media• Big Data
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E-business
E-business is the transformation of key business processes through the use of internet technologies.Categories of e-business:business to business (B2B)business to consumer (B2B)consumer to business (C2B)consumer to consumer (C2C)
E-commerce is trading on the internet.
Digital goods are any goods that are stored, delivered and used in an electronic format, e.g. e-books and music downloads.
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Managing knowledge
Businesses need to gather, organise, share and analyse their knowledge. Knowledge resides in human capital and structural capital.
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CRM systems
CRM systems help the organisation to know their customers better and to use that knowledge to serve customers better.
Benefits of CRM Criticisms of CRM
Improved co-ordination and integration of systems
Software purchase and associated costs
Improved customer relations Cost of staff training and disruption
Improved control and management Opportunity costs
Improved motivation Adjustment of business processes to fit software
A source of competitive advantage Cost of getting staff buy-in
Cost effective
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Wireless and hand-held technology
There has been huge growth in the ownership of i-pads, android tablets and other hand-held computing technologies.
Firms have:made websites tablet friendlydeveloped appsused tablets to access key information.
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Cloud computing
Cloud computing means storing and accessing data and programs over the internet instead of on a computer’s hard drive.
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Social media
Includes a range of sites that provide different social actions, such as Twitter, Facebook, LinkedIn and Instagram.Opportunities include:advertisingbrand developmentmethod of listening to customerscommunicationrecruitment and selection.
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Big Data
Big Data refers to large volumes of data beyond normal processing, storage and analysis capacity of typical database tools.
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Big Data continued
Big Data Management is the storage, administration and control of vast quantities of structured and unstructured data.Big Data Analysis is the process of scrutinising Big Data to identify patterns, correlations, relationships and other insights. Hadoop is an open source programming framework which enables the processing of large data sets by utilising multiple servers simultaneously.
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Big Data continued
Benefits of Big Data Risks associated with Big data
Drives innovation Skills to use systems may not exist
Improved customer service Security of data
Storage of transactional data in a digital format
Data protection issues
Use to develop the next generation of products or services
Integration difficulties
Access to external information Processing may not add value
Can create new revenue streams Change of perspective required
Source of competitive advantage
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8Session The Purpose of the Operations Function
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Overview Session Eight
• Definitions• The four V’s of operations• Porter’s value chain• Sourcing strategies• Purchasing vs supply• Reck and Long’s strategic positioning tool• Cousin’s strategic supply wheel• Relationships with suppliers• Process design• Sustainability in operations management• CSR and operations management
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Definitions
Operations involves the transformation of inputs into outputs in order to add value.
Operations management refers to the activities required to produce and deliver a product or service. It includes purchasing, warehousing and transportation.
Operations strategy – an organisation can achieve significant competitive advantage over its rivals through superior operating capabilities of its resources, e.g. assets, workforce skills, supplier relationships.
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The four V’s of operations
Operations may vary according to: volume variety variation visibility
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Porter’s Value Chain
Porter developed his value chain to determine whether and how a firm’s activities contribute towards its competitive advantage. Margin, i.e. profit will be achieved if the customer is willing to pay more for a product/ service than the sum of the costs of all of the activities in the value chain.The approach involves breaking the firm down into five ‘primary’ and four ‘support’ activities and then looking at each to see if they give a cost advantage or a quality advantage.
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Porter’s Value Chain continued
Inbound Logistics Operations ServiceMarketing
and SalesOutboundLogistics
Procurement
Technology
Human Resource Management
Infrastructure
Margin
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Sourcing strategies
Strategy ExplanationSingle sourcing
The organisation chooses one source of supply
Multiple sourcing
The organisation chooses several sources of supply
Delegated sourcing
The organisation chooses one supplier and this supplier co-ordinates and works with other suppliers to ensure the supply requirements are fulfilled
Parallel sourcing
The organisation uses a mix of the three approaches
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Purchasing vs supply
Purchasing Supply• Concentrates on the day to day buying of goods• Emphasis in on price, quality and accurate delivery of goods• May be viewed as an out of date approach to supply chain management
A more modern approach dealing with issues beyond the day to day, for example:• planning and implementation of a supply strategy• managing the overall supply process• considering the appropriateness of outsourcing arrangements• investigating whether strategic partnerships could be developed• the number of suppliers to use
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Reck and Long’s Strategic Positioning Tool
Passive
Independent
Supportive
Integrative
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Cousins’ Strategic Supply Wheel
Structure
Competences Cost/benefit
Performancemeasures Relationships
Strategy
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Relationships with suppliers
Past approach – competitive (opportunistic) relationships, e.g. using tendering to minimise the cost of purchases.
Modern approach – collaborative approach aiming to work with the supplier and to use their knowledge and skills to reduce costs and improve quality.
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Process design
Processes may be improved using methods such as:
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Sustainability in operations management
Sustainable development is about meeting the needs of the present without compromising the ability of future generations to meet their own needs.
Sustainability impacts operations management in a number of ways:Process design, e.g. designed to minimise waste Product design, e.g. use of recycled inputsSupply chain management, e.g. choose suppliers that adopt sustainable
development policiesQuality management should help to improve efficiency and reduce waste
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CSR and operations management
Organisations need to be aware of how effective supply chain ethics can help them to avoid costly product recalls and brand damage that results from an unethical supply chain decision.
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9Session Tools and Techniques of Operations Management
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Overview Session Nine
• Managing operational capacity• Forecasting demand• Inventory management systems• Process technology• Layout and flow• Work study• What is quality?• Quality related costs• TQM• Quality control• Lean management• JIT• Reverse logistics
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Managing operational capacity
Capacity planning – aims to balance customer demand with production. Three possible approaches: level capacity planning chase demand planning demand management planning
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Forecasting demand
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Inventory management systems
Methods of managing inventory
Continuous inventory system: each addition and withdrawal is recorded and an automatic order is placed when inventory falls to a pre-determined level
Periodic inventory system: inventory is checked on a regular basis and a variable order is placed depending on usage during the period
ABC system: managers focus their attention on inventory items of high value and there is little management control of inventory items that are least used
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Process technology
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Layout and flow
Layout and flow is a big design consideration in operations management.
A fixed position layout involves the movement of employees and machines to the product which remains stationary. Used when the product is large or bulky and the cost of moving it would be too high.
With cellular manufacturing, work units are arranged in a sequence that supports a smooth flow of materials and components through the production processes with minimal transport or delay.
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Work study
The theorist, Taylor, was one of the first people to study the work process scientifically.
By organising work in the most efficient way, the organisation’s productivity will be increased and this will enable the organisation to reward its employees with the remuneration they desire.
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What is quality?
Quality is difficult to define. However, the need to satisfy customer’s needs is critical in most definitions of quality.
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Quality related costs
Four types of quality cost
Prevention: cost of preventing defects before they occur
Appraisal: cost of quality inspection and testing
Internal failure: costs arising from a failure to meet quality standards. Occurs before product has reached the customers
External failure: costs arising from a failure to meet quality standards. Occurs after product has reached the customers
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TQM
Fundamental features:Prevention of errors before they occurContinual improvementReal participation by allCommitment of senior management
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TQM continued
TQM techniques:Quality circlesKaizen5-S practiceSix sigma
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TQM continued
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Quality control
Quality control (QC) involves a number of routine steps which measure and control the quality of the product/service as it is developed.
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Lean management
A philosophy that aims to eliminate waste, i.e. InventoryWaitingDefective unitsEffortTransportationOver-processingOver-production
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Lean management continued
Characteristics Criticisms• Improved production scheduling• Small batch or continuous production• Continuous improvement• Zero inventory• Zero waiting time
• High initial outlay• Requires a change in culture• Part adoption• Cost may exceed benefit
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Lean management continued
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JIT
Requirements for the successful operation of a JIT system include:Flexible productionThe speed of throughout should match demandElimination of non-value added activitiesHigher quality and reliabilityLower costs
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Reverse logistics
Reverse logistics is the return of unwanted or surplus goods, materials or equipment back to the organisation for reuse, recycling or disposal. It is important for an organisation to understand the reasons for returns and to take action to reduce the volume of returns.
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10Session Introduction to Marketing
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Overview Session Ten
• Approaches to selling a product• Understanding the marketing environment• Consumer behaviour• Factors affecting buying decision• Types of buyer behaviour
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Approaches to selling a product
Four possible approaches to selling a product
Sales orientation: uses aggressive promotional policies to entice the customer
Production orientation: focus is on high volume production to achieve a low unit cost
Product orientation: focus is on continual improvement of products assuming customers simply want the best quality for their money
Marketing orientation: starts by understanding the customers’ needs and then produces products with benefits and features to fulfil these needs. The best approach.
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Understanding the marketing environment
The following technique can be used to analyse the macro environment:• Political• Economic• Social• Technical• Ecological• LegalEach of these factors can be applied to the marketing function.
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Consumer behaviour
Need Recognition
Information Search
Evaluating Alternatives
Decision to purchase
Post Purchase Evaluation
Consumers go through a five stage decision-making process in any purchase:
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Theories of consumer behaviour
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Factors affecting buying decision
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Types of buyer behaviour
Fast moving consumer goods are relatively cheap, habitual purchases, e.g. bread.
Durable goods are relatively expensive, irregular purchases, e.g. a car.
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11Session The Market Planning Process and the Marketing Mix
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Overview Session Eleven
• The market planning process• Market segmentation• Targeting• Positioning• Market research• The marketing mix• Product• Pricing • Promotion• Place• Branding• Big data
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The market planning process
Situation analysis
Review mission/objectives
Set marketing objectives
Devise a marketing strategy
Plan the marketing mix
Implementation and review
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Market segmentation
Market segmentation is the sub-dividing of the market into homogenous groups to whom a separate marketing mix can be focused.
Kotler suggested that segments should be:MeasurableAccessible Substantial
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Market segmentation continued
Bases for segmentation
Demographic: • age• sex• geographical area (geo-demographic)•family life cycle
Socio-economic:• occupation• income
Psychological:• lifestyle• attitudes• values
Situational (behavioural):•occasion of use•frequency of purchase•customer loyalty
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Targeting
Targeting is the process of selecting the most lucrative market segment(s) for marketing the product.
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Positioning
Positioning involves the formulation of a definitive marketing strategy around which a product would be marketed to a target audience. Porter identified a number of potential strategies: Concentrated marketing: specialises in one or two of the identified markets only Differentiated marketing: the company makes several products each aimed at a separate market Undifferentiated marketing: the delivery of a single product to the entire market
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Market research
Market research is the way in which organisations find out what their customers and potential customers need, want and care about.
Data gathering techniques
Primary research: collected for the specific purpose of the research in question, e.g. focus groups, observation, interviews, experimentation
Secondary research: data that is already available, e.g. market research agency data, Companies’ Annual Reports and Accounts, trade and technical journals
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The marketing mix
The traditional marketing mix (4Ps):Product: Factors such as quality, design, range, packaging, branding
and warrantiesPlace: Where to sell the products, distribution channels, stock levels
and warehouse locationsPromotion: Techniques such as advertising, personal selling, public
relations, sales promotion and direct marketingPrice: level, discounts, credit policy and payment methods
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The marketing mix continued
Additional 3Ps for the service industry:People: relates to both staff and customersProcesses: systems through which the service is
deliveredPhysical evidence: makes the intangible service
more tangible
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Product
Terms• Product item: the individual product• Product line: a collection of product items that are closely related• Product mix: total product lines. Consists of:
-width: the number of product lines-depth: the number of product items within each product line
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Product continued
Maturity DeclineGrowthIntro
Time
Sales
The product life-cycle
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Product continued
The Boston Consulting Group (BCG) matrix is used by managers to identify the cash flow requirements of different products and to help to decide whether a change in the mix of products is required.
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Pricing
Pricing is influenced by the 3Cs, i.e. cost, customers and competitors.Two forms of pricing for a new product are:skim pricingpenetration pricing.
Other pricing options include:follow the leader pricingcharging a high price if the company is the sole producer loss leader pricing low prices to crush competitors.variable pricingconsideration of the product portfolio
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Promotion
The promotion mix comprises the blend of methods that a company uses to promote its products to existing and potential customers.
Methods include:AdvertisingPersonal sellingPublic relationsSales promotionDirect marketing, e.g. direct mail/ telemarketingE-marketing
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Promotion continued
Some relatively new forms of marketing include:ViralGuerrillaExperientialDigitalSocial mediaPostmodern
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Promotion continued
Three classes of marketing
communication
Personal and direct: one way communication with the customer, e.g. by letter
Personal and interactive: a one to one dialogue between the salesperson and customer
Mass media: non personal and aimed at the whole market
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Place
Distribution involves getting the right products to the right people at the right time.Three forms:Zero levelOne levelTwo levelOne and two level distribution involve:Pull strategies – advertising creates consumer demand forcing retailers to stock the
productPush strategies – retailers are offered high margins and therefore stock the product
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Branding
A brand is a name, symbol, term, mark or design that enables customers to identify and distinguish the products of one supplier from those offered by competitors.
Brand equity is the premium that customers are willing to pay for a brand compared to a similar, generic product.
Characteristics of a strong brand Determinants of brand value• Consistency• A distinctive name• Distinctive product features
• High loyalty• Name awareness• Strong personality associations• Perceived quality• Other attributes, e.g. patents
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Branding continued
Benefits of effective brand management include:improved profitabilityvaluable assethigher prices can be chargedmethod of differentiationway of connecting with customersassists with other marketing practicescustomer loyalty.
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Big Data
In the digital age, companies gather information about their customers from a huge range of sources. Sophisticated analysis using Big Data technologies allows some companies to more accurately predict demand.
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12Session Further aspects of marketing
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Overview Session Twelve
• Differences between B2B and B2C• Internal marketing• Marketing sustainability and ethics• Social marketing and corporate social responsibility• Marketing in a not for profit context
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Differences between B2B and B2C
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Internal marketing
Internal marketing is the means of applying the philosophy and practices of marketing to the people who serve the external customers so that:
the best people can be employed and retainedthe employees will do the best possible work.
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Marketing sustainability and ethics
Typical issues surrounding ethics and marketing include:marketing’s responsibility for customers’ privacy and securitymarketing’s responsibility to vulnerable peoplemarketing’s responsibility to employeesmarketing’s responsibility for preserving competitiveness in the marketresponsible communication.
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Social marketing and corporate social responsibility
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Marketing in a not for profit context
Charities employing the most appropriate marketing practices are most likely to lever the generosity of peoples’ time and money.
Within the UK, political reforms have pushed the public sector into a more commercial and managerial style meaning some managers need to make marketing decisions.
NGOs use marketing to:find a position for themselves in the marketdistinguish client and donor needsformulate and communicate NGO requirementsgain new supporters.
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13Session An Introduction to Human Resource Management
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Overview Session Thirteen
• Definitions• Human resource planning• HR in different organisations• The HR cycle• Recruitment• Selection• Induction
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Definitions
Human resource management (HRM) can be viewed as a strategic approach to acquiring, developing, managing and motivating an organisation’s key resource. This should help the organisation achieve its stated objectives through the best use of its employees.
Hard HRM treats employees simply as a resource of the business (like machinery and buildings). There is little staff empowerment and pay is just enough to recruit and retain sufficient staff.
Soft HRM treats employees as the most important resource in the business and as a source of competitive advantage. Employees are empowered and receive a competitive pay structure (including performance-related pay).
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Human Resource Planning
Stage 1: Strategic analysis
Stage 2: Internal analysis
Stage 3: Identify gap between
supply and demand
Stage 4: Put plans in place toclose the gap
Stage 5: Review
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HR in different organisations
HR practices vary depending on organisational:sizecultureavailability of specialist HR staff.
New forms of organisation have resulted in changing HR needs, for example:project-based teamsvirtual organisations.
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The HR cycle
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Recruitment
Recruitment involves attracting a pool of suitable candidates for the job.
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Recruitment continued
Competency frameworks attempt to identify all the competencies that are required by anyone taking on a particular role within the organisation.A person specification is developed as part of the recruitment process. It defines the personal characteristics, qualifications and experience required by the job holder in order to do the job well. It therefore becomes the specification for the attributes sought in a successful candidate for the job, a blueprint for the perfect person to fill the role.Rodgers recommended that the following categories should be covered in a person specification:Background/ circumstancesAttainmentsDispositionPhysical make-upInterestsGeneral intelligenceSpecial attributes
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Selection
Selection is aimed at choosing the best person for the job from the field of candidates sourced using recruitment.
The selection method must be:• Reliable• Valid• Fair• Cost effective
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Selection continued
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Induction
The purpose of an induction is to ensure the most effective integration of staff into the organisation, for the benefit of both parties.
Benefits include:• Quick assimilation of employees into the organisation• The process reassures employees which increases motivation/ performance• Increased employee commitment• Reduces staff turnover
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14Session Appraisal, Training, Development, Motivation and Retention
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Overview Session Fourteen
• Appraisals• Training and development• Reward systems• Workforce flexibility• Knowledge workers• Employee involvement• Psychological contracts
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Appraisals
Appraisal is the systematic review and assessment of an employee’s performance, potential and training needs. It will involve the following steps:
Identifying the criteria for assessmentPreparation of appraisal report by managerAppraisal interview between job holder and managerAgreement of future objectives and solutions to problemsManager’s supervisor reviews the assessment for fairnessFollow up
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Appraisals continued
Lockett’s barriers to effective appraisalConfrontationJudgementChatBureaucracyAnnual eventUnfinished business
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Training and development
Training: formal learning to achieve the level of skills, knowledge and competence to carry out the current role
Development: the realisation of a person’s potential through formal and informal learning to enable them to carry out their current and future role
Honey and Mumford suggested that there are four different learning styles:• Activists• Reflectors• Theorists• Pragmatists
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Training and development continued
Concrete Experience
ReflectionTesting Ideas
Concept Creation
Kolb’s experiential learning cycle:
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Reward systems
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Reward systems continued
There are four main types of incentive scheme:• Profit-related pay• Piece rates• Performance-related pay• Non-financial rewards
A total reward package draws together all the financial and non-financial benefits available to employees.
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Training and development continued
The stages in the training and development process:
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Workforce flexibility
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Knowledge workers
Knowledge workers are people who create knowledge and produce new products and services for the organisation to sell.
For example:• Research staff• Chemists• Architects
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Employee involvement
Employees should be given the opportunity to contribute to the organisation. High performance work arrangements rely on all employees for their ideas, intelligence and commitment to make the organisation successful.
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Handy’s psychological contracts
Psychological contracts exist between the employee and the employer.
They can exert strong influence on behaviour because it captures what employees really believe they will get in return for what they give.
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15Session Employment practices, HR roles and ethics
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Overview Session Twelve
• Employee practices• HR roles• Ethics
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Dismissal
Dismissal is the termination of a person’s employment with or without notice from the employer.Considerations when analysing if dismissal is fair:conduct of the employeecapability of the employeebreach of statutory dutyredundancyother suitable reasons, e.g. dishonesty.
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Redundancy
True redundancy arises when the role the employee performs is no longer required. Alternatives to redundancy include:recruitment freezenatural wastageretraining staff to fill vacancies elsewherejob sharingpart time work/ reduced hoursretirementvoluntary redundancy.
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Role of line managers and HR professionals
The role of the line manager and HR department is different, e.g. the line manager may take a more operational approach where as the HR department takes a strategic, longer term view.
Organising the HR function:centraliseddecentralisedshared servicesoutsourced HR
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Ethics
Ethics is a set of moral principles to guide behaviour. How to deal with ethical dilemmas at work:obtain further informationfollow internal proceduresconsult with line managers/ higher levels of management or the audit committee as appropriateseek advice from professional instituteconsider withdrawing from situation/ engagement.