B100 Day School TwoBlocks 3, 4 and 5

Phillippa Seaward

Overview of Day School 2 • Review so far• Block 3 - Accounting and Finance• Break• Block 4 - Marketing • Lunch• Block 5 - Economics• Final questions and conclusion

Experiences: What have you learned so far?

Block 3 – What is financial information for in business?

Group discussion

Block 3 – What is financial information for in business?

• Control, planning and forecasting• Comparisons

–budgets/forecasts–previous periods–competitors

• Reporting to stakeholders• Social aspects

Block 3 – Accounting & Finance:The Accounting statements

• What are the three financial statements generally produced?

• See Reading 23

Block 3 – Accounting & Finance:The Accounting statements• Income statements are a standard financial document

that summarises a company's revenue and expenses for a specific period of time, usually one quarter of a fiscal year and the entire fiscal year

• Balance sheet is a financial statement at a given point in time. It provides a snapshot summary of what a business owns or is owed - assets - and what it owes - liabilities - at a particular date

• Cash flow statement is a financial statement which reports the inflows and outflows of cash for a particular period for the operating, investing and financing activities undertaken by a company

Balance Sheet

• Relates to a single point in time (a “snapshot”)• Summarises:

–Assets – “things owned”• tangible/intangible, current/non-current

–Liabilities – “amounts owed”• short-term/long-term

–Equity (assets minus liabilities) – “what the business is worth”

Income Statement• Provides a “bridge” between two balance sheets• Shows how the value of a business increased (or

decreased) over time• …amount of increase (or decrease) being the profit (or

loss) arising from business operations– income (sales) –minus cost of sales–minus expenses/overheads

Cash Flow Statement• Also a “bridge” between two balance sheets

–but this time focusing on the cash line rather than any change in equity

• Shows how cash has been generated and consumed over time–cash generated by:

• profit, reduction in working capital, disposal of non-current assets, receiving loans

–cash consumed by:• losses, increases in working capital, investment in non-current assets, repaying loans

Case Study – Nether Hampden Tennis Club• Read the introduction to the case study “The Nether

Hampden Tennis Club”• Imagine that you are attending the AGM

• In your groups:–Consider the 2015 financial report, and compare it in

detail to the 2014 report. What concerns might you express concerning the Club’s financial situation?

–What would you expect the Committee to suggest in order to meet your concerns?

Practical advice on TMA03

• Read the questions carefully

• Read the student guidance notes (they are very helpful)

• Structure using the word limit and break down of the question

• Use your course material (All the information you need is in Block 3 and there are worked examples there which are very similar to the TMA task)

Questions

Break

Group discussion: Marketing

• What is marketing?

• What do you think is the main purpose of the marketing department in a business?

• 5 minutes. Be prepared to feedback

MarketingDefinitions:• Marketing is the management process responsible for identifying,

anticipating, and satisfying customer requirements profitably.(Chartered Institute of Marketing, 2009)

• Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

(American Marketing Association, 2013)Marketing orientation:• Assessing & fulfilling the needs & expectations of customers

Application:• Marketing can be applied to a variety of contexts, including non-

commercial

Block 4 - Marketing • Learning Objectives:• Appreciate the importance of marketing a business• Demonstrate a basic knowledge of some key

marketing concepts, including targeting, the extended marketing mix, and the nature of consumer society

• Begin to show an awareness and understanding of some key issues in marketing practice, using real life examples

• Develop critical thinking skills through an analysis of consumer behaviour and the implications of consumer society.

The Marketing Mix – 4Ps

Discussion – The Open University• Product?

–What needs and wants does it meet? –Where is it on the goods-services continuum?

• Pricing? –How does it compare on price with competitors?

• Place? –Which distribution channels are used?

• Promotion? –How is the offering communicated?–Who is the target market?

• People? Processes? Physical evidence?

Social and cultural aspects of consumption• Types of consumption:

–Consumption as pleasure–Consumption and identity–Consumption as communication

• Kilbourne (1998) argues that contemporary consumer societies value money and material wealth above all else, and people constantly buy new goods rather than continuing to use and perhaps repair old but still serviceable ones. Such trends are at the heart of the current environmental crisis. Do you agree?

Group Discussion: What do you think?

• Do you think we live in a consumer society?

• What does that mean for your own life style and consumption patterns?

• What are the arguments for and against the consumer society’?

The consumer society• For:• Allows new freedom & comfort

(review by Gabriel and Lang, 1995)

• Progress through growth (Vickers, 1968, cited in Feldman, 1971)

• Pleasure from dreaming (Campbell, 1987)

• Gives meaning to people’s lives (Featherstone, 1991; Baudrillard, 1997)

• Means of social communication (Veblen, 1925; Bourdieu, 1984)

• Against:• Pre-occupation with material

goods and money (Kilbourne, 1998)

• Disposable attitudes to goods (Kilbourne, 1998)

• Damage to the environment (Throop et al., 1993)

• Does not contribute to happiness – perhaps the reverse (Seligman, 2002)

Harvard referencing system

Questions

Lunch

Group exercise: Economic & political context

Using Reading 37, find three definitions of economics – what is the difference between them?

What’s the difference between micro- and macro-economics?

Relevance of the economic and political context Understanding how the economic system works and what the

government does is necessary for each type of organizations and is useful for scanning and developing entrepreneurial opportunities.

A manager who does not understand the basic principles of economics is no more likely to succeed in the medium to long term than one who doesn’t understand money or the basic principles of accounting.

The circular flow of income

Source: adapted from Sloman, (2008, p. 278 ).

Stakeholders

Group Activity• Think about the Open University.

• List the stakeholders.

• Who are the most important stakeholders?

• Explain why they are the most important.

Carroll’s model of CSR (1991).

Group Activity• Each person consider an organisation you are familiar

with

• For example, your employer

• Try to think of ways in which they meet the requirements of each part of Caroll’s pyramid of Corporate Social Responsibility (CSR).

• Be prepared to feedback

How could the planned Heathrow expansion impact on the circular flow of income? Use your own device to find information. Give examples.

How Heathrow expansionimpacts on the circular flow of income• There will be more money in circulation so more people working

that can buy more things and potentially save money to give to banks.

• There will be more government expenditures to finance Heathrow expansion and related public works. There might be also more taxes to finance public expenditures for Heathrow expansion.

• UK exports can growth because more businesses can reach new international markets.

• Banks will probably lend money to new businesses operating in the area.

• Overall, injections will be higher than withdrawals, generating economic expansion.

Benefits and drawbacks of Heathrow expansion• Benefits

Businesses operating in several industries such as hospitality, transport and retail will benefit from having more customers

Businesses exporting abroad will have more flights, especially long-haul connections

More jobs for local people

• Drawbacks Businesses located in

different areas may see Heathrow expansion as a lost opportunity for enhance the competitiveness of their areas

Environmental costs (noise and pollution)

New urbanisation and potentially higher costs of life

Important Dates• OU Live session 3

• TMA03

• OU Live session 4

• TMA04

• OU Live session 5

• Day School 3

Questions

The marketing planning process

Goals

• (Organisational objectives)

Situation analysis

• Marketing audit• SWOT analysis• Marketing &

environmental analysis• Competitor analysis• Customer analysis

Marketing strategy

• Marketing objectives• Segmentation• Targeting• Positioning

Implementation

• Marketing programme• Budgets• Monitoring

The goods-services continuum

(source: adapted from Kotler et al., 2006)

Tangibledominant

Intangibledominant

Salt Soft drinks

Detergent

Car

CosmeticsFast-food outlets

Fast-foodoutlets Ad

agency Airline Financial services

Consulting Teaching

Elements of good marketing communication: AIDA

Awareness

Interest

Desire

Action

grab

hold

elicit

stimulate

The extended marketing mix and targeting: The Open University

The consumer societyConsumption has been described as:“… in Western developed societies culture is profoundly

connected to and dependent upon consumption. Without consumer goods, modern, developed societies would lose key instruments for the reproduction, representation, and manipulation of their culture … The meaning of consumer goods … [is an] important [part] of the scaffolding of our present realities. Without consumer goods, certain acts of self-definition and collective definition in this culture would be impossible.” (McCracken, 1990, p. xi)

Heathrow expansion - activity• What are the economic factors that seem important in the

planned expansion of Heathrow airport?• Why is the Heathrow expansion a political decision? How

would you describe the political context of Heathrow’s expansion? How does this impact on businesses that are involved in the planned Heathrow expansion?

• What are the main benefits of the Heathrow expansion for businesses operating in the South East? What kind of industries will be more affected by this plan? What kind of impact is this plan going to have on these industries?

• Why do other businesses consider the expansion less favourably?

The economic context of the Heathrow expansion High economic impact (adding £147bn to GDP over 60

years and creating 70,000 new jobs by 2050) Economic expansion – the volume of the economy will be

increasing More businesses and more competition More services for citizens and businesses, but also more

noise and pollution in the area Key point to understand: economic investments put more

money in circulation in the economic system creating more opportunities and more competition

The political context of the Heathrow expansion Heathrow expansion is a political decision –

– Requires support (there might be opponents);– Has to follow an institutional procedure and be

approved by competent organs (some procedures – e.g. planning permissions - may have delay);

– Choosing this area has political implications, for example on wealth distribution within UK.