Topics

16

Business Administration / Foundation goods

« on: April 19, 2017, 09:57:47 AM »

2. Foundation goods: Foundation goods are those which help the production process for the long time. It is the capital items. Their cost is depreciation expenses that are assigned to the production process as original cost. It includes-

a. Installation: It includes long term investment items which help the manufacturing process. Such as building, land, rights and fixed equipment (ex-generators, computers, elevators)

b. Accessory equipment: These products are generally less expensive and shorter lived capital items than installation and not considered as a part of fixed plant. Example; Portable or light equipment that means hand tools, lift trucks or office equipment such as type writer, desks.

17

Business Administration / Entering goods:

« on: April 19, 2017, 09:57:16 AM »

1. Entering goods: Entering goods are those which become a part of finished product. Their cost is an expense items that is assigned to the manufacturing process. This category of goods consists of raw materials and manufactured materials and parts.

a: Raw materials: they enter the production process of the buying organization basically in their natural state. It includes both farm products and natural products.
   
i. Farm products are wheat, cotton, livestock, fruits and vegetables.
ii. Natural product are fish, lumber, crude petroleum, iron etc.

18

Business Administration / five types of industrial demand.

« on: April 19, 2017, 09:56:58 AM »

There are five types of industrial demand. They are:                                                                                                                                                                                                                                                                       

1. Derived demand
2. Environmental forces influence demand
3. International competition
4. Stimulating demand.
5. Price sensitivity.

1. Derived demand: The demand of industrial products is derived from the ultimate demand of consumer demand that means the demand of industrial products is depends on the consumer demands. Industrial customers like commercial firms, governments, institutions purchase goods and services to produce other products and services which will be consumed by their potential customers. So here demand is derived from the ultimate consumers.






2. Environmental forces influence demand: In monitoring and forecasting demand, the industrial marketer must look after carefully some factors like; competitive, economic, political and legal environment that directly or indirectly influence the final demand. For an example Japan has competitive advantages over technology based production for that she produces technological product as it has demand.

3. International competition: Now-a-days an increasing number of industries are not domestic but world wide market share. As a result competition in industrial is increasing. So, the companies should target those markets whose needs can be satisfied and whose competitors can be handled.

4. Stimulating demand: In industrial marketing the industrial marketer should first observe the demand. Then he should stimulate the demand of the ultimate consumer.

5. Price Sensitivity: When the ultimate consumer will be price sensitive then the industrial producer also be sensitive to the price. As a result the industrial marketer should pay keep attention to the price and demand. 

19

Business Administration / National competitive advantages

« on: April 15, 2017, 09:17:28 AM »

National competitive advantages
1. Factors endowments: All the factors of production are available in the concern area is a competitive advantage to the company. It helps to balance cost & quality.
2. Local demand: The product having local demand is also a competitive advantage as it can be sold after production. 
3. Competitiveness of related or supporting industries: The support of the small and middle supporting industry is the major competitive advantage to business firm.
4. Congruence of strategy & structure & intensity of Rivalry: If the strategy, structure and competition are in tune with the business the firm will get maximum productivity.
5. Home trade is a prerequisite of foreign trade: The foreign trade is allowable if and only if the products get the permission to do business in the home country. For example- Wine is not allowed in our country, so the export of wine is out of question.

20

Business Administration / Implementation skills

« on: April 15, 2017, 09:16:54 AM »

Implementation skills
1. Diagnosis skill: The skill of a manager is to find out the main cause of the symptoms and problems of the business organizations.

2. Identification of the company level: Whether the problem occurs in the corporate, function or business level.

3. Implementation skill: The efficiency to bring the best productivity by monitoring and controlling the program.

4. Evaluation of skill: The evaluation of the performance of the specific SBU ensures the total and maximum productivity for the organization.

21

Business Administration / Four building blocks of competitive advantages-

« on: April 15, 2017, 09:16:18 AM »

Four building blocks of competitive advantages-
1. Efficiency: To determine how efficiently they are using organizational resources, managers must be able to measure accurately how many units of inputs (raw materials, human resources, and so on) are being used to produce a unit of output. They must also be able to measure the number of units of outputs (goods and services) they produce. 
2. Quality: Today, competition often revolves around increasing the quality of goods and services. In the car industry, for example, with each price range, car competes against one another in terms of their features, designs and reliability.
3. Innovation: strategic can help to raise the level of innovations in an organization. Successful innovation takes place when managers create an organizational setting in which employees feel empowered to be creative and authority is decentralized to employees so that they feel free to experiment and take risks.
4. Responsiveness to customers: Finally, strategic managers can help to make their organizations more responsive to customers if they develop a control system that allows them to evaluate how well employees with customer contact and performing their jobs. Monitoring employees’ behavior can help managers to find the ways to increase employees’ performance level, perhaps by revealing areas in which skills training can help employees or by finding new procedures that allow employees to perform their job better.

22

Business Administration / Steps of PEC:

« on: April 15, 2017, 09:15:14 AM »

Steps of PEC: the five stages in this evolutionary process, which the authors call the product evolutionary cycle (PEC) are as follows…

1. Divergence: it is the start of a new product type (eg. TV). This term is suggested because most often a product is not an entirely new concept but a modification or combination of existing products and technologies. It is a divergence from a line of product evolution. Thus TV may be considered an evolutionary divergence from the radio and the motion picture.

2. Development: it is the pattern that occurs where a new product’s sales increase rapidly and the product is increasingly adapted to suit consumer needs best.

3. Differentiation: it is the pattern that occurs when a highly successful product is differentiated to suit varying consumer interests.

4. Stabilization: it is a pattern characterized by few and minor changes in the product category, bur numerous changes in packaging, service deals, product accessories, and stable or fluctuating sales. For example black and white TV to Plasma TV.

5. Demise: it occurs when a product fails to meet consumer expectations or can no longer satisfy changes in consumer demand. Sales decline and the product is ultimately discontinued.

23

Business Administration / Slow Penetration:

« on: April 15, 2017, 09:14:28 AM »

Slow Penetration: Launching a new product at a low price and low promotional expenses. This strategy makes sense when the market is large and highly aware of the product, market is price sensitive and there is a chance of potential competitors.

24

Business Administration / Rapid Penetration:

« on: April 15, 2017, 09:14:03 AM »

Rapid Penetration: Launching the product at a low price and spending heavily on promotion. This strategy makes sense when the market is large, the market is unaware of the product, most buyers are price sensitive, competition is strong, unit manufacturing cost falls in company’s scale of production and company gains the benefit of experience.

25

Business Administration / Slow Skimming:

« on: April 15, 2017, 09:13:39 AM »

Slow Skimming: Launching a new product at a high price and low promotion. This strategy makes sense when the market is limited in size. Most of the market is aware of the product, willing to pay even at a high price and potential competition is not imminent.

26

Business Administration / Rapid Skimming

« on: April 15, 2017, 09:13:16 AM »

Rapid Skimming: Launching a new product at a high price and high promotion level. This strategy makes sense when a large part of the potential consumers are unaware about the product.

27

Business Administration / Benefits/managerial influence/implication of PIMS model.

« on: April 15, 2017, 09:11:51 AM »

Benefits/managerial influence/implication of PIMS model.

PIMS framework can be beneficial in the following ways.

1. Provides a realistic and consistent plan:  It provides a realistic and consistent method for establishing potential return levels for individual business.

2. Stimulates managerial thinking: It stimulates managerial thinking on the reasons for deviations from par performance.

3. Provides insights into strategic moves:  it provides insights into strategic moves that will improve the par return on investment.

4. Encourages a more discerning appraisal: it encourages a more discerning appraisal of business unit performance.

28

Business Administration / PIMS= Profit Impact of Market strategy

« on: April 15, 2017, 09:11:24 AM »

: PIMS= Profit Impact of Market strategy
The PIMS project analyzed the data they had gathered to identify the options, problems, resources and opportunities faced by each SBU. Based on the spread of each business across different industries, it was hoped that the data could be drawn upon to provide other business, in the same industry, with empirical evidence of which strategies lead to increased profitability.
There is a positive relationship between profitability and market share. The study reveals that return on invested capital is the highest for the firm with the largest market share.
The information deals with such items as—
1. The market condition: a description of the market conditions in which the business operates, including such things as the distribution channels used by the SBU, the number and size of its customers, and rates of market growth and inflation.
2. The business unit competitive position: the business unit’s competitive position in its marketplace, including market share, relative quality, prices and costs relative to the competition, and degree of vertical integration relative to the competition.
3. Annual measure: annual measure of the SSBU’s financial and operating performance over periods ranging from two to twelve years.
Overall result of the study: The original PIMS data survey led the PIMS project to identify 37 variables which account for the majority of business success. From the 37 factors 7 factors are very important. If minimum 7 factors it can work, they are;
a. Return on investment (ROI): The ratio of net pretax income to average investment. Operating income is what is available after deduction of allocated corporate overhead expenses but before deduction of any financial charges on assets employed. “Investment” equals plus long-term debt, or equivalently, total assets, employed minus current liabilities attributed to the business.
b. Market share: The ratio of dollar sales by a business, in a given time period, to total sales by all competitors in the same market. The “market” includes all of the products or services, customer types, and geographic areas that are directly related to the activities of the business. For example, it includes all products and services that are competitive with those sold by the business. 
c. Product quality: The quality of each participating company’s offerings, appraised in the following terms;
   What was the percentage of sales of products or services form each business in each year that was superior to those of competitors?
   What was the percentage of equivalent products?
   Inferior products?

d. Market expenditure: Total costs for sales force, advertising, sales promotion, marketing research, and marketing administration. The figures do not include costs of physical distribution.
e. Research & Development Expenditure: Total costs of product development and process improvement, including those costs incurred by corporate-level units that can be directly attributed to the individual business.
f. Investment intensity: Ratio to total investment to sales.
g. Corporate diversity: An index reflects;
   The number of different 4-digit Standard Industrial Classification industries in which a corporation operates.
   The percentage of total corporate employment in each industry, and
   The degree of similarity or difference among the industries in which it participates.

29

Business Administration / experience curve

« on: April 15, 2017, 09:09:23 AM »

experience curve
A conceptual framework that many large corporations have used successfully is
the experience curve (originally called the learning curve).
As it applies to manufacturing , the experience curve concept holds that unit production costs decline by some fixed percentage (commonly 20%-30%) each time the total accumulated volume of production (in units) doubles.
Graph that depicts the 'experience effect' (increases in productivity) as reflected in reduced average and marginal costs. Unlike the learning curve, an experience curve takes into account both fixed and variable costs

30

Business Administration / Strategic group

« on: April 15, 2017, 09:08:51 AM »

Strategic group
A strategic group is the group of firms in an industry following the same or similar strategy along the strategic dimensions. An industry could have only one strategic group if all the firms followed essentially the same strategy.
Strategic group forms by the following basis
a.   Target market
b.   Product