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Lecture 3
9 March 2015
Strategic Position
1. Corporate Behaviour
Strategic Choice
2. Marketing
Business
Information Project Financial
Process
Technology Management Analysis
Change
People
1.2
Stakeholders
1.3
Corporate
Governance
1.4
Ethics and CSR
1.5
Integrated
Reporting
RCA: June 2015 Session P3 Business Analysis: Leonard Sammut 3
1. Corporate Behaviour
1.1 Mission Statement
The mission statement is:-
the overriding objective from which all other objectives are set
should consider all stakeholders and aim to satisfy their needs
The primary reason The general manner Expectations and Feelings and moral
for existence (raison in which the purpose behavioural principles underlying
detre) will be achieved guidelines to shape corporate culture
(corporate strategy) daily decisions
Advantages Criticisms
Helps resolves stakeholder conflicts May be full of meaningless terms like the best
Sets direction and helps strategy formulation Often written retrospectively to justify past actions
Our mission is to operate the best specialty retail business in America, regardless of the product we sell.
Because the product we sell is books, our aspirations must be consistent with the promise and the ideals of
the volumes which line our shelves. To say that our mission exists independent of the product we sell is to
demean the importance and the distinction of being booksellers. As booksellers we are determined to be
the very best in our business, regardless of the size, pedigree or inclinations of our competitors. We will
continue to bring our industry nuances of style and approaches to bookselling which are consistent with our
evolving aspirations. Above all, we expect to be a credit to the communities we serve, a valuable resource
to our customers, and a place where our dedicated booksellers can grow and prosper. Toward this end we
will not only listen to our customers and booksellers but embrace the idea that the Company is at their
service
Mendelows matrix is a well-known method for mapping stakeholders and their influence using two
dimensions.
POWER LEVEL OF
INFLUENCE
INTEREST
The ability to impose The likelihood
on organizational
demands of exercising
strategy
power
Indicators Indicators
Status Personal financial or career
Claim on resources investment
Representation in decision- Absence of alternative
making process Accountability
Legal rights Social impact
Mendelows matrix helps organisation to deal with stakeholders conflicting demands by understanding who the
most important stakeholders are.
Low High
KEEP SATISFIED KEY PLAYERS
Keep reassured of the outcome of the Major drivers of change, capable of hindering
strategy strategic plans
High Otherwise, interest level could rise, turning Manage them actively, communicate plans
these into key players and discuss implementation issues
Difficulties arise if key players consist of
competing groups
Power
Easily influenced, accept instructions Keep convinced that strategic plans are
Ignoring ethical considerations, ignore these justified
Low stakeholders Otherwise, they might form alliances with
high power stakeholders
Low High
LECTURERS CORPORATE CUSTOMERS / EIoBA
Corporate Customers
Medium interest because they can move to Powerful they pay for 60% of students and
another one of the players are switching from one provider to the other
High power they are well-known and a They need to be actively managed and
High distinctive competence of Eroba, if they leave reassured that named training staff will not
students may follow them change especially since Gillian will now leave
Keep satisfied, at least in the short term (first EIoBA
step should be prompt payment) High power (can withdraw certification) and
Power
Creating a framework to control powerful companies whose interests may not be aligned with national interest
Controlling multinationals, which can dominate local economies
Ensuring that companies are answerable to all stakeholders, not just shareholders
Ensuring that companies are run according to the applicable legal framework
Protecting investors who buy shares in the same way as buyers of other financial investment products
Business Ethics and Corporate Social Responsibility are sometimes used interchangeably. However:-
ethics is more concerned with right and wrong the main aim of business ethics is that businesses
should not harm anyone
CSR refers to an obligation or duty towards the people affected by the business through such things
as: training; environmental initiatives; employee and community welfare programs; sponsorships;
contributions to overseas aid and support for educational institutions.
Benefits Dangers
Attractive to customers, potential employees and As a differentiating strategy, it is easily copied by rivals
providers of capital
Attractive to potential collaborators and business International business may need different ethical
partners approaches in different markets
Avoids negative press Success often relies on trial and error
Saves time and costs in paying damages and fines and in It typically increases costs
dealing with investigations by regulatory bodies
Ethical stance is the extent to which organisations exceed the minimum obligations to stakeholders as specified by laws
and regulations. The same ideas apply to CSR.
The only standard to be adhered to is the minimum legal standard
Short-Term
Aim is to maximize profit for shareholders in the current financial year
Shareholder
The social responsibility of a business is simply to make profits, which is ultimately in the
Interest public good
Longer Term The only standard to be adhered to is the minimum legal standard
Shareholder Awareness of other stakeholders because they impact on long-term profit
Interest Additional costs may need to be incurred now for higher future returns
Organisations do not exist solely to make a profit, rather they have a role to play in society
Multiple
They must take account of all stakeholders interest and explicitly involve all stakeholders
Stakeholder
In certain circumstances, shareholders interest must be sacrificed for the greater good of
Obligation other stakeholders
Ideologically driven and aimed at driving ethical social and market change
Shaper of Society Vision is the overriding purpose and the focus of all actions
Shareholders and other stakeholders interest take a secondary role
Contents
Overview Overview of the organisation, business model and governance structure, including
vision, strategic goals and mission in order to explain how decisions are taken
Operating Context An environmental analysis of the current strategic position
Strategic Objectives, How the organisation aims to create value for stakeholders, the competencies
KPIs & KRIs needed and the manner in which progress will be measured and monitored
Performance Evaluation of performance against KPIs and KRIs as well as a conclusion as to whether
objectives have been achieved
Future Performance Any new objectives for future periods to deal with environmental changes, including
Objectives areas of future possible concern to stakeholders
Remuneration Policies Principles governing remuneration for management
Analytical Commentary Managements conclusions on how the organisation is performing as well as progress
towards achieving its mission
RCA: June 2015 Session P3 Business Analysis: Leonard Sammut 13
Syllabus
Business
Information Project Financial
Process
Technology Management Analysis
Change
People
Although there are techniques for evaluating options, the choice is likely to be influenced by subjective
elements such as: values of stakeholders, power, culture.
2. Maintaining
Value Chain Competitive
Competitive Benchmarking
Marketing Analysis Strategies
Advantage
2.1
The Marketing
Process
2.2
Pricing
2.3
E-Marketing
2.4
CRM
RCA: June 2015 Session P3 Business Analysis: Leonard Sammut 16
2. Marketing
2.1 The Marketing Process
Marketing
Market Customer Market
Targeting Mix
Analysis Analysis Research
Strategies
A. Market Analysis
Appraising and understanding the current market situation to identify the appropriate marketing strategy by:-
Identifying gaps in the market where consumer needs are not being satisfied;
Looking for opportunities that the organisation can benefit from, in terms of sales and product development.
Remember:-
PESTEL
Porters 5 Forces
Product Lifecycle
Opportunities and Threats
Segmentation
Dividing the customers into groups with similar purchasing characteristics. Each group might require a unique
strategy.
Uses variables such as: Segments on the basis of customer value, that is:-
Geographic (region, country, country size, Revenues customer generates
climate) Costs of establishing and maintaining the
Demographic (age, gender, income, occupation) relationship
Psychographics (personality, lifestyle, values,
attitude) VALUE = REVENUE - COSTS
Behavioural (benefits sought, usage rates, brand
loyalty)
It is important to understand:-
Motivation - the customers selection process, benefits sought, objectives and the general changes in customers
motivation in buying the products.
Unmet Needs - why customers are dissatisfied and why they are changing brands and suppliers.
D. Targeting
Selecting which segment/s to target and how to target the selected segment/s
Undifferentiated marketing one product for one market, no attempt to segment e.g. sugar
Differentiated marketing different products developed for different segments e.g. Toyota
Niche or target marketing specialising in one or two of the identified segments e.g. Ferrari
Marketing mix is the set of controllable variables used to influence the buyers responses.
3 additional Ps have developed because of e-marketing (marketing using IT) and are particularly relevant for
services. However, e-marketing affects the other 4Ps as well
Based on assumptions regarding demand and supply and the interaction between these two factors. From a
marketing perspective, the focus is on demand.
2. Profit Maximisation
Setting the price where marginal revenue = marginal costs or marginal profit = 0
3. Revenue Maximisation
Setting the price where marginal revenue = 0
Total Total Total Marginal Marginal Marginal
Price Demand
Revenue Cost Profit Revenue Costs Profit
70 3 210 120 90 - - -
65 4 260 160 100 50 40 10
60 5 300 200 100 40 40 0 Maximum
Maximum Profit
50 6 300 240 60 0 40 (40)
Revenue
40 7 280 280 0 (20) 40 (60)
D. Conclusion
The main pricing considerations are: costs, customers, competitors, corporate objectives
Cost Costs need to be understood better, including ATLs attitude to recovering costs
Considerations E-learning likely to have low variable costs, thereby it would make sense to focus on maximizing
revenue
Difficult to predict overheads (such as cost of support) as they will depend on demand and the
quality of the product likely to behave as stepped fixed costs
The costs of product development have already been incurred and can be considered as a sunk
cost. However, ATL might attempt to explicitly recover its investment in the product.
Pricing It can consider penetration pricing, cost plus pricing and it must keep in mind the cost of
Strategy/ classroom training (reference pricing)
Methods Negotiated prices seems feasible for brokers (already in use) and business customers
It can also consider differentiated pricing charging a lower price to customers in developing
countries
It can also consider bundling bundling in the examination fee and trying to negotiate a reduced
price with ISD
Integration
Customers can respond to offers
Industry Structure Independence of Location
publicised in other media or use the Relationship between a company and
Internet gives possibility of global
website to support purchases not its partners can be dramatically
communications, reaching markets
done through the internet. Websites altered. Moreover, re-intermediation
that were previously inaccessible
can also have integrated direct and disintermediation can occur
response facilities.
Disintermediation: buyers buy directly from the manufacturer, by-passing wholesalers and retailers
Re-intermediation: new intermediaries have emerged e.g. E-Bay
B. E-Branding
Web-site design, corporate branding, e-commerce and search engine optimisation are critical components in
building a companys e-branding
RCA: June 2015 Session P3 Business Analysis: Leonard Sammut 27
2. Marketing
Exam Question June 2008 3(a) - Exam Kit 33(a) [Section B Question 15 marks]
Interactivity Push vs pull
Internet allows a long-term dialogue to develop with the customer
Currently, this is restricted to collecting information for people who wish to view
downloadable study material.
This is too restrictive and it will probably exclude all the potential CPD customers. AEC should
find ways for visitors to register their details to improve 30% rate of run seminars
Individualisation AEC currently uses a generic web-site mass customisation
Content can be customised to reflect the two market segments the global accounting
company vs other students or professional education vs CPD students
Also, individuals can have the content customised depending on the stage of qualification they
currently are. Customised content should focus on relevant information only
Intelligence Internet allows relatively cheap collection of data about customers requirements (through
analysis of web logs).
Internet allows measurement of conversion rates - how many accesses are turned into actual
sales, which may be an important source of information
AEC does have some data but does not know how often their training course catalogue is
accessed and which pages are looked at. Such analysis would allow AEC to focus on particular
products or services.
Independence of Internet provides independence of location allowing the company to move into geographical
location areas that would otherwise have been unreachable
Global accounting company contract would not have been possible without the internet
Integration A direct response facility may be set up - customer chat line
Customers can respond to adverts published on other web-sites (through link building) or
adverts in traditional media
RCA: June 2015 Session P3 Business Analysis: Leonard Sammut 28
2. Marketing
2.4 Customer Relationship Management
The objective of CRM is to increase customer loyalty in order to increase profitability
It is an approach to building and sustaining long-term business with customers
It emphasises relationship marketing as opposed to transactional marketing
Online Techniques
Search Engine Improving position in search engine listings for key terms and phrases e.g.
Search Optimisation through link building
Engine
Pay per Click Displaying adverts in search engine results as a sponsored link
Marketing
Trusted Feed Feeding a websites online inventory onto search engines database
Media Alerting Services Using online media and journalists for press releases
Online PR Portal Representations Ensuring presence on portals (gateways to information and services)
Business Blogs Using online journals to showcase employees expertise
Link building Creating reciprocal links to/from sites with quality content
Affiliated Marketing Paying commissions to sites that link to own site
Online
Sponsorships Sponsoring a particular website
Partnerships
Co-Branding Labelling products with two brand names (e.g. motor insurance)
Aggregators Including products in comparison sites
Interactive Adverts Interactive banners using rich media (e.g. animation, overlays)
Viral Marketing Using a clever idea in an e-mail to ensure that it is widely circulated
Others Opt-in e-mails, online communities
Mass Online
Personalisation Extranets Opt-in E-mail
Customisation Communities
Individualised Customised Available solely Asking customers Creating
content through content to groups for customers, to whether they discussion forums
web-pages or e- of users through provide additional would like to where customers
mail web-pages or e- services and receive offers and create content.
mail information information via e-
mail
Software Solutions
Software plays a key role in CRM. It can organise, automate and synchronise marketing and sales actions.
Acquisition CT has recognised expertise in the difficult and dangerous task of chemical distribution where
there is a need for compliance with stringent and emerging legislation.
Without disclosing sensitive information, the website needs to provide examples of this,
including if possible testimonials from established customers
Constantly updated technical information would tempt people to return to the site.
All the above will suggest to potential customers that CT would be a worthy business partner.
It has to be recognised that it is a B2B website and that no contract will be entered into as a
result of the website alone. It is about building up confidence that may lead to a contract
Website should look professional and should be advertised on-line (sponsored links, search
engine optimisation) and in off-line media (relatively simple due to finite set of customers)
Retention A system to request and track deliveries is, at the moment, crucial for customer retention
Website has to be reviewed to explore possibilities to enhance the service it offers and to
assist in the long-term retention of customers.
Customers might be offered a service which helps them plan deliveries to help minimise
distribution costs. This is potentially even more valuable if it can assist in distributing
chemicals directly to the end customer, hence avoiding wholesaler storage costs.
Payment for the delivery might also be organised through the website
Customer retention is improved by integrating the systems of the supplier and the end
customer, which would make it difficult for CTs customers to switch.
Providing valuable management information on-line to help customers run their business
more effectively can also enhance retention
Chapter 4 Chapter 2
Internal Analysis
Marketing and the
Value of Staff