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Unit 3 by Mind Map: Unit 3

1. Functional Objectives & Strategies

1.1. Selecting Financial Strategies

1.1.1. raising finance

1.1.2. implementing profit centres Candidates should understand how these strategies interrelate with other functions and be able to assess their value in given circumstances.

1.1.3. cost minimisation

1.1.4. allocating capital expenditure.

1.2. Interpreting Published Accounts

1.2.1. conducting ratio analysis: the selection, calculation and interpretation of ratios to measure financial performance Candidates should understand the following ratios: liquidity (current and acid test ratios), profitability (ROCE), financial efficiency (asset turnover, inventory [stock] turnover, payables [creditor] and receivables [debtor] days), gearing and shareholder ratios (dividend per share and dividend yield).

1.2.2. assessing the value and limitations of ratio analysis in measuring a business’s performance.

1.3. Financial Strategies and Accounts

1.3.1. financial objectives

1.3.2. assessing internal and external influences on financial objectives Financial objectives should include: cash flow targets, cost minimisation, ROCE targets and shareholders’ returns

1.4. Using Financial Data to Measure and Assess Performance

1.4.1. Using Financial Data to Measure and Assess Performance analysing balance sheets analysing income statements using financial data for comparisons, trend analysis and decision making Analysing financial data should focus on assessing performance and potential. Candidates should understand the importance of working capital, depreciation, profit utilisation and profit quality. No construction of accounts or calculation of depreciation will be required. assessing strengths and weaknesses of financial data in judging performance

1.5. Understanding Financial Objectives

1.5.1. functional objectives and their relationship with corporate objectives

1.5.2. the relationship between functional objectives and strategies Candidates should understand a range of functional objectives that businesses might pursue (eg minimising costs, gaining market share) and how these contribute to the achievement of corporate objectives.

2. Marketing Strategies

2.1. • marketing objectives • assessing internal and external influences on marketing objectives.

2.1.1. marketing objectives Internal influences on marketing should include finance, HR, operational issues and corporate objectives. External influences should include: competitors’ actions, market factors and technological change.

2.1.2. assessing internal and external influences on marketing objectives

2.2. Analysing Markets and Marketing

2.2.1. reasons for, and the value of, market analysis

2.2.2. methods of analysing trends Reasons for analysing markets should include: gathering evidence for devising a new strategy, identifying significant patterns in sales.

2.2.3. the use of information technology in analysing markets

2.2.4. difficulties in analysing marketing data. Candidates should be familiar with moving averages, test markets and extrapolation as methods of measuring and forecasting sales. Candidates should understand how correlation can be used in analysing markets.

2.3. Selecting Marketing Strategies

2.3.1. low cost versus differentiation

2.3.2. market penetration

2.3.3. product development and market development stratergies Ansoff’s matrix should be used to assess marketing strategies in a national and an international context. Marketing strategies should consider the methods, risks and benefits involved in entering international markets.

2.3.4. diversification

2.3.5. assessing effectiveness of marketing strategies.

2.4. Developing and Implementing Marketing Plans

2.4.1. components of marketing plans Components of marketing plans include: objectives, budgets and sales forecasts and marketing strategies.

2.4.2. assessing internal and external influences on marketing plans

2.4.3. issues in implementing marketing plans. Influences on the marketing plan might include: finance available, operational issues and competitors’ actions.

3. Operational Strategies

3.1. Understanding Operational Objectives

3.1.1. operational objectives Operational objectives should include: meeting quality, cost and volume targets, innovation, efficiency (including time) and environmental targets.

3.1.2. assessing internal and external influences on operational objectives Influences on operational objectives might include: competitors’ performance, resources available, the nature of the product and demand.

3.2. Operational Strategies: Scale and Resource Mix

3.2.1. choosing the right scale of production: economies and diseconomies of scale Candidates should be aware of a range of economies of scale including: purchasing, technical and specialisation. Diseconomies of scale include communication and co-ordination.

3.2.2. choosing the optimal mix of resources: capital and labour intensity Candidates should understand the benefits and drawbacks of capital and labour intensive strategies.

3.3. Operational Strategies: Innovation

3.3.1. innovation, research and development Candidates should be aware that a strategy of innovation has implications for finance, marketing and human resources.

3.3.2. purpose, costs, benefits and risks of innovation. Candidates should be aware that a strategy of innovation has implications for finance, marketing and human resources.

3.4. Operational Strategies: Location

3.4.1. methods of making location decisions The focus should be on expansion and/or relocation (including off-shoring).

3.4.2. benefits of optimal location Methods of deciding on location should take into account quantitative (investment appraisal, for example) and qualitative factors.

3.4.3. the advantages and disadvantages of multi-site locations Reasons for international location include: global markets, cost reduction and avoidance of trade barriers.

3.4.4. issues relating to international location.

3.5. Operational Strategies: Lean Production

3.5.1. the effective management of time Candidates should be able to interpret and complete critical path networks by entering ESTs and LFTs and understand the significance of critical and non-critical activities.

3.5.2. assessing the value of critical path analysis

3.5.3. the effective management of other resources through methods of lean production Candidates should be aware of lean production techniques, including just-in-time production and kaizen.

4. Human Resource Strategies

4.1. Understanding HR Objectives and Strategies

4.1.1. HR objectives

4.1.2. assessing internal and external influences on HR objectives HR objectives might include: matching workforce skills, size and location to business needs, minimising labour cost, making full use of the workforce’s potential and maintaining good employer/employee relations. Candidates should be aware of ‘hard’ and ‘soft’ strategies to HR and the strengths and weaknesses of each.

4.1.3. HR strategies.

4.2. Developing and Implementing Workforce Plans

4.2.1. components of workforce plans

4.2.2. assessing internal and external influences on workforce plans Candidates should be aware of the influences on workforce planning, including other functional decisions, eg innovation may require greater diversity, legislation and labour market trends including migration.

4.2.3. issues in implementing workforce plans Issues involved in implementing workforce plans might include: employer/employee relations, cost, corporate image and training. Candidates should recognise that these issues can have positive and negative effects.

4.2.4. the value of using workforce plans.

4.3. Competitive Organisational Structures

4.3.1. factors determining choice of organisational structures Methods of adapting organisational structures to improve competitiveness should include: centralisation and decentralisation, delayering and flexible workforces. Candidates should be aware of the issues involved with implementing and operating each of these approaches.

4.3.2. adapting organisational structures to improve competitiveness Flexible workforces should include the notion of core and peripheral workers, outsourcing and home working.

4.4. Effective Employer/Employee Relations

4.4.1. managing communications with employees

4.4.2. methods of employee representation Candidates should understand the importance of communication in employer/employee relations. Candidates should know the advantages and disadvantages of employee representation. Methods of employee representation might include: works councils, employee groups as well as trade unions.

4.4.3. methods of avoiding and resolving industrial disputes