MBA 1 Course Outline October 2010(2)

LSC London School of Commerce

Course Outline

MBA Semester 1

October 2010

Assignment Deadline20th December 2010

MBA Course Leader: Dr. Rajendra Kumar: [email protected]

Course Administrators:

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mailto:[email protected]

Christina Giovi: [email protected] Freeman: [email protected]

Contents Page

Financial Analysis and Management Module Description 3Learning Outcomes 3Indicative Content 4Delivery 4Indicative Reading List 5Lecture Sequence 6-8 Sample Questions 9-16

Information Systems Management Module Description 17Learning Outcomes 17Indicative Content 17Delivery 18Indicative Reading List 18Lecture Sequence 19-20Sample Questions 21-24

Managing Human Capital Module Description 25Learning Outcomes 25Indicative Content 25Delivery 25Indicative Reading List 26Lecture Sequence 27-28Sample Questions 29-30Assignment 31

Marketing ManagementModule Description 32Learning Outcomes 32Indicative Content 32Delivery 33Indicative Reading List 34Lecture Sequence 35-36Sample Questions 37-40Case Studies 41-65

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Module Title: Financial Analysis and Management

Module Lecturers: S. Palan/Makailla McConnell

1. Module Description:This module is designed to provide all business students with an overview of how accounting data is used in making business decisions. The subject covers a broad range of topics including the regulatory framework of accounting, preparation and analysis of financial statements, investment analysis and ethics in accounting. It provides students with basic skills, knowledge and attitudes that enable them to process financial data, to analyse and interpret accounting reports, and to present the results within an ethical framework, to financial decision makers.

This module also provides a comprehensive coverage of financial management from a corporate perspective, together with a comprehensive coverage of relevant financial mathematics. It examines the core objectives of corporate financial management and the application of a range of analytical techniques and technologies to investment, financing and dividend decisions. The module also examines the impact of different income tax systems on investment evaluation from both a corporate and shareholder perspective.

The module also aims to provide students having career interests in accounting and finance with an introduction to the theory and practice of financial management from a corporate perspective. It examines the objectives of corporate financial management and the theory and practice of the investment, asset management and financing decisions necessary to achieve those objectives.

2. Learning Outcomes:Upon successful completion of this module students will be able to:

Prepare, analyse and interpret financial accounting reports. Compare the performance of one business with others, and the returns on business with those

on other investment options. Interpret data and reports. Implement internal controls and prepare reconciliations. Discuss how financial markets operate. Identify, analyse and solve financial problems confronting business enterprises, particularly

problems relating to corporate investment, asset management and financing decisions Use analytical techniques and electronic aids appropriate to contemporary financial decision

making. Discuss issues of capital budgeting. Analyse the impact of economic, legal and tax changes on the strategic and financial position of

the firm. Discuss and analyse the international financial environment.

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3. Indicative Content: The relationship between the three main financial statements. Conceptual foundations of accrual accounting. The basis of financial decision making Sources of finance, understand stock market information and exchange rates and analyse capital

investment opportunities. Alternative profit plans using cost-volume-profit analysis. Manufacturing statements and record basic costing flows in T-accounts. Cost flows, and prepare general ledger entries for simple jobs; process costing examples. Introduction to financial management and taxation systems in the UK and other countries. Financial markets and mathematics. Valuation of bonds and shares. Introduction to risk and rates of return. Capital budgeting concepts, methods and issues. Other approaches to evaluating risk in project evaluation. Cost of capital. Sources of short-term finance. Long-term debt finance. Equity financing. Capital structure. Dividend policy. International finance.

4. Delivery:A variety of teaching approaches is used, including lectures, seminars, case analysis, teamwork and extensive use of the Internet for guided research.

Notional Student Workload

Lectures 22.5 hoursSeminars 7.5 hoursDirected Learning 40 hoursIndependent Learning 77 hoursFormal Assessment 3 hoursTotal 150 hours

5. Assessment:The formal assessment of this module will be conducted through a closed book examination.

Closed book examination 100%The closed book examination will be of three (3) hours duration. There is no assignment for this module.

6. Indicative Reading List

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Core texts: Brealey, R. Myers, S and Allen, F. (2008) Principles of Corporate Finance, (9th edn)

McGraw-Hill: New York

Neale, B. & Pike, R. (2009) Corporate Finance and Investment. Decisions and Strategie,s( 6th Edition). Prentice Hall

Recommended Reading:Books Arnold, G. & Estrada, J (2006) The Handbook of Corporate finance. Prentice Hall

Drury, C(2006) Management Accounting for Business Decisions, (3rd Edition). Thomson

Block, S.B. and Hirt, G.A. (2008) Foundations of Financial Management, (12th edn). McGraw Hill Education

Greenwood R P (2007) International Financial Reporting Standards. AIA Publications

Higgins, R. (2007) Analysis for Financial Management, (ISE Edition). McGraw Hill Education

Barry, E and Jamies, E, (2008) Financial Accounting and Reporting, (12th edn).Prentice Hall

Horngren, C. And Sundern, G. (2008) Introduction to Management Accounting, (14th edn). Prentice Hall.

Wood, F. And Sangster, Alan (2008) Business Accounting 1, (11th edn). Prentice Hall

Wood, F. And Sangster, Alan (2008) Business Accounting 2, (10th edn). Prentice Hall

Horngren, C. Datar, S. Foster, S.M.,Rajan, M. And Ittner, C. (2008) Cost Accounting: A Managerial Empasis, (13th edn) Pearson Education

Moeller, S. & Brady, C. ( 2007) Intelligent M&A: Navigating the Mergers and Acquisitions Minefield, John Wiley & Sons.

Web Sites Useful sites with market commentary and date on individual firms and stocks:www.bloomberg.comwww.corporateinformation.com www.hoovers.comhttp://www.londonstockexchange.comFinance.yahoo.comNote: Given that SFM is a reflection of what goes on inside a firm, text books on corporate finance, business strategy and marketing may all provide useful reading.

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http://www.londonstockexchange.com/

http://www.hoovers.com/

http://www.corporateinformation.com/

http://www.bloomberg.com/

7. Lecture Sequence for Financial Analysis and Management

Topics taught by Mr S. Palan :

Lecture No. Topic(s) Covered Indicative Readings

Refer to Sample Question(s) No

1

Introduction

Introduction to Financial Management: Objectives, conflicts of interest, corporate governance

Brealey et al (2008)Chapter 1,2 pp 3-34Pike & Neale (2009)Chapter 1, pp 3-21

Questions 1

2 Introduction to Financial

Statements

Brealey et al (2008)Chapter 1, pp 3-11Pike & Neale (2009)Chapter 1, pp 3-21

Questions 2

3 Financial Ratios and

Financial Performance 1Pike & Neale (2009)Chapter 2, pp 23-57

Questions 3

Seminar 1

4 Financial Ratios and

Financial Performance 2Pike & Neale (2009)Chapter 2, pp 23-57

Questions 4

5Sources of Finance – short term

Pike & Neale (2009)Chapters 13-14; pp 323-376

Questions 5

6 Working Capital Management Brealey et al (2008)Chapter 30 pp 819-849

Questions 6

Seminar 2

7 Working Capital Management Brealey et al (2008)Chapter 30 pp 819-849

Questions 7

6

Seminar 3

Topics taught by Makailla McConnell

Lecture No. Topic(s) Covered Indicative Readings

Refer to Sample Question(s) No

8

Capital budgeting Techniques basic techniques,

discounting, annuities and perpetuities

Brealey et al (2008) Chapters 2,7 : pp13-34, 142-168

Questions 8,9

9

Advanced Aspects of Capital Budgeting 1

relevant cash flows, capital rationing, working capital.

Brealey et al (2008)Chapters: 10-11-12 pp 238-320Pike & Neale (2009)Chapter 6,7 pp 139-180

Questions 10,11

10

Advanced Aspects of Capital Budgeting 2

Brealey et al (2008)Chapters: 10-11-12 pp 238-320Pike & Neale (2009)Chapter 6,7 pp 139-180

Question12

Seminar 4

11Cost of Capital – equity, debt, WACC

Brealey et al (2008) Chapter 20 : pp529-559

Questions 13,14

12 The Capital Asset Pricing Models and its Variants

Risk Free Rate, Market

Brealey et al (2008) Chapter 9: pp206-236.

Questions 15,16

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Return, Market Premium, Beta

Seminar 5

13Source of Finance

Long term – Debt vs Equity

Brealey et al (2008)Chapters:17-18 pp 442-495Pike & Neale (2009)Chapters 18-19 pp 485-545

Questions17,18

14Sources of Finance

Capital structure theoriesBrealey et al (2008) Chapter 19 : pp497-528.

Questions19,20

Revision Class

QUESTION SAMPLES

Lecture 1 : Introduction to Financial Management: Objectives, conflicts of interest, corporate governance

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Question 1The primary financial objective of companies is usually said to be maximisation of shareholders’ wealth. Discuss whether this objective is realistic in a world where corporate ownership and control are often separate, and environmental and social factors are increasingly affecting business decisions.

Lecture 2: Introduction to Financial Statements

Question 2The following information has been obtained from the accounts of two companies A and Bwho operate within the same business sector:

Profit and loss account (extracts) for the year ended 28 February 2009: A B

£000 £000Profit before tax 450 220Taxation (100) (40)

----- -----Profit after tax 350 180Dividends (175) (100)

----- -----Retained profit for year 175 80

==== ====

Balance sheet (extracts) as at 28 February 2009:£1 Ordinary shares 1,100 500Long-term loans 200 600Retained profits 480 250

----- ----1,780 1,350==== ====

Market price of one share £3.80 £4.00

REQUIRED:a) Calculate the following for EACH of the companies:

gearing ratio earnings per share (EPS) PE ratio dividend cover

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dividend per share and dividend yield ROCE for the shareholders and the company

b) Comment on the financial performance of the two companies. c) Explain the importance of using a range of ratios to monitor the financial

performance of a business.

Lecture 3 : Financial Ratios and Financial Performance 1

Question 3

Year ended 31

March

2007 2008 2009

£m £m £m

Sales 100 103 108

Gross profit 33.0 34.0 35.6

Net profit 15 15 15

Fixed assets 64 72 68

Stock 4 4 4

Debtors 8 11 15

Creditors (5) (6) (6)

Cash at bank 5 - -

Bank overdraft - 6 5

There are no current liabilities other than those listed.

Required:

1. For each of the three years calculate the: gross profit ratio; net profit ratio; quick ratio (acid test); stock holding period; debtors collection period; and creditors payment period

(b) Based on the ratios you have calculated in (a), comment on the company’s financial performance over the three years

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(c) Discuss the main limitations of your analysis.

Lecture 4 : Financial Ratios and Financial Performance 2Question 4:

Profit and loss account year ending

31/12/2009 31/12/2008

(£'000) (£'000)Sales 3,095 1,909Cost of sales 2,403 1,442Gross profit 692 467Operating Expense 333 223Operating Profit 359 244Interest Payable 17 19Profit before Tax 342 225Taxation 74 31Profit after Tax 268 194Dividends 41 17Retained Profit for the year 227 177Earning per share 12.8p 9.3p

Balance sheet as at: 31/12/09 31/12/08

a)

Calculate for each year the followingGross profit ratioNet profit ratio

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Fixed assets 793 656Current assets

Stock 64 87Debtors 1003 853

Cash 1 681,068 1,008

Current liabilities 882 912Working capital 186 96Total assets less current liabilities

979 752

Long term liabilities 100 100Net assets 879 652

Share capital 210 210Share premium a/c 48 48Retained profits 621 394Shareholders’ Funds 879 652

Return on capital employed, ROCE for the shareholders and the company as a whole. (Show how you arrive at the figure for capital employed)Current ratioQuick ratio (acid test)

b) Comment on the financial performance in 2009 and 2008

Lecture 5: Sources of Finance – short termQuestion 5Atlas Ltd is a newly formed digital media company with a number of locations in the UK, France and Germany. The board of directors is currently discussing whether the finance function should be centralised or decentralised. What advice would you offer?

Lecture 6 &7: Working Capital ManagementQuestion 6 :The Branding Iron Company sells its irons for £50 apiece wholesale. Production cost is £40 per iron. There is a 25% chance that wholesaler Q will go bankrupt within the next year. Q orders 1,000 irons and asks for six months’ credit. Should you accept the order? Assume that the discount rate is 10% per year, there is no chance of a repeat order, and Q will pay either in full or not at all.

Question 7: Wines Co buys raw materials from suppliers that allow Wines 2.5 months credit. The raw materials remain in inventory for one month, and it takes Wines 2 months to produce the goods. The goods are sold within a couple of days of production being completed and customers take on average 1.5 months to pay. Required Calculate Wines’s cash operating cycle.

Lecture 8 : Capital budgeting Techniques

Question 8

Your aunt places $13,000 into an account earning an interest rate of 7% per year. After 5 years the account will be valued at $18,233.17. Which of the following statements is correct?

A) The present value is $13,000, the time period is 7 years, the present value is $18,233.17, and the interest rate is 5%.B) The future value is $13,000, the time period is 5 years, the principal is $18,233.17, and the interest rate is 7%.C) The principal is $13,000, the time period is 5 years, the future value is $18,233.17, and the interest rate is 7%.

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D) The principal is $13,000, the time period is 7 years, the future value is $18,233.17, and the interest rate is 5%.

Question 9

An investment of $100 today is worth $116.64 at the end of two years if it earns an annual interest rate of 8%. How much interest is earned in the first year and how much in the second year of this investment?

A) The interest earned in year one is $8.32 and the interest earned in year two is $8.32.B) The interest earned in year one is $8.00 and the interest earned in year two is $8.64.C) The interest earned in year one is $8.64 and the interest earned in year two is $8.00.D) There is not enough information to solve this problem.

Lecture 9: Advanced Aspects of Capital Budgeting 1

Question 10Discounted payback period. Given the following four projects and their cash flows, calculate the discounted payback period with a 5% discount rate, 10% discount rate, and 20% discount rate. What do you notice about the payback period as the discount rate rises? Explain this relationship.

Cash Flow A B C DCost $10,000 $25,000 $45,000 $100,000Cash Flow Year 1 $ 4,000 $ 2,000 $10,000 $ 40,000Cash Flow Year 2 $ 4,000 $ 8,000 $15,000 $ 30,000Cash Flow Year 3 $ 4,000 $14,000 $20,000 $ 20,000Cash Flow Year 4 $ 4,000 $20,000 $20,000 $ 10,000Cash Flow Year 5 $ 4,000 $26,000 $15,000 $ 10,000Cash Flow Year 6 $ 4,000 $32,000 $10,000 $ 0258 Brooks • Financial Management: Core Concepts©2010 Pearson Education, Inc. Publishing as Prentice Hall

Question 11Net present value. Quark Industries has a project with the following projected cash flows:Initial Cost, Year 0: $240,000Cash flow year one: $ 25,000Cash flow year two: $ 75,000Cash flow year three: $150,000Cash flow year four: $150,000

a. Using a 10% discount rate for this project and the NPV model, determine whether thisproject should be accepted or rejected.

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b. Should it be accepted or rejected using a 15% discount rate?c. Should it be accepted or rejected using a 20% discount rate?

Lecture 10: Advanced Aspects of Capital Budgeting 2

Question 12

Profitability Index. Given the discount rates and the future cash flows of each project, whichprojects should they accept using profitability index?Cash Flow Project U Project V Project W Project XYear 0 $2,000,000 $2,500,000 $2,400,000 $1,750,000Year 1 $ 500,000 $ 600,000 $1,000,000 $ 300,000Year 2 $ 500,000 $ 600,000 $ 800,000 $ 500,000Year 3 $ 500,000 $ 600,000 $ 600,000 $ 700,000Year 4 $ 500,000 $ 600,000 $ 400,000 $ 900,000Year 5 $ 500,000 $ 600,000 $ 200,000 $1,100,000Discount rate 6% 9% 15% 22%

Lecture 11: Cost of Capital – equity, debt, WACC

Question 13WACC. Eric has another get-rich-quick idea, but needs funding to support it. He chooses anall-debt funding scenario. Eric will borrow $2,000 from Wendy, who will charge him 6% on theloan. He will also borrow $1,500 from Bebe, who will charge 8% on the loan, and $800 fromShelly, who will charge 14% on the loan. What is the weighted average cost of capital for Eric?

Question 14WACC. Grey’s Pharmaceuticals has a new project that will require funding of $4 million. Thecompany has decided to pursue an all-debt scenario. Grey’s has made an agreement with fourlenders for the needed financing. These lenders will advance the following amounts and interestrates:

Lender Amount Interest RateStevens $1,500,000 11%

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Yang $1,200,000 9%Shepherd $1,000,000 7%Bailey $ 300,000 8%

What is the weighted average cost of capital for the $4,000,000?

Lecture 12: The Capital Asset Pricing Models and its Variants

Question 15Cost of Equity: SML. Stan is expanding his business and he will sell common stock for theneeded funds. If the current risk-free rate is 4% and the expected market return is 12%, whatis the cost of equity for Stan if the beta of the stock is:a. 0.75?b. 0.90?c. 1.05?d. 1.20?

Question 16Cost of Equity: SML. Stan had to delay the sale of the common stock as outlined in Problem 9for six months. When he finally did sell the stock, the risk-free rate had fallen to 3%, but theexpected return on the market had risen to 13%. What was the effect on the cost of equity bywaiting six months, using the four different betas from Problem 9? What do you notice aboutthe increases in the cost of equity as beta is increased?

Lecture 13: Source of Finance 1

Question 17What is the difference between an angel investor and a venture capitalist? What event do theseinvestors want to see happen? Why?

Question 18What is the role of an investment bank in selling stock?

Lecture 14: Source of Finance 2

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Question 19Equity value in a levered firm. Air America has an annual EBIT of $1,000,000, and the WACC in the unlevered firm is 20%. The current tax rate is 35%. Air America will have the same EBIT forever. If the company sells debt for $2,500,000 with a cost of debt of 20%, what is the value of equity in the unlevered and in the levered firm? What is the value of debt in the levered firm? What is the government’s value in the unlevered firm and in the levered firm?

Question 20A company is considering diversifying with a project in a new industry.The company’s capital structure is 60% debt and 40% equity and will not change. The debt is 9% debentures, redeemable at par (£100) after 10 years with a current market value of £90. Any new debt will have the same cost which is currently 8%.Tax rate is 30% and its ordinary shares are currently trading at 445 pence. The equity beta is 1.21. The systematic risk of the debt may be assumed to be zero. The risk free rate is 5.75% and market return 11%.The estimated equity beta of a company in the same industry as the business is 1.5 and its capital gearing is 35% equity and 65% debt.Required:1. Calculate a project-specific discount rate.2. Discuss the problems that may be encountered in using CAPM.3. Explain briefly the order companies prefer to raise finance in.

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Module Title: Information Systems Management.

Module Lecturers: Dr Uma Mohan / Denver Reynolds

1. Module DescriptionThis subject requires students to stand back from the technicalities of information systems and look at the field in a broader way. It attempts to give students a business awareness so they can determine how best to align technology with business needs.

The objective of this module is also to empower students with skills and knowledge in using IT to create business value. The module provides foundations in the concepts of strategic management and information management. The module views IT management as a strategic capability that enables and supports a firm’s competitive strategy. It discusses how firms could use IT to create business value in: (a) corporate strategies (b) business strategies (c) growth strategies and (d) globalisation strategies. It also examines how firms could justify investments into IT resources, and how they could govern those IT resources to create agile organisations that are highly responsive to changing demands of competitive strategy.

2. Learning Outcomes:On successful completion of the module, the student will be able to:

understand the need for, and methods of, strategic planning; select appropriate tools and techniques for the strategic planning of a corporations

information system; discuss the nature, integration and use of the various forms of information systems within

the corporate setting; discuss the alignment of a corporations information system with their business strategies; make informed comment on the societal issues raised by information management.

3. Indicative Content Contribution of IT to business value Contribution of IT to corporate strategies Contribution of IT to business strategies Contribution of IT to growth strategies Contribution of IT to globalisation strategies Integrating Information Systems and Business Strategy. Using value chain analysis to

improve the effectiveness of Information Systems. Obtaining competitive advantage with Information Technology Societal effect of Information Technology.

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Problems with strategic planning and alternate approaches.


Notional Student WorkloadLectures 22.5 hoursSeminars 7.5 hoursDirected Learning 42.0 hoursIndependent Learning 75.0 hoursFormal Assessment 3.0 hoursTotal 150 hours

5. Assessment:

The formal assessment for this module is a 3hour closed book examination. There is no assignment for this module.

One 3 hour exam

6. Concise Indicative Reading List:Core Text:

Bocij, P, Greasley, A and Hickie, S. (2008) Business Information Systems: Technology, Development and Management for the E-Business (4th ed), Prentice Hall

Laudon, K. And Laudon, J (2009). Management Information Systems (11th ed). Pearson Education.

Edwards, C., Ward, J. & Bytheway, A. (1995). The Essence of Information Systems. Prentice Hall: London

Recommended Additional Reading: Burgelman R and Maidique (2003) M.A. Strategic Management of Technology and

Innovation McGraw-Hill Education

Kangas, K. (2003) Business Strategies for Information Technology Management IGI Publishing; illustrated edition

Stahl, B.C. (2008) Information Systems: Critical Perspectives Routledge

Applegate, L.M., Austin, R.D. and Soule, D.L. (2009) Corporate Information Strategy and Management: Text and Cases McGraw-Hill Higher Education

Chaffey, D. and Wood, S. (2004) Business Information Management: Improving Performance Using Information Systems Financial Times/ Prentice Hall

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Chew, E.K. and Gottschalk, P. (2009) Information Technology Strategy and Management: Best Practices (Premier Reference Source) Information Science Reference

Ward J and Peppard J (2002) Strategic Planning for Information Systems John Wiley and Sons Ltd.

Cambell, D. (2006) Incentives: Motivation and the Economics of Information, (2th ed). Cambridge University Press

7. Lecture Sequence:

Lecture TopicsIndicative Reading Lecturer

1 Overview and relevance of Information Systems ManagementBocij, P(2008)Chapter 1

UM

2 Recent trends in the Business Environment Bocij, P(2008)Chapter 1

UM

3 Relationship between Business and IS/IT strategies Bocij, P(2008)Chapter 1

UM

Seminar 1 Two Questions / Case studies

4Strategic Planning and the role of IS/ IT in a firm's strategy / Boston Box model

Bocij, P(2008) Chapter 5 Laudon and Laudon (2009). Chapter 2

UM

5 Internet and E Commerce Business ModelsLaudon and Laudon (2009). Chapter 2

DR

6 Managerial Decision Making and IS/ITLaudon and Laudon (2009). Chapter 12

UM


7 Information securityBocij, P(2008) Chapter 15 Laudon and Laudon (2009). Chapter 8

DR

8Role of IS/IT in Business Innovation / Metadata / Knowledge Bases

Lecture Notes UM/DR


9 Integrated Information Systems and Introduction to ERP Bocij, P(2008). Chapter 6DR

10Governing IT/IS for superior risk/return – Specific Examples of Corporate IS

Laudon and Laudon (2009). Chapter 9

UM


11 Usage of IS/ IT in CRM, e-CRMBocij, P(2008)Chapter 11

DR

12 Information Economics Cambell, D. (2006)Part I-II

UM

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13 Knowledge Management - IntroductionLaudon and Laudon (2009). Chapter 11

UM

14Knowledge Management and Opportunities & challenges entailed in the strategic management of information technology

Bocij, P(2008)Chapter 12

DR

Revision Seminar : 6

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MBA 1 ISM Sample Exam Questions

Lecture No Topic Sample Exam Question

1 – (UM) Overview and

relevance of

Information

Systems

Management

To understand the basic relationship between

Business, Information Systems and Information

Technology

2- (UM) Recent trends in

the Business

Environment

Ana Analyse the recent trends in business

environment, and how they have influenced

management of information systems.

3- (UM) Relationship

between Business

and IS/IT

strategies

“IT/IS is an integral part of the overall

organisation strategy”. Evaluate this statement

using relevant corporate examples, theories and

concepts. You may include a discussion of the

different types of information systems at the

various levels of managerial decision making to

substantiate your arguments.

4- (UM) Strategic Planning

and the role of

IS/ IT in a firm's

strategy / Boston

Box model

Suggest ways that information technology and

information systems can be used to exploit

external opportunities and defend against the

threats facing Emirates Airlines.

5- (DR) Internet and E

Commerce

Business Models

Critically evaluate the impact of the internet on

any business. Your discussion may include

the impact of the internet on value chains, five

forces and similar aspects

6- (UM) Managerial

Decision Making

a) Explain the decision making process in terms

of the three phases, cite a corporate example,

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and IS/IT bring about the information requirements at

each of the phases and explain the role of

information systems. Examples to be given for

each phase.

b) For an organization of your choice, identify

the managerial decision making levels, give

examples of the types of decisions made at each

level, recommend IS which would help the

organization strategically and gain competitive

advantage in the business.

7-(DR) Information

security

It is said “No computer based information

system can be considered completely secure –

all organizations should base their control

strategies around information recovery”. Argue

a case for or against this statement.

8- (UM/DR) Role of IS/IT in

Business

Innovation /

Metadata /

Knowledge Bases

3M innovation case

9-(DR) Integrated

Information

Systems and

Introduction to

ERP

A large manufacturing organization wishes to

integrate the information systems using an

Enterprise Resource Planning software. You

are required to prepare a write – up for the

management explaining clearly,

The standardization and security aspects of

ERP,

The merits and de-merits of such Information

systems.

10- (UM) Governing IT/IS

for superior

Class Discussion on the various

organisational examples of IS and their

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risk/return –

Specific

Examples of

Corporate IS

benefits.

11-(DR)

Usage of IS/ IT in

CRM, e-CRM

Explain the concept of CRM. “CRM creates

value to the organisation”- discuss how this

value can be for the Cadburys created using

IS/IT.

12-(UM) How

information/knowl

edge products

differ from

physical products

To have a discussion on the different types of

organizational resources – funds, human and

information. To demonstrate that information

resources are valuable and their significance in

decision making.

13-(UM) Knowledge

Management -

Introduction

A large multinational company is taking time

off to reflect on it’s and processes

performance. A junior employee has

suggested that the organisation should consider

undertaking an exercise in “knowledge

management” . The CEO has shown interest in

this idea and has appointed you as a consultant

for this purpose. Explain clearly step by step

how you will go about this exercise.

(Remember you need to quote relevant theory

to justify your steps).

14-(DR) Knowledge

Management and

Opportunities &

challenges

entailed in the

How could an organization make use of

technology such as virtual reality to support

knowledge work and gain competitive

advantage?

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strategic

management of

information

technology

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Module Title: Managing Human Capital

Module Lecturer: Dr. Rajendra Kumar / David Hall

1. Module Description:The primary purpose of this module is to develop an understanding of the current context and practice of human resource management in the public sector. Like other parts of government, HRM has been undergoing many changes. The focus will be on best current practices in managing the workforce and organisational change.

The module will aid the students to gain a clear understanding of the concepts, methods and techniques and issues involved in managing human resource so as to facilitate employing, maintaining and promoting a motivated workforce in an organisation

2. Learning Outcomes:Upon successful completion of this module the students will be able to: demonstrate an awareness of current issues and challenges facing human resource managers understand and discuss workplace laws and know how they should be applied demonstrate a familiarity with traditional human resource management practices such as

carrying out selection activities and job analyses interact constructively in a group with diverse membership for the purpose of process gain research and develop a research paper on a current HRM topic gather information for the purpose of building a meaningful human resource text.

3. Indicative Content: Human Resource Management and its theoretical base Human Resource Planning Job analysis and design Recruitment and selection; discrimination in the workplace Performance appraisal Managing Diversity Training and Development Career planning / management Payment and Reward Occupational Health and Safety Management of Change. International perspectives on Human Resource Management



Lectures 22.5 hoursSeminars 7.5 hoursDirected Learning 40 hours

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Independent Learning 78 hoursFormal Assessment 2 hoursTotal 150 hours

5. Assessment:The formal assessment of this module will be conducted through an assignment and a closed book examination..

Assignment 30% Closed book examination 70%The closed book examination will be of two(2) hours duration

6. Concise Indicative Reading List

Core texts: Dessler, G. (2011) Human Resource Management ,12th edition, Prentice Hall, Recommended Reading:Beardwell, J. & Claydon, T (2007) Human Resource Management: A Contemporary Approach, (5th edn). Prentice Hall

Brewster, C. Sparrow, P. and Vernon, G.(2007) International Human Resource Managemen,t (2nd Edition). Chartered Institute of Personnel and Development

Price, A (2007) Human Resource Management, (3d edn). Thomson Learning

Legge, K. (2004) Human Resource Management: Rhetorics and Realities (Management, Work and Organisations),(Ed. Edition). Palgrave Macmillan

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7. Lecture sequence for Managing Human Capital

Lecture Topics Indicative Readings

Refer to Sample Question(s) No.

1. Introduction Human Resource Management and its theoretical base

Chapter 1, pp 28-53

Question 1

2.

Equal Employment Opportunity.Case studies ; Gap between theory and practice of HR in the UK

Chapter 2 , pp 56-91

Question 2

3.Job Analysis and DesignCase Study: Electronic Banking System Inc

Chapter 4, pp 140-174

Question 3

Seminar 1: Case Study

4. Human Resource PlanningChapter5,pp 176-182

Question 4

5.

Recruitment and Selection

Case study: Can Small Be Better for Recruiting

Chapters 5,6 &7

Pp 184-314

Question 5

6.

Organisational Change / Organisation Development


Question 6

Seminar 2: Two Questions

7.

Strategic Human Resource ManagementCase study : We Don’t Want to Get Involved (or Do We)


Question 7

8. Performance AppraisalChapter 9, pp 330-364

Question 8


9.

Training and DevelopmentCase Incident ; Reinventing the Wheel at Apex Door Company


Question 9

10. Pay, Benefits and ServicesChapter 11, 12 & 13, pp 410-523

Question 10


11. Career Planning/Management, Case incident : Job


Question 11

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Insecurity at IBM

12.Labour Relations and Collective Bargaining


Question 12


13.

Occupational Health and Safety. Case incident : The New Safety Program


Question 13

14.International Perspectives on Human Resource Management


Question 14

Revision

MHC Sample Questions

Lecture No.

Sample Question

1. 1. Critically discuss the role of HRM in initiating and managing culture change and, how HRM attempts to do so.

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2. 2. Distinguish between equal opportunities and managing diversity. Identify the types of discrimination that can occur in the workplace.

3.3. For each of the following HR systems, what information from a job analysis is needed to develop a professional and legally defensible system?

4.

4. Some organizations do a thorough job analysis first and then human resource planning as part of a restructuring process. What makes more sense to you? Why? If actual performance of the human resources plan differs from desired performance, what remedial steps might you use?

5.

5. a. Identify the linkages between Human Resource Planning outcomes and the

Recruitment decision. b. “Online recruitment is rapidly becoming a highly efficient forum for both

recruiters and job seekers. While it offers a number of advantages over the more traditional channels, at the same time it has brought its own set of problems ”

In the context of this statement perform an evaluation of online recruitment.

6.

6. Identify and discuss the key HR policies that contribute to organizational change and discuss the impact that they might make. Make reference to an organizational example in your answer.

7.7. Evaluate the role of “strategic human resources management” and outline how HRM supports organizational strategy. Provide examples in your answer.

8.

8. Many managers describe performance appraisal as the responsibility which they like the least. Why is this so? What could be done to improve the situation? As a HR manager, what steps would you take if your performance appraisal system resulted in disparate or adverse impact?

9.

9. Why is it necessary to link training and development to the achievement of the strategic business objectives of the organization? Critically discuss what would happen if these functions are not linked?

10.

10. Explain the rise in popularity of performance-related pay schemes although they may discriminate against certain groups of employees and they fail to motivate all employees. What is the link between performance, pay and motivation?

11.

11. What are the manager’s roles in a career management system? Which role do you think is most difficult for the typical manager? Which is the easiest role? List the reasons why managers might resist involvement in career management.

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12.12. Analyse all the relevant aspects to: Inductions / orientation Training programs

13.

13. There has been an increase in the number of work- related accidents and injuries in your organisation. As the occupational health and safety manager, you are required to institute an OHS programme in your organisation. Explain the necessity of such a programme and the steps that you would take?

14.

14.(a) “Several reasons exist to justify the need to rely on local managers to fill a

foreign subsidiary’s management ranks”.

Analyse this statement and evaluate the various sources available to international organisations when filling their foreign subsidiaries with international managers.

(b) Recommend and justify the human resource strategies that will ensure that an organisation can succeed in a challenging global environment.

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8. Assignment

Managing Human Capital Assignment Due date: 2nd December 2010

Value: 30%

Length: Approximately 3000 words

Instructions

. This coursework is an opportunity for you to gain experience and insight into training function of HRM as it exists in an actual organization. Your perspective will be as an external observer of the organization’s inner workings. This perspective will allow you to objectively discuss the organization’s training methods and practices and comment on what seems to be working, as well as make recommendations for improvement. In the interest of time and to maximize your learning from this project, consider selecting an organization for which information readily exists; a highly secure or secretive organization will make this project very difficult to complete.

NOTE : If you decide to use your own company or the organisation where you are doing a part time job, make sure that it is permissible for you to document the company’s HR practices for this project.

You may need to go beyond the set text and do extensive secondary research to tackle the above questions. Guidelines :

1. Thorough literature review on Human Resource Management must be evident. Suitable organisational examples need to be given. These examples should be real-life business situations that illustrate the concepts of the subject. Your assignment should have an analysis of issues raised in the organizational examples with relation to the assignment question.

2. Harvard style of referencing should be used. Include an introduction in your opening paragraph and a conclusion in the final one. Pay attention to the rules of writing in relation to paragraphing, punctuation, spelling, etc.

3. Use headings for sections of your essay where appropriate.4. Attach a bibliography of the books and journal articles used in the assignment.

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Module Title: Marketing Management

Module Lecturers: Prof. Geoff Lancaster / Mary Fitzpatrick

1. Module Description:

The objective of this module is to develop an understanding of some of the more important concepts and theories in marketing. When students have mastered the subject, they will be able to apply that knowledge to formulate and appraise marketing strategies and policies. In addition to the marketing of physical products, attention is given to the application of marketing principles to services marketing.

Marketing management is the study of the analysis, planning, implementation, and control of programs designed to create, build, and maintain mutually beneficial exchanges and relationships with target markets for the purpose of achieving organisational objectives. It relies on a disciplined analysis of the needs, wants, perceptions and preferences of target and intermediary markets as the basis for effective product design, pricing, communication, and distribution.

This course is organised around the major concepts and theories of business economics. The study of economics helps to prepare students to make rational economic choices, both in their own lives and in their participation in policy decisions as citizens of a city, state, nation and the world.

2. Learning Outcomes:

Upon successful completion of this module students will be able to: understand the nature of marketing and marketing management; analyse the marketing environment, understand customers and identify opportunities (and threats)

in the market place; segment markets and use that information to select target markets; develop and evaluate marketing strategies for organisations in different market positions; design marketing programs to serve selected target markets; design an appropriate organisation structure and to develop a control system to monitor the

implementation of a marketing program. understand the basic theoretical principles (concepts) concerned with the economic decision

making of producers and consumers and their interaction in the market place. understand of the theoretical basis of government economic policies as they relate to UK’s

macroeconomic problems of inflation, unemployment, budget and current account deficits and external debt.

apply economic theory to practical business problems that you are likely to face any business manager or accountant, e.g. incremental cost analysis, pricing decisions, the impact of government economic policy change on business profitability, etc.

3. Indicative Content: Concepts of Marketing Management

Marketing’s role in organisational performance

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Building customer satisfaction

Managing marketing information and measuring market demandConcepts of the MarketThe market environmentConsumer markets and buying behavioursAnalysing business markets and buyer behaviourAnalysing industries and competitorsSegmenting targeting and positioning

Marketing StrategyDifferentiating and positioning the marketing offerDeveloping new products and product life-cycle strategiesDesigning strategies for the global market place

Marketing programsManaging products and brandsManaging servicesPricing decisionsMarketing channel decisionsRetailing, wholesaling, and physical distributionMarketing communication decisions

The nature and method of economics and market theory Economics of the consumer and producer Economics of the producer Cost concepts for decision-making Perfect competition and Imperfect Competition The essentials of macroeconomics and Contemporary macroeconomic issues Demand side equilibrium and the Keynesian model Fiscal policy, Money, monetary policy and monetarism



Lectures 22.5 hoursSeminars 7.5 hoursDirected Learning 40 hoursIndependent Learning 72 hoursFormal Assessment 8 hoursTotal 150 hours

5. Assessment:

The formal assessment of this module will be conducted using: Presentation: 30%.

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The class will be divided into 5 (or 10 groups based on the no of students in class) and students will do a case study analysis and presentation. 2 MM classes will be scheduled in the timetable for this.

Examination: 70% - Two (2) Hours.

6. Indicative Reading List

Core texts: Lancaster G. and Massingham, L (2002) Essentials of Marketing, (4th edn).

McGraw Hill

Recommended Reading:

Lancaster G & Massingham, L (2011) Essentials of Marketing Management, Routledge (NB only available from end October 2010)

Lancaster, G. & Reynolds, P. (2004) Marketing, Macmillan

Aaker, D.A. (2005) Strategic Marketing Management, (7th edn.) John Wiley and Sons

Kazmi, S.H.H. (2008) Marketing Management: Text and Cases. Excel Books

Mankiw, N.G (2006) Principles of Economics (4th edn) South-western Educational Publishing

McGuigan, J.R, Moyer, RC and Harris, FHD (2007) Managerial Economics: Applications, Strategy and Tactics, (10th edn) South-Western College Publication

Lancaster, G and Reynolds P (2005) Management of Marketing, Elsevier Butterworth-Heinemann

Baker, M Hart, S. (2007) The Marketing Book, (6th edn) Butterworth Heinemann

Lancaster, G. and Withey, F. (2006) Marketing Fundamentals – the official CIM course book, Elsevier Butterworth-Heinemann

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7. Lecture Sequence for Marketing Management

Lecture Lecture Topic Indicative Readings Sample Questions

1 Marketing Culture and ethics Lancaster (2002)Chapter 1

Question 7, 10,

2 Marketing EnvironmentIntroduction to Marketing Communications

Lancaster (2002):

Chapter 2 pp43-71

Questions 2,618, 23

3 Understanding the behaviour of customers

Lancaster (2002):

Chapter 3. Pp 73-103

Questions 3,4,8

Group Seminar 1 CASE 1: Nivea

4 Marketing Communication Mix : Advertising & PR, sponsorship

Lancaster (2002) Chapter 9Kotler et al (2010), Chapters: 17, 18

Question 22,26

5 Marketing Communications Mix: Direct Marketing, Sales Promotion

Lancaster (2002) Chapter 10 pp 324-347,. Kotler et al (2010) Chapter 17

Question 19, 21

6 Marketing Communication Mix :Sales Management /personal selling

Lancaster ( 2002) Chapter 9Kotler et al (2010) Chapter 16Lancaster & Jobber (2009). Chapters 8-9

Q4, 25, 27

Group Seminar 2 CASE 2: Salon Promotion Given in Class

7 Marketing Segmentation Lancaster (2002):

Chapter 4 pp 104-130

Question 9

8 Marketing Information Systems & Research

Lancaster (2002):

Chapter 5 pp 133-179

Group Seminar 3 CASE 3: ASOS

9 Product ( or service) Lancaster (2002): chapter 6 pp 180-225

Question 7

10 Pricing: economic etcProduct and service polity etc

Lancaster (2002: chapters 6 &7, Lancaster (2002): chapters 8, 11, 12

Questions 5,11,12

Group Seminar 4 CASE 4: CORUS

11 Distribution Lancaster (2002): chapters 6 Questions 1,13,14,15

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&7, Lancaster (2002): chapters 8, 11, 12

12 Sales Forecasting Lancaster (2002): Chapters 11 pp351369

Group Seminar 5 CASE 5: FIRST DIRECT

13 Marketing Planning Lancaster (2002): Chap 12 pp370-404

14 International Marketing Lancaster (2002): Chap 14 pp425-451

Questions 16,17

Revision Revision

Sample Exams Questions- Marketing Question 1

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Your company supplies components for the automotive industry. Your largest customer has recently announced that it is moving towards a lean manufacturing system that will adopt ‘just-in-time’ principles of component delivery within one year.

Write a report to your marketing director stating the implications of this announcement and suggesting what your company should do in order to be prepared for this change within one year.

Question 2Marketing is continuing to evolve. Identify and explain what in today’s marketplace you consider to be the important elements in the making of quality decisions within the overall marketing planning process. Illustrate your answer with appropriate contemporary examples.

Question 3(a) Identify and briefly explain the key factors and sub-factors that influence consumer

behaviour.

(b) Discuss the nature and importance of reference groups in the context of consumer buying behaviour.

Question 4Identify and describe the nature of the major elements of the communications mix, and state under which conditions each would be more appropriate. Provide an example of each element.

Question 5Identify the type of information required by a marketing department before a pricing strategy can be agreed, and explain how this information can assist in the formulation of an appropriate pricing strategy.

Question 6Using specific examples by way of explanation what is meant by the following three types of business orientation:

(i) production orientation;(ii) sales orientation;(iii) marketing orientation.

In your answer, explain how recent developments in marketing which focus on environmental, ecological and related issues have impacted on these business orientations.

Question 7Management theorists such as Theodore Levitt and Tom Peters have argued strongly for the

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importance of customer care and service as a dimension in marketing management. Outline the main arguments they have put forward and discuss their importance and give your reasoned view as to whether or not you agree with these arguments.

Question 8What do you understand by the concept of product positioning? How does this relate to market segmentation? What are the stages involved in positioning a product?

Question 9With reference to product and service examples of your choice distinguish between ‘push’ and ‘pull’ strategies of promotion. In your answer indicate the likely mixture and emphasis given to various elements of the communications mix (i.e. advertising, sales promotion, public relations, selling, direct marketing, e-marketing).

Question 10

The product life cycle has five major phases: development; introduction; growth; maturity and decline. Draw an appropriate diagram for the product life cycle and discuss the marketing characteristics of each of these stages.

Question 11You are the newly appointed marketing manager in a company where prices have been set by the accountant on a cost plus basis.

Following your appointment, senior management has called a meeting to discuss the option of giving the marketing department the responsibility for price setting. Prepare your notes for this meeting.

Question 12Value analysis (VA) can be a powerful tool in reducing the costs of component parts of a product. Explain, through the use of appropriate illustrations, how this can be achieved.

Question 13The company in which you work is considering the idea that physical distribution should become a component part of marketing, rather than being the final delivery part of the production process. Prepare a report for the general manager who has asked you to do this for a meeting of directors, outlining how such an arrangement might improve service to customers.

Question 14

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Discuss what is meant by the terms “consumerism” and “environmentalism”. What relevance do these issues have in the context of strategic marketing planning?

Question 15Lancaster maintains the product life cycle concept provides a useful framework for developing appropriate strategies for each stage of a product’s life and is a useful vehicle for forecasting. However, Dallah and Yuspeh, in the Harvard Business Review, have criticised the product life cycle concept as a tool of marketing.

Provide justification for agreeing or disagreeing with one view or the other and go on to expand upon appropriate strategies for each of the stages in the product life cycle that have been identified.

Question 16 Discuss the commonly held belief that there is no single market entry strategy that is appropriate in all circumstances.

Question 17 A rush of investment business worth more than half a billion Euros in 2008 is heralding increased interest by UK based marketing firms in the transitional economies of Eastern Europe particularly those of the former Soviet Union such as Estonia, Ukraine and Latvia. Discuss the problems international marketing researchers may face in gathering both secondary and primary data in such markets. Use examples to illustrate the points made.

Question 18For each of the PEST factors of the marketing environment, give three examples of influences on the promotional mix?

Question 19What are the benefits to buyers of direct marketing? What are the benefits to sellers of direct marketing?

Question 21How is sales promotion different from advertising?

Question 22Contrast the different types of advertising objectives

Question 23Give three specific examples of noise within the marketing communications process. Whatstrategies can a marketer use to reduce the effects of these noise factors.

Question 25

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Identify and briefly explain the elements of the DMU (Decision Making Unit). Explain why marketers need to understand the DMU in Key Account Management.

Question 26Using examples discuss the main uses of sponsorship; Provide examples of good sponsorship poor sponsorship

Question 27List and briefly identify each of the major steps in sales force management.

CASE STUDIES

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CASE 1: NIVEA. Developing a marketing plan

Introduction

The NIVEA® brand is one of the most recognised skin and beauty care brands in the world. NIVEA creme was first introduced in 1911 and the NIVEA brand now extends to 14 product ranges worldwide from sun care to facial moisturisers, deodorant and shower products.

In 1980 when Beiersdorf, the international company that owns NIVEA, launched its NIVEA FOR MEN® range internationally, it broke new ground with its aftershave balm product. It was the first balm on the market that did not contain alcohol, which can irritate the skin. It proved to be very popular with consumers.

In 1993, NIVEA FOR MEN developed a fuller range of male skincare products. This reflected the growing social acceptance of these products with male consumers. The brand was able to exploit its knowledge of the skincare market. The company's research showed men mainly wanted skincare products that protected the face after shaving. Men were willing to buy products that helped calm and soothe irritated skin caused by shaving.

The NIVEA FOR MEN brand was launched in the UK in 1998. At that time total annual sales of men's skincare products (facial and shaving preparations) in the UK were only £68 million with the male facial product sector worth only £7.3 million.

Sales of male skincare products have grown steadily since the launch of NIVEA FOR MEN and the market in 2008 was worth over £117 million with male facial products worth £49 million.

NIVEA FOR MEN wanted to increase its share of the UK male skincare market. This case study examines how NIVEA re-launched the NIVEA FOR MEN range in 2008. This was part of its overall plan to develop the range in the UK. It shows how the company developed a marketing plan for the relaunch and organised its marketing activities to achieve its aims and objectives. The study focuses on how a company can respond to changes in consumer expectations, external influences and business aims to achieve those objectives.

What is a marketing plan?

A business needs to set its overall direction for the company through a business plan. This plan sets out how the company is to achieve its aims. The aims and objectives of a business inform and shape its business plan. A vital part of the overall business plan is the marketing plan. The relationship between the two plans is shown in the diagram.

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Marketing involves identifying, anticipating and satisfying customer needs. A marketing plan takes the stated aims and objectives and then puts in place a series of marketing activities to ensure those objectives are achieved. Marketing plans can cover any time period, but normally set out activities for the next one to five years at either a business or brand level.

The main sections of the plan cover:

SWOT and competitive analysis – to assess where the business or brand is currently and what competitors are doing

objectives – what the plan needs to achieve the marketing strategy – how the objectives will be achieved sales forecast – by how much sales are likely to increase budget – how much the marketing activities will cost and how the plan will be financed evaluation – how outcomes will be monitored and measured.

There is no set model for a marketing plan. The structure of the plan – and the amount of detail – will depend on the size of the brand, the timescale involved and how the market and economy is behaving. However, NIVEA's marketing plan for the relaunch of NIVEA FOR MEN follows closely the outline described here.

Assessing the market

The first step in devising a marketing plan is to conduct an evaluation of the business, its brands and products. This should include an assessment of the brand's position and the state of the market. NIVEA FOR MEN needs to know what its male customers want and what competitor products exist. As well as targeting the male consumer, women are also an important target market for NIVEA FOR MEN. This is because women often buy male grooming products for their partners as well as helping them choose which products to buy. NIVEA FOR MEN used a SWOT analysis to help it assess the market. This takes a detailed look at the internal strengths and weaknesses of the business, as well as external opportunities and threats in the marketplace.

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Setting objectives

A successful marketing plan relies on setting clear and relevant objectives. These must relate directly to the business' overall aims and objectives. In other words, the marketing plan must fit with the overall company strategy that is set out in the business plan. Beiersdorf states its goal as '...to increase our market share through qualitative growth. At the same time we want to further improve our sound earnings performance so that we can fulfil our consumers' wishes and needs with innovations today and in the future. This will give us a strong position within the global competitive environment.'

The marketing team set SMART objectives for the NIVEA FOR MEN relaunch. These are Specific, Measurable, Achievable, Realistic (given the available resources) and Time constrained (to be achieved by a given date). The marketing team used research data to forecast market trends over the next three-to-five years. This helped them set specific targets for increasing sales, growing market share and improving its brand image.

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Beiersdorf wanted to increase its UK market share for NIVEA FOR MEN, but also wanted greater market penetration for male skincare products. In other words, it wanted not just a greater share of the existing market; it wanted to expand that market. It wanted more men buying skincare products. One key aim was to move men from just considering skincare products to making actual purchases. It also aimed to sell more male skincare products to women. Research had indicated that women were often the initial purchaser of skincare products for men. NIVEA FOR MEN used this key fact as a way to increase opportunities for sales. Another objective was to develop the NIVEA FOR MEN brand image. The NIVEA brand has always stood for good quality products that are reliable, user-friendly and good value for money. The brand’s core values are security, trust, closeness and credibility. These values would be strengthened and expanded on with the re-launch, to get more men and women to think of NIVEA as first choice for skincare.

Marketing strategies

The NIVEA FOR MEN team devised marketing strategies to deliver its objectives. These strategies set out how the objectives would be achieved within the designated budget set by the management team.

This focus on product development combined with an emphasis on consumer needs is a key differentiator for NIVEA FOR MEN. It is a major reason why in the UK the brand is still the market leader in the male facial skincare market*.

Another cornerstone of the UK marketing strategy for the re-launch was promotion. NIVEA sought to build on and develop the approach it had used in the past. In the 1980s, advertising in men’s style and fashion magazines along with product sampling was a major promotional tool. In the 1990s, the company used radio, television and press advertising together with sampling. Since 2000, there has been a greater emphasis on consumer needs and an increasing use of experiential activities in the promotional mix. Experiential marketing is about engaging consumers through two-way communications that bring brand personalities to life and add value

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to the target audience. This helps build an emotional connection between the brand and the consumers.

It is important to get the promotional balance right. NIVEA FOR MEN promoted the new launches of its products through a mixture of above-the-line and below-the-line promotion. The use of sport was a key element here. NIVEA FOR MEN supported football events at a grass-roots level through its partnership with Powerleague to build positive relationships with men. This helped create stronger brand affinity for NIVEA FOR MEN among men. It also allowed the brand to build and maintain a consistent dialogue with men, which helps to drive sales.

Above-the-line promotion included television and cinema adverts, which reached a wide audience. By using links with sport, NIVEA FOR MEN aimed to build a positive male image associated with male facial skincare. The brand also benefited from press advertorials in popular men’s magazines, making the daily usage of their products more acceptable.

Promotions were used to attract new customers. For example, the distribution of free samples encouraged trial of NIVEA FOR MEN products which drove purchase. These promotions have helped build up brand awareness and consumer familiarity which reinforce the NIVEA FOR MEN brand presence. There is a dedicated NIVEA FOR MEN website to support its products and provide information to educate men on their skincare needs. To enhance the brand a tool called a ‘Configurator’ was created on the website to help customers specify their skin type and find the product that best suits their needs.

Conclusion - evaluating the plan

The marketing plan is a cycle that begins and ends with evaluation. The final stage in the marketing plan is to measure the outcomes of the marketing activities against the original objectives and targets. Continuous evaluation helps the marketing team to focus on modifying or introducing new activities to achieve objectives.

NIVEA FOR MEN adopted a range of key performance indicators to assess the success of the NIVEA FOR MEN re-launch in the UK. It looked at:

market share - Did the re-launch accelerate this growth and help achieve its market share objectives? NIVEA FOR MEN is market leader in many countries and is consistently gaining additional market share.

overall sales - Was this in line with objectives? Internationally, NIVEA FOR MEN skincare products grew by almost 20%. Its sales in the UK market at retail in 2008 were nearly £30 million and in line with expectations.

brand image ratings - NIVEA FOR MEN was the Best Skincare Range winner in the FHM Grooming Award 2008 for the fifth year running. This award was voted for by consumers. It illustrates that NIVEA FOR MEN has an extremely positive brand image with consumers compared to other brands.

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product innovation - In response to consumer feedback and following extensive product innovation and development, the NIVEA FOR MEN range has been expanded and the existing formulations improved.

These results show that, in the UK, the NIVEA FOR MEN re-launch met its overall targets, which was a significant achievement, considering the difficult economic climate. The marketing plan for the re-launch used past performance and forecast data to create a new marketing strategy. This built on the brand and company’s strengths to take advantage of the increasing change of male attitudes to using skincare products.

Questions1. Describe two pieces of data that NIVEA used when preparing its marketing plan to

relaunch NIVEA FOR MEN.

2. Explain why NIVEA used football sponsorship to help increase its sales ofNIVEA FOR MEN products.

3. Using the case study, put together a SWOT analysis of NIVEA’s position just before therelaunch of NIVEA FOR MEN.

4. Discuss how effective you think the marketing plan for NIVEA FOR

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CASE3: ASOS. The product life cycle and online fashion

Introduction

ASOS.com is the UK's market leader in online fashion retailing. It offers own-label, branded fashion and designer goods. Its headquarters are in Camden Town in North London. ASOS.com originally stood for As Seen on Screen. The company was set up in June 2000 with just two people to bring the latest fashion trends to shoppers as quickly as possible. It has rapidly grown to become the UK's largest independent online fashion retailer. It stocks over 22,000 product styles on its website and introduces up to 1,000 new products to its ranges each week. The ASOS.com website attracts over five million visitors a month and the company currently has around 1.2 million active customers (that is, people who have bought in the last six months). It was named Online Retailer of the Year in 2008 by Retail Week Awards.

ASOS.com provides high fashion clothing for women, men and children, as well as footwear, accessories, jewellery and beauty products. It aims these primarily at a target audience of 16-34 year olds. However, as the company continues to grow and diversify its product ranges and increase awareness, it appeals to a much wider online fashion market. Over 20% of its current customer database is aged over 35. Each week ASOS.com delivers 70,000 packages to the homes of its online customers.

ASOS.com has been able to exploit the increasing popularity of online shopping to help the business grow. According to research from IMRG UK, an organisation which tracks online sales:

around 50% of 16–24 year olds buy clothes online more than once a month 30% of women have bought clothes online the total UK online spend in 2007 was £42.0 million there were 26 million UK online shoppers in 2007.

Online shopping provides customers with the convenience of making purchases whenever and wherever they like. ASOS.com' use of technology helps to increase sales by providing easy navigation around the website and helpful tools like the 'catwalk' option so items can be seen on moving models. The business also benefits from its visionary approach to traditional retailing by not having high street stores. This keeps its staffing and property costs down.

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http://www.asos.com/

This case study shows how ASOS.com uses the product life cycle to ensure its product portfolio continues to meet the needs of its customers and provide up-to-date fashions in the fast-moving online retail industry.

The product life cycle

The product life cycle shows the stages a product goes through over time in relation to its sales. Whilst individual products have their own life cycles it is important also to understand wider market trends. The retail market also follows a life cycle. In the UK the total retail market is in a mature state with growth slowing down. Retailers have to compete hard, shown by declining sales in high street stores.

In contrast, the online retail industry is a young market still showing huge growth since its introduction period between 1998 and 2002. Between 2004 and 2007, total retail growth was just 4.6%, whereas online retail grew by over 130% in the same period. One of the big changes that occurred was a move by businesses from selling from a catalogue to direct selling online. This is clearly illustrated by the growing market share of ASOS.com.

In the fashion industry there is a fairly short product life cycle because trends and tastes change regularly. For example, the ASOS.com website features a range of own-brand dresses which are a 'must-have' fashion item for the summer of 2009. The product life cycle for an ASOS.com own-brand dress typically follows the following sequence:

Introduction – The dress is made available to customers on the website. Fashion leaders adopt the new item. ASOS.com initially gives a lot of prominence to newly launched products on its website, for example, by having links directly to these items from the homepage and weekly newsletters.

Rapid growth – ASOS.com needs to ensure adequate stocks so as not to disappoint customers. Once the item moves into the growth stage it tends to promote itself as customers see the item in newspapers and magazines.

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Maturity– At this stage, ASOS.com will remind people about the product online, through for example, trend features on the website and in its newsletter. It may order more stock to ensure supply. For example, one dress from the summer 2008 collection is still selling well and has regular repeat orders.

Saturation – At this point, ASOS.com may decide to reduce the price to clear remaining stock. Sales provide an opportunity to make space in the warehouse for new products.

Decline – people become tired of the item or it is replaced by a new product. Fashion and trends have moved on.

There is a stage to the life cycle before the product is introduced – Development. In this phase, the ASOS.com buying team choose materials, styles and colours to produce a dress design. Suppliers then produce and distribute the goods to ASOS.com's warehouse in the UK ready for introduction to the market.

ASOS.com regularly introduces new products as customers demand the latest trends they have seen in magazines and on fashion catwalks. Introducing a new product involves considerable costs:

New stock needs to be purchased. The website needs to be updated with pictures of the new fashionable items. The ordering system needs to be updated. The items need to be promoted through the website, newsletter and magazine. There is the risk of an item selling poorly.

At the start of the life cycle, costs for a new product will be high whilst revenues are low. However, during the growth period revenues start to outstrip costs and contribute to the business' profitability. The life cycle in fashion can be a matter of days. Limited 100 – a collection created in collaboration with students at London College of Fashion – sold out in five hours.

Purpose of the product life cycle

Knowledge of how the life cycle works is particularly important for a company like ASOS.com. The fashion industry is fast-moving and the individual product life cycles may be seasonable. This means that some items will only sell well during parts of the year. In addition, the lead time

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on the production and buying process means that ASOS.com must plan a season ahead. Fashion designers launch their new clothes collections in the same way. So, during winter 2008, ASOS.com would already have chosen and been planning for the promotion of its summer 2009 collection.

However ASOS.com enjoys an extended product life cycle due to the fact that the business has a large international market. In the southern hemisphere the seasons are the other way round to the UK. This, combined with an increasing trend to take winter holidays in sunny countries, means that summer items, such as swimwear, sell right through the year. Other items sell at unexpected times. For example, Ugg sheepskin boots would normally be considered a winter product. However, a few years ago, celebrities wearing them at pop festivals in the summer means they now sell all year round. As an online retailer, ASOS.com is not restricted in terms of space. It can offer products at times when high street retailers have to send certain categories of goods back to the warehouse. For example, ASOS.com's Holiday Shop performs very well at Christmas time.

Understanding the product life cycle also gives ASOS.com managers greater control.

They are able to predict when revenue will flow in and calculate the profitability of product lines.

They can plan the introduction and withdrawal of products. Some product lines will be highly seasonal. Other products such as classic blue jeans will have much longer life cycles and provide regular long-term revenue for the business. Managers therefore need to plan the appropriate type and level of promotion for different products.

They can support products through the entire life cycle. They can plan pricing strategies to extract as much revenue as possible at every stage. For example; promotional discounts can be used to encourage large numbers of people to purchase a new product when it is launched. Premium pricing may apply to a new limited edition dress. Price reductions are often used at the end of the life cycle when the item is less popular and sales are declining.

Promotion

Promotional activity helps a business to provide potential customers with information about its products with a view to making a sale. ASOS.com is a market-orientated company. ASOS.com's Customer Relationship Management system helps it to understand its customers and their buying patterns. This means how different age groups and most importantly, how different attitudes affect what appeals to customers and influences how they will spend their money. User information enables ASOS.com to target its promotional activity. ASOS.com gathers information about its customers and what types of fashion they like from its website registrations. For example, two women of the same age can have entirely different purchasing habits and fashion styles. This information helps ASOS.com decide where and how it will promote its products. ASOS.com's Public Relations department will target advertising to a broad range of publications simultaneously, such as Harper's Bazarre, Vogue, Elle, GQ or The Times newspaper. As part of online registration, customers provide email addresses. ASOS.com sends

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out email newsletters with updates about new products and offers twice a week to over 2.7 million customers.

By analysing a database of what its customers typically buy and how often they purchase, ASOS.com is able to target promotions directly at particular segmentsof customers. ASOS.com estimates what products will appeal to individual customers. It then targets promotions to customers on an individual basis. For example:

a younger customer who has in the past bought low-rise jeans may also be interested in buying a fitted leather jacket

a customer who has bought a dress from ASOS.com's Black range of products may also have the spending power to buy designer shoes and handbags.

Measuring the response to promotional activity is very important. A number of key performance indicators are used to measure effectiveness. When ASOS.com sends customers emails about a new product, such as blazers, it needs to know:

how many of these emails are opened whether they are clicked through (read to the end) how many of these convert into sales.

From evaluating these figures, ASOS.com can get a picture of how many customers are exposed to this promotional method and what sales are being generated as a result. Other important measures include the number of people using and purchasing from the ASOS.com website. If use is high and growing, it shows continued growth of the market.

Extension strategies

ASOS.com makes it easy for people to buy online as it has a huge range of own-brand, high street and designer labels on one website with a single basket check-out ordering service. Leading clothes designers and fashion houses choose to sell their clothes through ASOS.com because they know that this is a good way to reach a wide, international audience and generate revenue. ASOS.com is continually seeking to outperform its competitors and increase its market share. It does this by providing customers with choice, value, service and fashion credibility. It also needs to be aware of how the life cycle of its entire product range can be managed and extended to maximise revenues.

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The Boston Matrix model helps ASOS.com to assess the value of product categories and plan strategies to manage them.

Poor performers such as last season's items that are now in decline or products that fail to launch are referred to as Dogs – sales are poor and profits low.

Question Marks are new items that have been launched and may do well. Stars are the items that are growing quickly and could go on to make a lot of money. Cash Cows are items which are good earners and have been so for a while. For example,

basic T-shirts and ASOS.com's own-label dresses continue to be popular year after year. These items have reached maturity and stayed there.

ASOS.com's challenges are to:

convert the Question Marks and Stars into Cash Cows of the future by increasing or extending promotion

manage the Dogs either by removing the item and cutting costs or reducing the price to sell quickly or re-using the materials in these garments to make new ones.

The profits earned from Cash Cows can be used to develop and promote Stars and Question Marks.

Conclusion

Fashion is a rapidly moving market. ASOS.com demonstrates the growing trend for online shopping with increasing numbers of visitors and purchases on its website year-on-year. ASOS.com meets the needs of its target audience by providing an exciting and continually updated website with regular new fashion items. Being able to target customers through personalised customer communications is a vital aspect of its promotion strategy.

It also continues to enhance the range of product areas it offers, such as kidswear and maternity clothes, launched in 2008 and 2009 respectively. ASOS.com also continues to develop the range of services it offers, for example, its 'Style with substance' initiative ensures customer emails are responded to within one hour. By understanding its customers' needs and the life cycle of its products, ASOS.com is able to provide a product offering which ensures customers keep returning to the ASOS.com website.

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Questions

1. What do you understand by the term ‘product life cycle’? Illustrate your answer using anexample of a fashion item that you have bought.2. How is knowledge of the product life cycle useful to managers in planning the launch andongoing support for new products?3. Using the ASOS.com website, analyse the types of approaches that might be adoptedwhen promoting a clothing range online.4. What considerations should ASOS.com take into account when deciding whether tospend more on promoting particular products? Refer to the Boston Matrix when answeringthis question.

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CASE 4: CORUS. Product development through continuous improvement

Introduction

Corus is part of the Tata Steel Group, the world's sixth largest steel producer. Within Europe, Corus is the second largest steel producer with average annual revenues of around £12 billion. The company produces more than 20 million tonnes of steel each year, mainly in the UK and the Netherlands. It has a global network of sales offices and service centres, employing around 42,000 people worldwide. Corus is a leading supplier of steel to some of the most demanding markets around the world.

Corus Long Products Business (CLPB), a business unit of Corus, has steel manufacturing facilities in England, Scotland and France. These produce different steel products – from steel plate to steel rails and wire rod. The key markets for CLPB products include construction (for buildings), engineering and machinery, mining and earthmoving equipment, shipbuilding, fastenings and rail. The principal manufacturing site in Scunthorpe covers 2,000 acres and employs 4,000 people. The site consumes 6.5 million tonnes of iron ore and 2 million tonnes of coal each year to produce 4.3 million tonnes of steel products.

This case study focuses on how Corus used its knowledge and experience of continuous improvement (CI) to win new business. Continuous improvement is a tool that gives competitive advantage. This means the business can move ahead of competitors and increase its market share. Using skills and expertise in a structured way enables an organisation to create better processes and products. Corus used CI to support its new product development (NPD), enabling it to meet the needs of its customers more closely. Developing innovative products through continuous improvement is at the heart of Corus' business strategy.

Continuous improvement enabled Corus to overcome problems in its steel works. Several years ago Corus bid for a Royal Navy contract for steel for T45 destroyer vessels. Up until that date, this was the largest Royal Navy contract awarded. Corus did not get the work because the business at that time was not seen to have the capability of meeting the high specification of steel plate required. Losing the contract showed Corus it needed to invest to improve its machinery and processes. It invested around £8 million at the Scunthorpe plate mill in order to be ready to meet the requirements of any similar contracts in the future.

The investment, together with its established Continuous Improvement practices, has enabled Corus to win a recent contract to supply steel for two new Royal Navy aircraft carriers. The £3.8 billion carriers, HMS Queen Elizabeth and HMS Prince of Wales, will enter service in 2014 and 2016 respectively. Corus will supply more than 80,000 tonnes of structural steel for the carriers. They will be the biggest and most powerful surface warships ever built for the Royal Navy.

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Continuous improvement (Kaizen)

Since the 1950s many manufacturing techniques based on quality have been developed. 'Kaizen' is one of these and is Japanese for 'continuous improvement'. This focuses on making small continuous improvements across all functions, systems and processes within a business. For example, waste is a cost to Corus. Continuous improvement contributes towards lean production. Lean production occurs where:

waste has been minimised. the flow of work is smooth. the business is focused on customer needs.

Lean production uses fewer resources more efficiently. This increases productivity and can improve profitability. Continuous improvement at Corus helps to eliminate waste in seven key areas. It uses the mnemonic 'TIM WOOD' to help employees remember the areas.

One aspect of lean production that helps to save costs of stock is the just-in-time (JIT) principle. Just-in-time means producing and supplying goods at the time they are needed. The business holds the minimum amount of raw materials and just enough finished product to meet demand. It requires well-organised systems to ensure supplies arrive and goods reach customers on time. This reduces costs and so helps to improve the return on investment for shareholders.

JIT also carries risks – if the business has no stock it could be less able to cope if suppliers fail to deliver. Corus needs to balance these risks against the proven benefits.

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Continuous improvement influences the whole of the business. To be effective, all employees need to own and adopt CI principles, starting with senior management commitment. Under their leadership, CI works through the whole organisation. Strong communication is important in building this commitment. Corus carries out regular presentations to staff on how CI is improving the business. It also uses written forms of communication with articles in team briefings and newsletters.

Everyone has a part to play in continuous improvement. Through various CI groups, all Corus employees can contribute ideas for improving their working practices. The person doing a job often knows best how to make improvements. This empowermentof employees and managers helps them to feel valued and gives them job satisfaction. Corus benefits from becoming a more profitable business by reducing costs, securing high value orders and maximising the time its rolling mill operations are in use. Corus Research & Development benefits from the business’ commitment to improvement by developing expertise and knowledge. This will support future business.

Continuous improvement not only makes Corus more efficient but also provides many benefits to its external stakeholders.

Product development

The steel for the new aircraft carriers needed to meet a very high specification. Materials for warships have to be able to endure the unique conditions in which they operate, such as extreme temperatures or high seas. This contract required grades of steel with strength and toughness higher than those Corus had put forward for its previous contract bid. This represented a new product opportunity. Product development ideas may come from:

competitors - developing a product in response to competitors helps the industry as a whole to move forward

changes in technologies - arising out of research and development innovation - using new ideas to make new products employees - who see opportunities from working with products the market - where customer demand suggests new products.

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In this case, the customer, the Royal Navy, drove demand. It wanted a single preferred supplier for all the materials it needed. Corus satisfied the contract through research and innovation based on its continuous improvement processes.

During the bidding process, Corus worked with the Aircraft Carrier Design Team. This is known as ‘early vendor involvement’. Corus did this to make sure that it understood, could direct and could meet the final product specification requirements. It is a high-risk strategy as Corus had to invest money, time and effort before knowing if its bid was successful. However, this process gave Corus the time to develop the steels which had the increased levels of strength combined with toughness that the design team desired.

To add to the challenge, the Royal Navy changed the product specification during the period of the bidding process, creating new factors for Corus to overcome:

Design requirements changed to make the ships lighter and improve speed. To save on weight, the steel plate needed to be higher strength but thinner.

The maximum thickness of certain critical parts increased by over 40%. As the thickness of steel increases, its ability to meet the required high strength and resistance to fracture becomes increasingly more difficult.

This meant Corus had to develop a completely new product to meet this much higher specification if it was to win the contract.

Although continuous improvement usually focuses on small increases, Corus' established systems and quality procedures helped it to meet this step change:

Its Research & Development expertise and knowledge came up with the new steel formula that had the required toughness and strength.

Lean production principles helped to minimise waste. Just in time procedures helped to meet tight deadlines.

Product testing

Steelmaking is a large-scale manufacturing process. Manufacturing involves taking all of the raw materials involved in making steel and turning them into tangible outputs. Producing large quantities reduces the cost of each piece. This is known as 'economies of scale'. In order to test the new steel formula properly during development, Corus needed to find a way of making small batches for testing. Corus also needed to evaluate how, if it won the bid, it would produce the steel on a large scale.

Product testing is an important part of development. The small batches enabled Corus to create prototypes to test and discover how well each met the required specification.

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It needed to examine which elements of the steel manufacturing process affected the strength and toughness of the plate. It was important to test various factors to see what impact changes in each would make to the finished product:

the steel chemistry - what ingredients made the steel 'recipe' better? the reheating conditions - how did the temperature affect the steel? the rolling schedule - did different mill processes have an effect? the cooling speed - did the speed of cooling affect the product? the additional heat treatment processes - would additional heating change its qualities?

The product testing stage enabled Corus to make sure the final product met the required brief from the design team. It used computer modelling software to identify the impact of changes in each factor. By understanding the best combination, Corus came up with the winning formula.

Outcomes

Corus developed the new steel product to help it win the Royal Navy contract. As a result, it benefited in many ways as a side effect of the changes:

By using its existing CI procedures to guide its research and development and testing, Corus developed the new specification of steel required at a competitive price.

Investment in new technologies and equipment, used alongside lean production techniques, enabled Corus to minimise levels of waste and reduce high manufacturing costs.

It was able to meet customer deadlines, a vital element of making a business' operations more competitive.

The steelmaking industry also benefited. Corus adopts a practice of benchmarkingas part of its continuous improvement. It shares its best practice across the industry. Other steel businesses can now use the best methods of production to raise quality across the whole sector.

Quality assurance is a vital requirement of continuous improvement, especially in the shipbuilding industry. Steel products for this industry require approval by shipping classification societies, such as Lloyds Register of Shipping. This independent body carries out its own

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assessment of the test programme to ensure that materials meet full requirements for the shipping industry. Without this approval, Corus would be unable to use its materials for this type of job.

By meeting the higher specification, Corus gained Lloyds Register approval for the new steel plate it developed for the Royal Navy. This approval means that Corus can offer these high quality steels to other customers. This expands its customer base. Its investment in CI systems, research and development and the use of its employees' knowledge have provided Corus with a distinct competitive advantage.

Conclusion

In a competitive industry, businesses need to use all the resources they have, including skills and knowledge. Continuous improvement at Corus provides a process in which everybody can play a part in moving the business forward. Working in teams enables employees to share their ideas and expertise. Using the expertise of staff helps the business to develop. It also empowers individuals to take on responsibility and provides them with increased job satisfaction.

New product development may involve risk, such as investing time, resources and money in new technologies. However, it also creates business opportunities. Continuous improvement has helped Corus to meet the Royal Navy's increasingly sophisticated requirements for high specification steel products. However, in meeting these needs, it has also opened up other business opportunities. By winning this contract, Corus is now able to make this higher grade steel available as part of its product portfolio. As a long-term strategy, it will help the business to outperform its competitors and increase its market share.

Questions

1. Describe what is meant by continuous improvement.2. Explain the link between continuous improvement and new product development.3. Using examples, analyse the importance of lean production principles for each of Corus’internal and external stakeholders.4. Evaluate how Corus could use developments through the processes of continuousimprovement to meet the needs of new groups of customers for its steel products.

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CASE 5: FIRST DIRECT. Using customer service to position a businessIntroduction

When customers buy manufactured goods, such as a mobile phone, a magazine, a bicycle, some new clothes or a computer, they usually know precisely what they are getting. These products have tangible qualities. Customers make choices based on the particular features of each product. Retailers need to provide good customer service, so that customers can find out more about products before making a purchase and can get a refund or after-sales service if a product proves to be faulty or unsatisfactory. However, customer service is only a small part of the overall offer. For example, a customer may expect good service when buying some new shoes, but this is unlikely to be the main factor in deciding whether to make a purchase. Factors like price, comfort, style and brand are likely to be more persuasive.

Customer service is more important for businesses that provide services rather than physical products. In fact it is often good customer service that wins and keeps customers in the first place. Many service industries provide essentially similar products. For example, all hotels provide accommodation and most offer food as well. All banks offer customers current and savings accounts. It can be difficult to differentiate between service products. They have intangible qualities. This is why it is important to ensure that customers have a good experience.

Good customer service can be used by businesses to position themselves in the marketplace. Positioning helps an organisation to become distinctive. It helps consumers to make choices.

first direct is a division of the HSBC Bank. It provides a range of banking services, offering customers products such as current accounts, credit cards, savings accounts, insurance and loans. What is different is that first direct does not have a branch network. Customers access services over the internet or by telephone or through mobile phone banking services and text messaging. first direct has been providing online banking services for almost 20 years. It now has more than 3,000 employees and 1.1 million customers. Over 80% of transactions use the online channel. For customers that wish to contact the bank by phone, first direct’s UK call centres work 24 hours a day, 7 days a week, 365 days a year. They receive more than 200,000 calls each week.

This case study shows how the online bank first direct positions itself in the retail banking sector. It illustrates how customer service has become a key factor in helping the bank to differentiate its offer to customers in a competitive market.

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What is customer service?

Customer service is the service provided to customers before, during and after purchasing and using goods and services. Good customer service provides an experience that meets customer expectations. It produces satisfied customers. Bad customer service can generate complaints. It can result in lost sales, because consumers might take their business to a competitor.

Good customer service involves developing bonds with customers, hopefully leading to longterm relationships. It creates advantages for both customers and the business alike. Customers benefit because the business is providing a service that meets their needs. The business benefits because satisfied customers are likely to be repeat customers. They will stay with the business. However, good customer service is not easily achieved. It takes time to establish. It requires investment to deliver consistent standards.

first direct’s mission statement is 'pioneering amazing service'. This means that customer service is used to set the direction for the business. In other words, customers come first. This is not an empty slogan. Market research shows that, in terms of customer satisfaction, first direct is the UK's number one bank. It confirms that the bank has a reputation for quality customer service. This has also been demonstrated by comparative studies. The bank was the leading performer in the Top 50 Call Centres for Customer Service benchmarking programme and it came top in the Finance Sector in the Institute of Customer Services (ICS) Satisfaction Awards.

At the heart of providing customer service is the notion of 'respect'. This involves respecting the business' employees, as internal customers within the organisation, as well as external customers. Using this concept influences how colleagues and individuals at first direct act towards each other as well as how they deal with customers.

To achieve customer satisfaction, first direct sets and monitors service standards. For example, four out of five calls are answered within 20 seconds. On average a customer's call is answered in 13 seconds. Customer service representatives are available around the clock. This means that customers always get to talk to a real person not a machine and they never have to push buttons before they get to talk to someone.

The focus in all operations is on providing quality customer service. This helps first direct in the marketplace. It means that even though it is an online bank, it can provide a personal service missing in many other banks. The intention has been to avoid becoming a faceless call centre. Individuals are well trained and are empowered to act on customer issues. This means that

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customers are not passed from one person to another. The same customer representative will phone to deal with an issue, so that the customer is not always dealing with different individuals. In this way, first direct gets to know its customers. It can even provide a personal touch, like occasionally sending flowers to a customer or their partner to mark a birthday.

To maintain these standards first direct identifies what customers expect from banks in terms of customer service provision. It then builds these customer expectations into the services it provides. For example, this involves:

ensuring first direct colleagues are courteous and informed – that they know about the bank's products and services

dealing with any complaints promptly and fairly following up sales offering informed guidance on any products that are available (subject to financial

regulations).

Customer expectations

All first direct customers have needs: they want banking services. They also have expectations about how these services should be delivered. To meet these expectations, first direct has to know what its customers want (and what they might want in the future). To find out more, first direct carries out market research.

Market research is a process that enables a business to find out more about its customers and markets. It provides direct feedback that can be used to build and refine services. first direct collects a range of data that identifies market trends through several research activities:

First Impressions involves contacting new customers shortly after they join the bank. This primary market research helps the bank to assess their initial experiences of banking with first direct.

Voice of the Customer is a programme of research that is conducted monthly amongst existing customers who have taken out a new product with first direct over the last couple of months.

Focus groups, consisting of small groups of customers, are also held regularly to provide qualitative feedback on specific topics and issues.

Quantitative research provides robust and representative feedback on a range of specific issues.

The information generated by market research helps those within the organisation to understand more fully what existing and potential customers want. For example, focus group results indicate that first direct customers want the company to be different and distinct from other banks. Market research also helps to identify very specific features that customers want. It has confirmed that customers want a 24-hour service. They also want the reassurance of being able

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to speak to a person rather than an automated machine. In a competitive market where customers are able to shop around for services, it is important for first direct to make sure that it gets its customer service right.

Market research also provides valuable information about how first direct's services are perceived and experienced by customers. Research data shows that first direct has been ahead of its competitors in achieving overall customer satisfaction. It also shows that it is ahead of the competition in achieving customer satisfaction for an internet banking and a telephone banking service.

Meeting customer needs

For an online bank, the key to meeting customer needs is good communication. Customers want to know that they can communicate their concerns with somebody who will understand the issues. first direct's people therefore are central to the customer service function. Customers' experiences will be largely shaped by the quality of service they receive from the bank's employees.

Training and development has an important role in preparing employees to provide good customer service. first direct aims to be a destination employer. This means it expects employees to remain with the bank for a large part of their careers. It benefits the bank because long-serving colleagues and employees can use their experience to provide a better service for customers.

Employees are selected for their skills and personality. It is important that new employees are able to reflect the first direct brand and deliver the brand's service values. After appointment, new staff undergo six weeks of training (or nine weeks part time) with 65% of the time in a classroom environment and 35% integrating with dedicated coaches in the live working environment taking live calls. They also have ongoing coaching. The process of people development is designed to empower individuals to make decisions and take action in meeting the needs of customers. From the very start, new employees need to show a commitment to delivering high standards of customer service. In the first few days of training they engage with the culture of the business. They meet with their new team leader, listen to some live calls, experience the business values and understand how first direct treats its customers fairly. This helps them to understand the core values of customer service delivery.

Every piece of training at first direct is focused around servicing the customer to the highest standard. The course mixes technical or procedural aspects together with communication, sales, brand recognition, role plays and live call experience. The course appeals to all learning styles and preferences, because it provides a blended approach to learning.

This involves classroom work with facilitators, innovative e-learning based training, listening to and taking live calls, plus dedicated coaches to help motivate and develop individuals.

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Another way of meeting customer needs is through the bank's website. The website must be easy to use. This helps customers to complete their transactions. The first direct website is constantly monitored to look for areas of improvement. It has one of the best security systems in the banking industry to prevent fraud. first direct was also the first bank to develop a platform for iPhone banking. It is now possible for customers to receive real-time balances direct to their mobile phone.

The benefits of providing good customer service

Providing good customer service enables first direct to create a distinctive position for itself in relation to competitors. This requires investment in employees, training and processes to maintain high standards. However there is a payback: good customer service can reduce marketing and some operational costs.

Market research clearly shows that customers enjoy and are satisfied with the bank's services. This means that they are more likely to remain with the bank. Customer retention is important to any business. Marketing and promoting a bank to new customers can be expensive. It is much more efficient to keep existing customers than focus resources on searching for new ones.

Satisfied customers are also good adverts for the bank. Market research shows that customers are happy to recommend first direct to other people. A person who really likes a service and recommends it to others is called an advocate. One in three of new customers come to the bank as a direct result of recommendations from existing customers.

Providing good customer service also means that customers have fewer complaints. Dealing with complaints can be costly. So, again, by providing good customer service, the bank can reduce the costs of resolving customer problems.

Conclusion

To meet its mission, first direct has a real commitment to providing high levels of service for its customers. It puts existing customers first. For example, when demand for mortgages was very high, customer service representatives were overloaded with work. This meant that there were delays in answering calls. Rather than reduce the level of service to customers, sales to new customers were stopped. This was important as it meant that first direct could maintain its quality of service to existing customers.

As an online bank with no branches, first direct could come across as a faceless organisation. However by listening to customers, by paying attention to all aspects of service and customer communication, the bank has built up a loyal customer base. It has achieved a unique position within the banking industry.

Questions1. Using an example, describe what is meant by the phrase ‘good customer service’.2. Explain the role of employees in call centres by referring to the range of tasks that they

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undertake.3. Analyse how market research helps an organisation to provide better services for itscustomers.4. Evaluate how first direct positions itself within the banking industry.

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MBA 1 Course Outline October 2010(2)

Documents

Transcript of MBA 1 Course Outline October 2010(2)