ACCA - AB - Chapter 2

  1. Types of Organisational Structures (6)
    • Entrepreneurial
    • Functional/Departmental
    • Divisional/Product
    • Geographical
    • Matrix
    • Boundaryless
  2. Product vs Geographical Structure
    Product better for relatively complex products that require a high cost of capital equipment or skilled operations (i.e. car industry)
  3. Org Structure - Boundaryless - Types (3)
    • Hollow
    • Virtual
    • Modular
  4. Unstructured org that is not constrained by chain of command or formal departments - FOCUS ON FLEXIBILITY
  5. Mintzberg's Organisational Structure - Name Components + Describe (6)
    • Strategic Apex - Senior Mgmt/Board
    • Middle Line - Middle Mgmt
    • Operating Core - Workers directly involved in creating core product or service
    • Technostructure - Analysts who plan / control work of others (standardization procedures, etc.)
    • Support Staff - Admin support (accounting, etc.)
    • Ideology - org's beliefs &amp, values (culture)
  6. Minzberg's 6 Types of Org Layouts - and who dominates?
    • Simple Structure -- Strategic Apex
    • Machine Bureaucracy -- Technostructure
    • Professional Bureaucracy -- Operating Core
    • Divisionalised -- Middle Line
    • Adhocracy -- Support Staff / Operating Core
    • Missionary -- Ideology
  7. Factors that influence span of control (3)
    • Nature of Work -- more repetitive / simple = wider span
    • Type of Personnel - More skilled / motivated = wider span
    • Location of personnel - more local = wider span
  8. Advantages of Shared Services (3)
    • Improved quality of service
    • Improved consistency of service
    • Cost savings (efficiency, less duplication, economies of scale)
  9. Factors that affect amount of decentralization (4)
    • Mgmt Style
    • Ability of mgmt / employees
    • Geographic spread
    • Size of org / scale of activities
  10. Anthony Triangle - Levels of Strategy (3)
    • Strategic - Sr Managers, long term decisions (5 yr view)
    • Tactical - Middle Mgmt - plans for specific divisions/departments, how to use resources - 1 yr view
    • Operational - Junior managers + supervisors - short-term, detailed, practical"
  11. Levels of Strategy (3)
    • Corporate - Whole Org
    • Business - Particular Market
    • Operational - Specific to each department
  12. Marketing - Emphasis on Customer Needs (4)
    • Market Research - identifies &amp, anticipates needs
    • Product Design &amp, Development - Supplies customer needs
    • Distribution - efficiency
    • Profitability - pricing &amp, promotion - INFORMING CUSTOMERS!
  13. Potential Issues with Product Orientation (2)
    • Costs escalate in pursuit of perfect product - turns customers away
    • Product may have features that customers don't want or need (and won't pay for)
  14. Marketing Mix (4Ps)
    • Product
    • Place
    • Promotion
    • Price
  15. Product Definition - defining exactly what a product should be (3 layers)
    • Core/Generic
    • Actual
    • Augmented/extended
  16. Pricing Issues - Key considerations (4 Cs)
    • Cost - price must be high enough to make a profit
    • Customers - What are they willing to pay?
    • Competition - how does it compare to competitors?
    • Corporate Objectives - i.e. the price could be set low to gain market share
  17. AIDA
    Awareness, Interest, Desire, Action
  18. Promotional Mix (4)
    • Advertising - adverts on TV, newspapers
    • Sales Promotions - i.e. buy one get one
    • Personal Selling - door-to-door salesmen
    • Public Relations - i.e. sponsoring events
  19. Place (distribution) options (2)
    • Selling Direct - direct to consumer
    • Selling indirect - via wholesalers, distributors, retail shops
  20. Strategic Marketing Process - 3 pieces
    • Strategic Analysis of Firm
    • Strategic Choice
    • Strategy Implementation
  21. Strategic Analysis of Firm (4)
    • Analysis of brand strength, product quality, reputation
    • Analysis of competition
    • Market Research to determine market attractiveness
    • Analysis of customer expectations &amp, power
  22. Strategic Choice (3)
    • Which products to sell?
    • Segmenting potential markets (age, etc.) + targeting
    • Develop strategies for each market mix variable
  23. Strategy Implementation (3)
    • Setting budgets
    • Setting targets (sales revenue, market share, etc.)
    • Monitoring + Control
  24. Market Research Options (3)
    • Desk Research
    • Field Research
    • Test Marketing
  25. Market Segmentation (4)
    • Geographic
    • Demographic (age, sex, income)
    • Psychological - i.e. older people more security conscious
    • Socio-economic - class based systems
  26. Attractive Segments - target criteria (3)
    • Size of market
    • Growth prospects
    • Intensity of competition
  27. Approaches to Targeted Segment (3)
    • Differentiated
    • Undifferentiated
    • Concentrated
  28. Concerned with how work is divided and allocated - will often change over time as company grows
    Organisational structure
  29. Org Structure that is built around owner manager - usually small businesses / early stages
    Org Structure - Entrepreneurial
  30. Advantages of this org structure include fast decision making, responsive to market, goal congruence, good control, close bond with workforce
    Org Structure - Entrepreneurial
  31. Disadvantages of this org structure include lack of career structure (no ladder to move up), dependent on capabilities of owner, cannot cope with growth/diversification
    Org Structure - Entrepreneurial
  32. Org Structure that groups together employees that undertake similar tasks. It is most appropriate for small organisations with relatively few products/locations
    Org Structure - Functional/Departmental
  33. Advantages of this org structure include economies of scale, standardization, specialists feel comfortable, career opportunities (can move directly up ladder with additional experience)
    Org Structure - Functional/Departmental
  34. Disadvantages of this org structure include empire building, slow decision making, conflicts between functions, cannot easily cope with diversification
    Org Structure - Functional/Departmental
  35. Mangers of functions try to make decisions that increase their own power and are good for their function but not wider org
    Empire Building
  36. Org Structure that splits org into several divisions, each autonomously overseeing a product. Each division an SBU likely to have a functional structure run like profit centers
    Org Structure - Divisional/Product
  37. Advantages of this org structure include that it enables fast growth, there is clear responsibility, it allows for training general managers, it easily cope with further diversification, and top mgmt is free to focus on strategy
    Org Structure - Divisional/Product
  38. Disadvantages of this org structure include a potential loss of control, lack of goal congruence &, duplication. In addition, specialists may feel isolated and allocation of central costs can be problematic.
    Org Structure - Divisional/Product
  39. This org structure has a dual reporting structure with product/project/customer leads and functional leads. It combines the pros from the [Functional/Departmental] and [Divisional/Product] structures.
    Org Structure - Matrix
  40. Advantages of this org structure include flexibility, customer orientation, and teamwork. Disadvantages include dual command conflict, dilution of functional authority, time-consuming meetings, and high admin costs.
    Org Structure - Matrix
  41. Org type that splits functions into core (strategically important) and non-core. Non-core activities are outsourced to other organisations (think Apple - they do design, they outsource manufacturing, chip making, etc.)
    Hollow Organisation
  42. Org type that outsources most functions and exists as a network of contracts - Think internet retailers - products are bought from manufacturers, distributed through third parties (DHL) - even websites are created by third parties.
    Virtual Organisation
  43. Boundaryless manufacturing companies - Break manufacturing process into components. Each component can then be outsourced or made internally. The org then brings the components together for final product - think mobile phone companies that put the pieces together but buy the components from multiple suppliers (screen, chip, etc.)
    Modular Organisation
  44. Mitzberg Structure - Strategic Apex dominates, Entrepreneurial, Fast, flexible structure but struggles with growth
    Simple Structure
  45. Mitzberg Structure - Technostructure dominates, Work is very formalized with large numbers of rules / procedures where standardization is critically important
    Machine Bureaucracy
  46. Mitzberg Structure - Operating Core Dominates, Highly skilled members of staff (legal firm, medical), Decision making is decentralized making it very hard to control this sort of organisation
    Professional Bureaucracy
  47. Mitzberg Structure - Middle line dominates with a divisional structure. Middle line managers will have great deal of control over day to day and strategy for their division while strategic apex focuses on big-picture thinking
  48. Mitzberg Structure - Support Staff/Operating Core Dominates. FOCUS ON INNOVATION. Tend to have teams of experts from different fields (high-tech, pharma). Standardization is not encouraged.
  49. Mitzberg Structure - Ideology dominates. Behavior / norms become standardized
  50. Line of Authority from most senior manager to most junior - i.e. the line of command up / down org chart
    Scalar Chain
  51. Number of people reporting directly to manager
    Span of Control
  52. Type of Organisation Many levels of mgmt (long scaler chain) , Narrow span of control , High bureaucratic , Decisions take longer , Higher upward career mobility
    Tall / Narrow Organisation
  53. Type of Organisation Short scalar chain , Wide span of control , Weaker control , Fewer upward career options
    Wide / Flat Organisation
  54. Structure Upper levels of org's hierarchy retain authority to make decisions
    Centralized Structure
  55. Structure Authority to make decisions passed down to units and people at lower levels , Advantages include Sr mgmt free to focus on strategy, better local decisions, better motivation due to career mobility options, quicker responses/flexibility due to smaller chain of command, Disadvantages include Loss of control by sr mgmt, lack of goal congruence, training costs, duplication of roles.
    Decentralised Structure
  56. Anthony Triangle
    > Long term
    > Looks at whole organisation
    > Defines resource requirements
    > Board level
    Anthony Triangle - Strategic
  57. Anthony Triangle
    > Medium term
    > Looks at department / division level
    Defines how to use resources
    > Middle Level
    Anthony Triangle - Tactical
  58. Anthony Triangle
    > Short Term / Day to day
    > Very detailed
    > Junior Mgmt
    Anthony Triangle - Operational
  59. Process that identifies, anticipates, supplies customer needs efficiently and profitably (Key emphasis on customer needs)
  60. Philosophy that says focusing attention towards customer meeting the customers needs better than competition is the key to corporate success
    Marketing Orientation
  61. Philosophy that success is achieved through producing goods and services of optimum quality
    Product Orientation
  62. Using aggressive sales tactics to persuade people to buy
    Sales Orientation
  63. Marketing Mix
    Features, durability, design, brand name, packaging, service, warranties
    Marketing Mix - Product
  64. Marketing Mix
    Distribution channels, transportation, outlet mgmt, stocks/warehouses
    Marketing Mix - Place
  65. Marketing Mix
    Advertising, personal selling, publicity
    Marketing Mix - Promotion (distribution)
  66. Marketing Mix
    Price levels, discounts, allowances, payment terms, credit policy
    Marketing Mix - Price
  67. Marketing Mix
    Ability of the staff and the need to understand customer needs
    Marketing Mix - People
  68. Marketing Mix
    Systems through which the service is delivered
    Marketing Mix - Processes
  69. Marketing Mix
    Testimonials and references regarding proposed service
    Marketing Mix - Physical Evidence
  70. The set of controllable tactical marketing tools that the firm blends to produce the response it wants in the target market concerned with how to influence consumer demand
    Marketing Mix
  71. How does our product compare with the offerings of competitors? Is our product better? If so, why?
    Product Positioning
  72. Product Layer
    > What is the buyer really buying?
    > The base level need that is fulfilled (i.e. for a car, the need is personal transportation)
    Core/generic product
  73. Product Layer
    The tangible product or intangible service that serves as the medium for receiving the core product benefits (i.e. for a car would be the range of engine sizes, body shapes offered, etc.)
    Actual Product
  74. Product Layer
    Measures taken to help the consumer put the actual product to sustained use - installation, warranty, delivery/credit, after-sales service
    Augmented Product
  75. Pricing Tactic:
    Cost per unit calculated and mark-up added
    Cost Plus Pricing
  76. Pricing Tactic:
    Low price set to gain market share
    Penetration Pricing
  77. Pricing Tactic:
    High price set to reflect/create image of high quality
    Perceived Quality Pricing
  78. Pricing Tactic:
    Different prices set for same product in different markets (i.e. peak/off-peak rail fares)
    Price Discrimination
  79. Pricing Tactic:
    Prices set to match competitors
    Going Rate Pricing
  80. Pricing Tactic:
    High prices set for new product and later price is dropped once customers that are willing to spend more are gone
    Price Skimming
  81. Pricing Tactic:
    One product sold at loss with expectation that customers will then go and buy other more profitable products
    Loss Leaders
  82. Pricing Tactic:
    Customers must buy two products. First is cheap to attract customers but the second is expensive, once they are captive
    Captive Product Pricing
  83. Essentially about market communication. Primary aim is to encourage customers to buy products by moving them along the AIDA sequence
  84. Market Research
    Use of info that already exists - government stats (demographic data, etc.), trade association data, org's systems on sales trends, turnover
    Desk Research
  85. Market Research
    Asking people chosen at random their views on different products. Testing products on people (blind tests, etc.)
    Field Research
  86. Market Research
    Small, typical, stable population - marketing campaign before big campaign - allows for refinement of marketing mix.
    Test Marketing
  87. Anthony Triangle - Image
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  88. Mitzberg Org Structures - Image
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  89. Chapter 2 Summary - Image
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  90. Product Levels x3 - Image
    Image Upload 4
  91. Matrix Org - Image
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Card Set
ACCA - AB - Chapter 2
ACCA - AB - Chapter 2