Marketing Marketing is based on the importance of customersto a business and has two important principles: 1. All company policies and activities should be directed toward satisfying customer needs. 2. Profitable sales volume is more important than maximum sales volume.
. . . to best use these principles, a small business should: • Determine the needs of their customers through market research • Analyse their competitive advantages to develop market strategy • Select specific markets bytarget marketing • Determine how to satisfy customer needs by identifying a market mix (price, place, product, promotion)
Market research • Successful marketing requires timely and relevant market information. research program (questionnaires)uncover dissatisfaction or possible new products or services • Market research will also identify trends that affect sales and profitability. Population shifts, legal developments, and the local economic situation should be monitored to quickly identify problems and opportunities. It is also important to keep up with competitors' market strategies.
BCGmatrix % 25 „Stars“ „Question marks“ high Market growth 10 low „Dairycows“ „Troubled products“ -5 10 1 low 0,1 high Relative market share
BCGmatrix C - costs B - benefits „Stars“ „Question marks“ B C C Market growth (%) B 0 2 4 6 8 10 12 14 16 18 20 „Dairycows“ „Troubled products“ B C C B 10 x 1 x 0,1 x Relative market share
GE matrix investment, growth selective access, earnings „run dry“, leave 5 high 3,67 Attractive market medium 2,33 low 1 medium weak strong 5 3,67 2,33 1 Competitive position
X • disadvantages of portfolio analyses: • too much attention is devoted to market growth, • the results are sensitive to rating and weigh, • often is Ø valuation of partial characteristics levels, • there is not respect the synergy among two and more business branches.
… identification of occasions to firm growth Amount of sales (mil. CZK) diversify growth integrating growth intensive growth starting position time (years)
intensive growth = development of current business branches by own sources integrating growth = development of current business branches thanks to integration with other market subjects diversify growth = implementation and development of new business branches (diversification concentrated, horizontal, conglomerate)
Managing the Marketing Mix – 4 „P“ Every marketing program contains four key components: • Products and Services - product strategies may include concentrating on a narrow product line, developing a highly specialized product or service, or providing a product-service package containing unusually high-quality service.
Managing the Marketing Mix – 4 „P“ • Promotion- Promotion strategies include advertising and direct customer interaction. Good salesmanship is essential for small businesses because of they have limited ability to spend on advertising.
Managing the Marketing Mix – 4 „P“ • Distribution(Place) - The manufacturer and wholesaler must decide how to distribute their products. Working through established distributors or manufacturers' agents generally is easiest for small manufacturers.
Managing the Marketing Mix – 4 „P“ • Price- The right price is crucial for maximizing total revenue. Generally, higher prices mean lower volume and vice-versa; however, small businesses can often command higher prices because of their personalized service.
What does organizing mean? Deciding, whowill do each of the tasks that must be performed, and whowill be responsible for seeing, that tasks get done properly.
Aim of organization - OSCAR O = Objectives – identifying of goals of individuals, parts of firms, S = Specialization – advantages of division of labour, C = Coordination – adjusting of activities of people and necessary resources, A = Authority – rules, discipline and realisation of partial processes, R = Responsibility – connected with authority.
Organizational structure of enterprise The aim of organisation is to define and effectively use planed activities of people to achieve objectives and other needs of the company. Form of coordinating of activities to achieve objectives of organisation is organizational structure.
Organization chart = diagram that shows how work is divided and where authority lies.
Basic organization structures • 1) Formal structures – are specified by organisation systems and charts: • a) Departmentional organisation – defines the way of • firm structure, • b) Process organisation – characterize configuration of working processes (process = systematic connection of activities) in organisation. • 2) Informal structure – spontaneous existence in the group of people with shared interest, friendship, sympathy, unofficial channels of communication and contacts.
Departmentalization:what it is and why it´s necessary • Department – group or section of people working together in a specific area. • Departmentalization – process of establishing departments.
Departmentalization = subdivision of work activities into unitswithin the organisation: • Product departmentalization • Geographic departmentalization • Customer departmentalization • Process departmentalization • Functional departmentalization
Building the organizational structure • Hierarchy of objectives: • Depends on the size and complexity of the firm. • Broader goals of profitability, sales, market share,services are broken down into objectives of: • Division • Factory • Department • Work group (team) • Individual worker
Authority and responsibility • Delegation – act of assigning of a manger´s activities to subordinates. • Authority – power to act and make decisions in carrying out assignments. • Responsibility – obligation of a subordinate to perform assigned duties.
Organizational structures: • 1. „unit“ (or departmentional) structures • 2. processional structures
1. Organization structures according to the coordination of activities • functional structures • product (divisional) structures • others (customer, service, technology)
1a. Functional structures They are based on functional specialization of departments. In one department there are cumulated the same function activities (department of research, production, finance, accounting, controlling).
1a. Functional structures Advantages: • effectiveness of joint work and specialisation of experts, • short communication channels, • flexibility with problems solutions. Disadvantages: • competence conflicts between main departments, • dangerous of different directives and instructions, • problems with responsibility.
1b. Product structures Based on product specialization. In each structure unit there are cumulated the same or similar products, services or technological activities. They are often in division units → divisional structure.
1b. Product structures Advantages: • complex management (coordination of pre-production, production and after production stages), • development of internal business activities, • fast reaction on changes in the market. Disadvantages: • danger of non-coordinated competition for sources and markets, • tendency of diversion from business strategy of the company, • demanding for top management, • difficulties with integration of information and control systems.
1c. Other structures • Coordination according to : • customers departmentation, • territorial or geographical grouping, • grouping by services.
2. Structures by authority and responsibility: • line structures • staff structures • mixed structures: • Line-staff structures • Goal oriented structures (matrix structures)
2a. Line structure It is the organisation structure based on a direct flow of authority from the chief executive to subordinates. It is the oldest and simplest form of organisational structure. Decision can be made quickly, because manager can act without consulting anyone.
2a. Line structure Advantages: • decreasing of competence conflicts, • clear relationships between subordinated and higher department, • transparency of the whole system, • better possibility of control. Disadvantages: • danger of working overloading of top managers, • long communication channels between managers, • non-flexibility of organisation, slow reaction on changes.
2b. Staff structures Staff organisation supplements the line organization by providing advice and specialized services. Staff structure cannot exist separately, but only in combination with other organization structure!!!
2c1. Line-and-staff structure It combines the direct flow of authority (present in the line organization) with staff departments that serve, advise and support the line departments. It has a clear chain of command from the top downward, but it also includes various auxiliary groupings of people who come under the heading of staff.
2c1. Line-and-staff structure Advantages: • unloading for lines, • better quality of decision, • wide use, • staff function are good help for performance of the line function. Disadvantages: • conflicts of competence between the lines and staffs, • dangerous of isolation of staff places, • dangerous of uncontrollable growth of staff departments.
2c2. Matrix structure Organisation with familiar vertical lines of authority, orders are always set down the chain of command, and decisions are always passed upwards. Too often different departments in an organisation have conflicting needs or priorities that can only be resolved by a higher-level executive, who may well have a dozen more important things to worry about.
2c2. Matrix structure Advantages: • increasing innovation ability and flexibility of the organisation, • pushing decision making downwards, • team work and limited risk of mistakes. Disadvantages: • danger of loss because of insufficient communication between departments and teams, • high working stress, • non - ambiguous relationships of subordination, • difficult structure.
3. Organization structures according to centralisation and decentralisation • centralizedstructures – little amount of authority is delegated to subordinates, • decentralizedstructures– great amount of authority is delegated to subordinates.
4. Organization structures according to shape or span of control • flat structures – wide span structures, • tall structures – narrow span structures.
4a. Flat structures Enterprise has got less organisation levels with more subordinates. There is more decentralised management with higher requirements for independence, self-reliance and higher quality of labour.
4b. Tall structures The enterprise has got more organisation levels with less subordinated departments. Generally there is a centralized management.
5. Organization structures based on time duration • Temporary structures (with limited duration) –existence of structural organisation and configuration has got time limited duration (e.g. team work), • With unlimited duration – expected long term duration of these structures. • There is a tendency to use more temporary structures to achieve more flexible enterprises (team work, project teams, amoebas)
xxx Tendences of development of organization structures A) Hole structures B) Network structures C) Virtual enterprises D) Intra-entrepreneurship