May archive

Fundamentals of Marketing

May 31, 2007 0 comments

Concept of Marketing

The concept of marketing has been variously defined over the years; here are some explanations from leading practitioners and theorists in the field.

“Marketing is the management process for identifying, anticipating, and satisfying customer requirements profitably.”

Chartered Institute of Marketing

“If you are obsessed with attaining happiness you will never attain it. But if you focus on service to others, happiness will come immediately. It is the same with industry: if you are obsessed with looking for profits, you will never find them. But if you focus on satisfying the customer, you will gain everything.”

(Jose Lopez VW top executive cited by Jobber 1995)

Peter Drucker stated:

“Because the purpose of business is to create and keep customers, it has only two central functions – marketing and innovation. The basic function of marketing is to attract and retain customers at a profit.”

He went on to explain that the role of marketing is to identify customers requirements so well that when products and services are designed to meet these requirements and presented to the customers they automatically recognise and accept what is being offered. (Drucker 1973)


David Jobber stated that a modern marketing concept can be expressed as:

“The achievement of corporate goals through meeting and exceeding customer needs better than the competition.” (Jobber 1995)

Three conditions should be met:

  1. Customer orientation – Corporate activities are focused upon providing customer satisfaction.
  2. Integrated effort – all staff accept the responsibility for creating customer satisfaction.
  3. Goal achievement – The belief that corporate goals can be achieved through customer satisfaction.

Philip Kotler defines marketing as:

“A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.” This leads into the debate about needs, wants and demand, Where needs stem from a state of felt deprivation affected by the complexity of physical, social and individual motivational factors. Wants on the other hand are shaped by culture and individual personality and can be influenced by variety of choice. Demand is affected by the ability to exchange resources to obtain what is on offer i.e. buying power.

The debate moves on into the concepts of products and services where Kotler defines a product as:

“Anything that can be offered to market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organizations and ideas.”

Services are defined as:

“Any activity or benefit that one party can offer to another which is essentially intangible and does not result in ownership of anything.”

Marketing Environment

In his book on Competitive Advantage (1985) Porter discusses the need for people to understand the competitive environment that affects every firm. The competitive forces of other firms causes turbulence within the market, however the other forces at play include; Supplier Power, Buyer Power, Threat of New Entrants, and the availability of Substitutes.

It could be argued that competitive offerings present the biggest threat and therefore there are needs to have effective marketing intelligence gathering and analysis systems.

Marketing Mix

The marketing mix described by Kotler (1999) is

“The set of controllable tactical marketing tools – product, price, place and promotion – that the firm blends to produce the response it wants in the target market.” It is useful, however to consider three more factors in this concept – physical evidence, process and people – as these will have a bearing on customer’s expectations and perceptions. For a discussion on expectation and perception theory see the work of Berry, Parasuraman and Zeithaml. They have developed a methodology for assessing customer’s responses to service offerings.

Posted by Lisa
Categories: Business Entrepreneurship Product Innovation Marketing

Perceptions of Risk

May 31, 2007 0 comments

The hazards, associated with product design and development, are many and complex. Some entrepreneurs tend to see risk as just another hurdle that must be coped with, extreme tendencies view risk as the gambling stake to be borne, while others see only researched probabilities to aid decision making. The measurement of risk before the event is the source of much debate, mainly because the majority of risks are perceived and not necessarily actual. When assessing risks, designers should accept this in mind to avoid over dependence on numerically based data; as there is a chance of promoting or validating misconceptions.

Sorting processes need to be employed to develop perspective and avoid over dependence on microscopic analysis. In short, there is a need to first be effective before developing efficiency, in that way the right direction can be discovered before committing valuable resources.

Missed and misconstrued perceptions of the consequences of decisions are of themselves a major, arguably the greatest, source of risk in decision making and any responsible decision maker will make every effort to obtain a complete and accurate perception of the risks faced before attempting to undertake an analysis and assessment'. (Ansell, 1992)

Thus, the purpose of risk analysis is the identification of all possible outcomes of decisions, whilst the estimation of probabilities and the size of the outcomes is the subject of risk assessment.

Posted by Lisa
Categories: Business Entrepreneurship Product Innovation

Product Innovation

May 31, 2007 0 comments

Business Strategy and Innovation


Markets, technologies and competitors; creating additional customer value; forms of competitive advantage

Generating and harnessing creativity; frameworks for innovation

Product Innovation Process

Designing for market needs; the product concept; the use of the Quality Function Deployment Tool; creating the product specification

Invention creation

Modelling the product development process; product design, manufacturing and market development

Implementing the product development process; teamwork and project management; learning and re-invention.

Posted by Lisa
Categories: Business Entrepreneurship Product Innovation

Gaining and Maintaining Competitive Advantage

May 31, 2007 0 comments

Key points

The seminal work of Michael Porter entitled “Gaining and Maintaining Competitive Advantage”

provides a model to help us understand the competitive environment affecting all firms.


picture will be added later

Sources of Innovation

According to Peter Drucker (1985) the majority of innovations are the result of concerted effort. There are of course exceptions to the rule that result from a flash of genius or serendipity but most innovations within entities originate from four areas:

  • Unexpected occurrences
  • Incongruities
  • Process needs
  • Industry and market changes

Unexpected occurrences

Examples were drawn from:

IBM designed accounting machines for banks, but banks didn’t buy them. Public libraries had money and did buy IBM’s machines.

The computer industry developed when businesses recognized that computers could be used for more than scientific purposes and could be adapted to payroll processing. Univac failed to recognize the opportunity but IBM did and adapted designed that led them into becoming industry leaders.

Ford Motors failure with the Edsel almost sunk the firm as the most highly researched model of its day did not meet customers requirements. Ford had to find a replacement quickly and imposed short deadlines on its design and manufacturing team. The result was the famous Mustang and Thunderbird models that were designed to meet the needs of the target customers life-styles.



Examples were drawn from:

Alcon Industries exploited an incongruity of medical technology used to treat eye cataracts. By developing a preservative for an enzyme that could dissolve the ligament that caused the problem Alcon were able to provide a new compound that could be stored. The resultant product grew in popularity and created a worldwide monopoly.

The development of ‘Roll-on’ ‘Roll-off’ ships and container vessels came about when ship builders realised that the major cost in shipping were incurred when ships were in port loading and unloading. This changed the thinking of designers who for the past 50 years had attempted to make bigger and more fuel efficient vessels to cut shipping costs. The shift in viewpoint and not technology was responsible for improving the economics of the shipping industry.

Process needs

Example was drawn from:

Federal Express and the core concept of the business being explained a switching process. Items for distribution are collected and delivered to a central sorting center and switched to carriers for redistribution. The speed of processing is critical as is the central switching operation.

Industry and market changes

Examples were drawn from:

The growth in direct services such as banking and insurance services and the growth of e-businesses.

External Sources

Sources of opportunity from outside entities can be found through:

  • Demographic changes
  • Changes in perception
  • New knowledge

Demographic changes

Changes in the population offer opportunities. For example the Americans have recognized the growth in the wealthy aged population who need and want labor saving equipment to suit their life-styles and failing health.

Changes in perception

Global improvements in the communications and media industries are constantly enlightening people and therefore changing their perceptions and expectations. Products that were acceptable 10 or 20 years ago are no longer acceptable for a whole range of reasons that are affected by personal attitudes through changing social acceptability.

New knowledge

New knowledge emerges all the time bringing with it both opportunities and threats.

External environmental factors

The external factors affecting all businesses must be analyzed to identify opportunities and threats. These factors are often known as PEST or SPELT factors the latter means.

Social, political, economic, legal, and technological factors.

When carrying out a SWOT analysis it is important to recognize that the Strengths and Weaknesses are internal to the business and therefore with the control of the business. While on the other hand Opportunities and Threats come from the environment and are therefore out with the control of the business. Innovation can emanate from an understanding of both.

Posted by Lisa
Categories: Business Entrepreneurship Product Innovation

Principles of Creativity

May 31, 2007 0 comments

Importance of creativity, psychology of creativity, serendipity.

The nature of incubation and illumination.

Bisocation and lateral thinking, idea generation and selection.

Innovative companies - recognising and exploiting opportunities

Suggested Readings

Baxter. M. 1995 ‘Product Design’, Chapman & Hall, London Chapter 4, pages 61 - 79

James Collins & Jerry Porras "Built to Last" Chapter 3

find new ways of making improvisations - go somewhere you wouldn’t otherwise

thinking about game-playing

Try to watch your friends and family members when they play quite elaborate games during holiday seasons - you will see how normally retiring people become enormously extrovert and funny.

The great thing about games is that they in some sense free you from being yourself: you are “allowed” forms of behavior that otherwise would be gratuitous, embarrassing or completely irrational.

You will find out how people are active in the improvisations if you apply the same idea for business

some motivational characteristics of a creative person:


  • a curious or inquiring mind;
  • an intellectual persistence;
  • a need for recognition for achievement;
  • a need for variety;
  • a need for autonomy;
  • a preference for complex order;
  • a tolerance of ambiguity;
  • a need for mastery of a problem;
  • an insatiability for intellectual ordering.

A creative person also needs to be able to look at a situation from different angles,

  • questioning assumptions,
  • imagining new situations,
  • changing relationships
  • or adding new elements into the situation (McWhinney, 1993; McFadzean, in press; McFadzean et al., in press).

There have been a number of lessons learnt by exploring other people’s creativity. These are:

  • There must be a desire to win or to reach a goal successfully.
  • There must be motivation, dedication and commitment to the work being studied.
  • The creative person tends to be self-confident, a risk taker or, at least, is prepared to fail.
  • The creative person has the ability to see relationships or make connections between different elements or situations.
  • There must be an ability to learn from mistakes or to get something positive from a failed project.
  • The creative person must be able to shift his or her paradigm of a given situation and view it from different angles.
  • The creative person must have the ability to conceptualise the problem or opportunity from a more novel perspective.
  • The creative person tends to have a single-minded vision of where he or she wants to go.
  • He or she must have a working style that involves both hard work and periods of relaxation so that incubation can occur.
  • Creativity can take place while working alone as well as working in groups.

Creativity is an important aspect of organisational life and it should be nurtured and allowed to grow.

Posted by Lisa
Categories: Business Entrepreneurship Product Innovation

Encourage Visioning

May 31, 2007 0 comments

Ensure participative safety

Employees can only be encouraged to think creatively if they are not afraid of criticism or punishment.

For example

If a project fails and the champion is in fear of losing his job then he will never take the risk of thinking creatively again.

Challenge Assumptions

Employees should be encouraged to challenge their assumptions and perceptions regarding procedures, products, services and processes


(Jones and McFadzean, 1997; McFadzean, 1996a).

In particular, they should examine procedures that

“have always been done that way”.

Encourage Visioning

Managers should encourage “visioning”

Creative thinkers look into the future and visualise where they would like to be in five or ten years time.

This can be applied to the company as a whole or to a department or section or to products, services, procedures and processes.

Climate of Excellence

Establish a climate of excellence

Creative ideas need to be implemented effectively in order to succeed.

Managers should ensure that employees are committed to achieving a first-rate performance.

This can be undertaken by developing achievable objectives (both as an organisation and as individuals) and by producing a strategy for fulfilling them.

Question Corporate Viewpoint

Employ people who do not seem to fit in (Jones and McFadzean, 1997). By upsetting the status quo, it encourages people to look at situations from different perspectives instead of a “corporate viewpoint”.

This may not necessarily be comfortable for management but it can help the company produce some excellent innovative ideas.

Facilitate Pet Projects

Allow people to spend time on their pet projects so they can be researched and developed (McFadzean, 1996b).

For example, the Post-It Note was developed by 3M because the company had allowed its inventor - Arthur Fry - to spend time working on the concept. 3M allows 15 percent of time to be spent on researching pet projects (Nayak and Ketteringham, 1991).

Senior Management Support

There must be senior management support for creativity and innovation (Jones and McFadzean, 1997).

Often, managers will articulate their support but will not enact it.

They must provide sufficient resources and training, encouragement for developing new ideas, time to work on pet projects and/or financial support.

Atmosphere of Enjoyment and Fun

Encourage an atmosphere of enjoyment and fun. Creative thought can be greatly enhanced if participants are enjoying themselves.

An appropriate atmosphere may be created by reducing distractions and enhancing relaxation

Creative Problem Solving Teams

Develop creative problem solving teams that can work together and develop trust for one another

Problem solving teams will be more effective if the participants have the same goals and are supported by a trained facilitator (Briggs and Nunamaker, 1996; Nelson and McFadzean, in press).

Group members who share goal congruence will work towards their objectives together rather than working with hidden agendas and conflicting interests, which will ultimately reduce the efficiency of the group.

Competent Facilitator

Groups will work more effectively together if supported by a competent facilitator.

The facilitator helps the group to reach its objectives and can help the group to look at the situation from different perspectives by using a variety of creative problem solving techniques (McFadzean and Nelson, 1998).

Posted by Lisa
Categories: Business Entrepreneurship Product Innovation

The lack of new ideas is the main constraint on innovation

May 31, 2007 0 comments

"The lack of new ideas is worrying. Unless companies can come up with new ideas they won't have any innovations to exploit in the future. Both companies and the Government need to do more to create the conditions in which creativity can flourish. It is timely that a new round of the Government's Foresight program has just got underway."

The other key constraints on innovation are problems finding finance and the amount of competition. The good news is that the cost of finance is less of a problem. For manufacturers international competition is becoming increasingly important, and although it is less of a problem for non-manufacturers they too are facing mounting competition from North America and the Asia Pacific.

Tips for successful business innovation in processes and products

  1. Create goal vision. Have business goals in your company and communicate them. Know how you want to position your company.
  2. Market savvy. Foresight is important - you need to know your marketplace and have an intimate understanding of your customer's needs today and tomorrow.
  3. Encourage creativity. Companies rely on employees for their future growth. Give employees time and support to exercise their own initiative - give some direction but encourage creative thinking. At technical employees have the blessing of the company to devote 15% of their time on projects of their own choosing.
  4. Empower employees. Provide support for developing employee's ideas, give a suitable degree of project ownership and then reward their successes.
  5. Encourage risk taking and understand failures. Innovation brings risks - as picking winners is never easy! The key is to spot the losers early because this reduces the financial and organizational risk. Turn a failure on its head to see if it might work in another setting.
  6. Support Implementation. Provide the resources (time, money, materials) to bring suitable ideas to fruition.
  7. Know how to fund a new idea. Research where to find money to fund new ideas and then secure it when needed. Let researchers apply for special grants, which provide the finance and resource for projects that cannot be supported through normal budgets.
  8. Protect your ideas. Evidence suggests that firms with an understanding of intellectual property rights have a better chance of maintaining a competitive edge and can maximize the returns of their innovation.
  9. Sometimes sharing is better. Recognize that not all ideas are within your scope alone. Finding the right partner externally can often bring about the best result.
  10. Be ready for change. When the right idea comes along the rewards can be substantial but you need to recognize that you may need to change the nature and shape of your business. Several times in its history whole new areas have opened up through innovation.

Posted by Lisa
Categories: Business Entrepreneurship Product Innovation

Risk Assessment

May 31, 2007 0 comments

The Concept of Risk

The hazards associated with product design and development are many and complex. Interviews conducted with entrepreneurs, product design teams, quality managers, general managers, enterprise agency staff and fund managers, revealed a broad interpretation of the word risk. For example entrepreneurs tend to see risk as just another hurdle which they must cope with, at the one extreme there are tendencies to view it as the gambling stake to be borne, while at the other extreme there are only researched probabilities to aid decision making. Attempts to define the word risk examine its origins, Arabic has the word risq while Latin provides the word risicum (Kedar, 1970). Arabic risq signifies 'anything that has been given to you [by God] and from which you draw profit' and has connotations of a fortuitous and favourable outcome. On the other hand the Latin risicum, originally referred to the 'challenge that a barrier reef presents to a sailor' with connotations of dangerous hazards and fortuitous outcomes (Ansell 1992). French use risqué with mainly negative but occasionally positive connotations as for example in 'qui ne risqué rien n'a rien' or 'nothing ventured nothing gained' whilst in common English usage the word risk has very definite negative associations as in 'run the risk of...' or 'at risk' meaning exposed to danger. (Ansell 1992) The Oxford Dictionary (1991) refers to '1. Chance of or of bad consequences, loss, etc., at risk, exposed to danger' and '2. Expose to chance of injury or loss; venture on, accept the chance of ..'

In common usage the meaning of the word risk includes: gamble - to take a chance on something or trust in luck; venture - to invest with exposure to loss or gain; endanger - expose rashly; danger - put in jeopardy, the state of being exposed to injury, pain, or loss. Collectively risk is used to describe the chance of occurrence of any undesirable outcome due to a decision or course of action. Gamblers tend to evaluate risk against reward, whilst to scientists the word risk is used to imply a measurement of the chance of an outcome, the size of the outcome or a combination of both.

The Perception of Risk

The measurement of risk before the event is the source of much debate, mainly because the majority of risks are perceived and not necessarily actual. (Ansell 1992) When assessing risks designers should bear this in mind to avoid over reliance on numerically based data as there is a chance of promoting or validating misconceptions

Often complex formulae based on historical data are employed to project events and assess future risks. As much of risk assessment is subjective there is a real danger to found in placing high levels of reliance on mathematical models which convert subjective data into objective data. Thus providing credibility for spurious or incomplete data. Some ranging processes need to be employed to develop perspective and avoid over reliance on microscopic analysis. In short there is a need to first be effective before developing efficiency, in that way the right direction can be ascertained before committing valuable resources.

'Missed and misconstrued perceptions of the consequences of decisions are of themselves a major, arguably the greatest, source of risk in decision making and any responsible decision maker will make every effort to obtain a complete and accurate perception of the risks faced before attempting to undertake an analysis and assessment.' (Ansell 1992)

The purpose of risk analysis is the identification of all possible outcomes of decisions, whilst the estimation of probabilities and the size of the outcomes is the subject of risk assessment.

Model for Risk Assessment

This model examins risk from a producers viewpoint, the techniques from the first model prove data for consideration here. There is also a need to increase the intensity of investigation to include quality management, quality assurance and control techniques. The 'Feature to Benefit Score Card' provides data which is then assessed in the 'Design Rating Score Card' and Criticality Factors are then identified. These can then be prioritised using 'Pareto's Principle' otherwise known as the 80/20 rule where 80% of the value is normally to be found in 20% of the features of the product. By identifying the essential few features designers can then target effort to maximising satisfaction and risk reduction. The other 80% of features may then be managed to enhance the product and elevate customer satisfaction in an effort to delight the customer. Each Key Success Factor will have a fundamental bearing on implications for excellent production capabilities, attention to these factors will drive operations management towards continuous improvement initiatives and raise the organisations effectiveness, flexibility and efficiency.

The concept of Failure Mode and Effect Analysis (FMEA) can provide an intensive focus for risk assessment where a high degree of product integrity is required, and where the consequences of failure could be catastrophic such as in defence industries. Aircraft designers and manufacturers as well as the automotive industry find this technique highly effective in risk assessment and reduction. The American Department of Defense recognised the value of the technique and produced a Military Standard MIL-STD-1629 (SHIPS) 1 NOVEMBER 1974 later superseded by MIL-STD-1629A 24 NOVEMBER 1980 entitled 'Procedures for performing a Failure Mode, Effects and Criticality Analysis'. Service industries use the technique to identify good practice, often adopting manufacturing quality management techniques modified to suit service organisation requirements.

FMEA when employed at the design stage identifies possible shortcomings of the design of a product, service or process operating system to determine what could fail, where and what effect would be created so that corrective action can be initiated and problems avoided. Brainstorming is employed to identify all possible modes of failure and their related effects on performance. It is a factual analysis of the design which can enable numerical values to be assigned to help overcome subjective opinions. When the results of an FMEA are ranked in order of seriousness we can identify the CRITICAL modes (FMECA) so that action can be taken to reduce failure and avoid risk.

As FMEA aims to avoid failure occurring it should be carried out at the design stage of a product or service. As a communication tool it is useful throughout every level of an organisation to increase awareness of the consequences of operational procedures and is effective in product and service design development. It provides the analysis team with a valuable insight into issues which are normally outwith their normal range of interest, e.g. the effect of operational procedures on their downstream customers, likely consequential damages, sources of customer complaints, etc. and provides a valuable resource for analysing strengths and weaknesses, as well as sources of opportunities and threats for product or service development.

FMECA analysis steps of are:

  1. Assemble a team of 3 - 5 and elect a chairperson.
  2. Clearly state the product, service or process function to be analysed. It is essential that the scope of the analysis is clearly defined to avoid confusion.
  3. Brainstorm to generate a list all possible failure modes of the subject.
  4. Identify and list the effects that each mode of failure would create.
  5. Brainstorm to generate a list all the possible causes of each failure mode.
  6. Agree a numerical value of each failure mode on a scale from 1 to 10.

    P = probability of each failure (1 = low, 10 = high).

    S = seriousness or criticality of the failure (1 = low, 10 = high).

    D = difficulty of detecting the failure before the product or service is used

    by the consumer (1 = easy, 10 = very difficult).

  7. Calculate the product of the ratings, C = P x S x D
  8. This is known as the criticality index or risk priority number (RPN) for each failure mode. It indicates the relative priority of each mode in the failure prevention activities.

  9. List the RPNs according to severity in descending order.
  10. Create an action plan and estimate resource requirements, availability, and probability of completion.
  11. Agree an action plan and briefly state the corrective action required, by whom, where, when, and the expected completion date.

Posted by Lisa
Categories: Business Entrepreneurship Product Innovation

Introduction to Operations Management

May 31, 2007 0 comments

The Transformation Model

picture will be abailable later



  • all of "DIRECT EMPLOYEES" are controlled by OM
  • Most of indirect employees are controlled by OM
  • high proportion of management is controlled by OM, ie., 70 - 80% of all employees


  • most fixed assets - plant, machinery, buildings
  • most current assets - raw materials, B.O.P.'s, W.I.P., finished goods, ie., 70 - 80% of all assets


  • wages, salaries, machinery, plant etc.
  • 70 - 80% of all expenditure



  • Control of the major parts of an organizations' assets and expenditures.


  • Long term development
  • Investment
  • Staffing


  • Day to day production changes
  • Absenteeism
  • Breakdowns
  • "Firefighting"


  • Product technology
  • Process technology


  • Training
  • Appraisal
  • Discipline
  • Counselling


Business Planning

  • What is the strategic plan?

Product Design

  • What service or product is provided?

Resource Planning

  • What labour, materials, plant, equipment, furniture and fittings are required?

Location and Layout

  • Where and how do we operate?

Job Design


  • How do people and technology work together?

Inventory Control

  • What stock levels and purchasing policies are required?

Operations Planning

  • How much output is required and when?

Materials Planning

  • How much input is required and when?

Scheduling and Controlling

  • How are people and equipment?

Quality Control

  • Are the internal and external standards being met?


  • Do output levels allow for adequate servicing?

Posted by Lisa
Categories: Business Entrepreneurship Operations Management

Application of IT

May 30, 2007 0 comments

Development of purchasing systems

1. Infant

  • simple clerical system

2. Awakening

  • improved manual systems - Cardex
  • beginnings of computer system but no integration

3. Developing

  • more integrated systems
  • Material Requirements Planning (MRP)
  • computer linking and networking

4. Mature

  • fully integrated organizational database
  • Manufacturing Resource Planning (MRP II)
  • all purchasing information generated by computer

5. Avanced

  • electronic data interchange (EDI) between major suppliers and customers with resultant benefits

Integrated databases give the following advantages:

  • logistics
  • TQM
  • flexible manufacturing
  • automation
  • JIT
  • reduced strategic acquisition costs

Integrated databases give purchasing department real time information on;

  • orders placed/outstanding
  • turnover by supplier
  • stock position
  • accounts outstanding
  • production/customer requirements
  • vendor rating - delivery & quality
  • new developments/projects

Electronic Data Interchange

EDI is the Transfer of data from one computer to another by electronic means using agreed standards

Types of data Transferred:

1. Trade Data

  • Quotations, Purchase Orders, Achnowledgement Notes, Delivery Instructions etc.

2. Technical Data

  • Specifications

3. Query/Response

  • Travel Agent
  • Booking Agent
  • Process Checking by Customer

4. Monetary Data

  • Invoice Payment Systems, Electronic Funds Transfer at point of sale (EFTPOS) - SWITCH



  • Open 24 hrs
  • Short delivery
  • Better prices?


  • Bankruptcy
  • Credit card security
  • hacking

Posted by Lisa
Categories: Supply Chain Management

Purchasing scope & objectives

May 30, 2007 0 comments

Development of purchasing and supply

See fig.

World class concepts

  • Supplier analysis
  • Single supplier
  • Partnership

Advancing technology

  • Computers
  • Spreadsheets
  • MRP2
  • EPOS
  • EDI

Government and policies

Compulsory competitive tendering (CCT)

Factors leading to the greater recognition of purchasing:

here will the the schema when this service becomes available

Purchasing scope & objectives

Finite resources

  • careful planning is essential

Fewer but larger suppliers

  • Iron & steel industry virtually annihilated
  • Chemical industry in the hands of a few vast conglomerates
  • Pharmaceuticals - same story
  • Car manufacturing is a global business

Increasing environmental awareness

  • waste disposal
  • re-cyclable components
  • returnable containers
  • concern for the planet

Development of purchasing and supply

  • Barter
  • Development of Currency
  • Banking
  • Rise of literacy
  • Improvements in communication
  • Letter, telegraph, telephone, telex, fax, EDI, e-mail
  • Pack-pony, horse & cart, train, lorry, artic, RDC

Purchasing scope objectives

Control of stock and inventory

Facts a buyer should know:

1. What material is required? (specification, design)

2. What quantity? (Production control, Purchasing manager)

3. When is it required? (Production control, Purchasing manager)

4. What quality is required? (Senior management, quality manager, program manager)

Inventory control

Control of stocks:

  • Raw materials (RM) + bought out parts (BOP's) & fuel
  • Work in progress (WIP)
  • Finished goods (FG)

Management of storage within the organization


  • Long term
  • Short term
  • Capacity v demand?
  • Time in storage?

Management of storage


  • Multi-national
  • National
  • Small and medium enterprises

Distribution facilities within the organization I.e.

Physical areas:

  • Incoming goods
  • Buffer stocks
  • Finished goods stores

Materials management

Control methods

  • Material Requirements Planning (MRP)
  • Manufacturing Resources Planning (MRP2)
  • OPT
  • Just-in-Time (jit)


schema becomes available when service avaliable

Supply Chain

schema becomes available when service avaliable

Posted by Lisa
Categories: Supply Chain Management

Purchasing and Supply Management Introduction

May 30, 2007 0 comments

This category is devoted to my work at Marvin Engineering within 9 months contract. I wrote this material as I researched the scope and nature of supply chain management. If you are trying to pursue a career in this industry or just an IT person who happens to have a project, I hope this material will help you to get an understanding of the principles of purchasing and supply management and their application within various types of organizations and operating environments, to examine the relationship between purchasing and supply and other functions, and to consider relevant procedures, methods and techniques.

I will touch basics on the following topics:

  • the management issues involved in purchasing and supply functions in an organization;
  • the use of IT in P & S, the hierarchical structures necessary in organizations for the efficient management of P & S and logistics;
  • the source of a purchasing officer’s authority, the selection, quality and negotiation; and legal aspects of dealing with suppliers and the use of accurate recording systems;
  • the use of different types of contract;
  • the factors involved in controlling stock and logistics in a modern organization;
  • the ethics expected of modern professional business people.

There are several sub-categories to be discussed:

Objectives and Organization

The scope and objectives of purchasing, control of stock and inventory, and management of storage and distribution facilities within the organization. The impact of each organizational efficiency and profitability. Budgets. The relationship with other functions. Applications of information technology (IT) to purchasing and supply. Organizational structures and approaches in various environments (eg manufacturing, retailing), including Materials Management, Logistics and Physical Distribution Management concepts.

Purchasing Procedures

Origin of need and authority to purchase. Determination and control of quality and quantity. Supply sourcing, supplier evaluation and vendor rating, overseas sourcing (benefits and problems). Make or buy. Inquiry procedures. Tenders and quotations. Determination of prices, including commodity prices. Evaluation of offers. Negotiation of contracts and orders. Terms and conditions of purchase and sale. Placing the contract. Issuing the order. Acknowledgement of order. Cancellation. Expediting. Receipt, inspection and rejection of supplies. Invoice certification. Control of costs. Disposal of surplus and scrap materials. Purchasing Manuals. Records.

Purchasing Methods

Types of contract. Uses and limitations of competition and negotiation. Single and multiple sourcing. Competitive tenders and quotations. Comparative analysis of buying, hiring and leasing. Sources of information. Factors and criteria affecting choice of supplier.

Control of Stock and Inventory

Factors involved in determining stock levels. Stock and inventory control. Methods and mechanics of control: eg statistical, Just-in-Time (JIT) and Materials Requirements Planning (MRP 1) approaches and their applicability to various operating environments. Identification systems. Standardization, rationalization and variety reduction. Stock checking. Records and accounts.

Logistics, Storage and Distribution

Buildings and site layout. Storage and handling equipment. Packaging, containers, pallets. Locating, picking and dispatching supplies. Distribution by road, rail and air. Control and storage and distribution costs. Control of surplus, redundant and obsolete items and scrap. Security and safety aspects.

Professional Behavior

Relationships between the purchasing and supply function and its suppliers and users. The commercial, legal and organizational implications of professional behaviour. The ethical code of the Institute of Purchasing and Supply. Other codes of conduct.

Posted by Lisa
Categories: Supply Chain Management

The Role of Business Plans

May 28, 2007 0 comments

Introduction to business planning

Structure and content


Arrange an interview with an entrepreneur of your own choice

Analyse key success factors and prepare a short summary of findings

Business Formation

Forms of business entities

Legal aspects

Evaluating franchising


Building the team

Analyse own business idea and settle on a suitable legal format for the new or restructured business

Creating new ventures

Sources of ideas

Identifying core benefits

Matching capabilities

Design process

Protecting the idea

Select a business idea to suit your personal requirements for further investigation

Posted by Lisa
Categories: Business Entrepreneurship

Feasibility Plan

May 28, 2007 0 comments

a means of assessing the feasibility of a business venture to reduce the risks associated with start up and growth of a venture


Construct an outline business plan for your idea described in your 'Creativity Analysis'.

This will help you to construct later an effective plan for venture creation or regeneration. It will take you time to carry out necessary research. Your business plan should contain evidence of how you would identify and manage the critical success factors of the venture and manage risk factors during the start-up process, or redevelopment process of an existing business.

The marking scheme will reward well thought through submissions where there is sufficient evidence of understanding of how to research a venture.

The plan should demonstrate:

  • the way in which the venture could be established
  • the critical factors of each section
  • the risks and how these will be managed

Include information regarding how you would collect data, establish facts and project financial management information to ensure the viability of the project.

This document also may be required for presenting it to prospective investors.

Posted by Lisa
Categories: Business Entrepreneurship

Creativity Presentation

May 28, 2007 0 comments

Presenting your new idea to the marketplace, creating a new business, or redefining an existing business to make it more successful

Select an idea of your own choice; then carry out an analysis of the idea to identify the core benefits and key success factors which are likely to attract customers and contribute to the overall success of the venture.

Concentrate on the total concept of the idea and how it will satisfy identified needs and wants of identified customers.

Your analysis of the business idea should be built on a detailed scientific research.

Prepare your presentaion to be suitable for a prospective investor. Do not forget it should be in easily understood and jargon free format.

Posted by Lisa
Categories: Business Entrepreneurship

Service Concept

May 28, 2007 0 comments

Stated in terms of results produced for customers what are the elements of the service to be provided?

How are these elements expected to be perceived by:

  • The target market segment?
  • The market in general?
  • Employees?
  • Others?

What does this suggest in terms of the manner in which the service is:

  • Designed?
  • Delivered?
  • Marketed?

The Service Package or Product

  • Physical items or facilitating goods
  • Sensual benefits or explicit services
  • Psychological benefits or implicit services

Fitzsimmons, J. A. and Fitzsimmons, M.J. 1994. Service management for competitive advantage, McGraw - Hill

Posted by Lisa
Categories: Business Entrepreneurship

Current Custom and Practice

May 28, 2007 0 comments

Initial primary research has been carried out within a range of Small to Medium Enterprises (SMEs) to investigate the extent to which risk analysis is undertaken. Initial findings indicate that while senior managers, designers, engineers, and quality practitioners are all aware of or have experience in using risk analysis techniques, few attempts to employ formal applications during the development of new projects in product design. Risk assessment was mainly centered on financial and marketing.

There was however evidence to support the view that a number of techniques were employed following initial design and during product development.

The techniques fall into three general categories:

1. Financial risks

2. Operational issues

3. Product failure.

Financial risk analysis was mainly concentrated on cash flow and capital investment ratios based on projected market forecasts.

Operational risk analysis techniques were highly influenced by financial and quality issues.

Product failure risk analyzes were mainly concerned with the avoidance of failure, product reliability and the chain reactions of failure liability.

The route chosen relied on the industry sector and the criticality of failure, that is the degree of catastrophic failure, complexity, consequential loss, cost per product, etc. Smaller organizations tended to estimate the risk of personal loss associated with business failure, mainly developing sensitivity analysis based on 'What if?' modeling, once in production risk reduction programs included: prototype modeling; pre-production runs; matrix diagrams; check lists; cause and effect analysis; field tests; market tests.

SME's in highly technical field used a range of sophisticated techniques as part of contractual requirements these include: failure mode and effect analysis (FMEA); failure mode and effect and criticality analysis (FMECA); reliability engineering; environmental testing; functional testing; simulated life tests; destructive testing to meet contractual conditions. Electronics organizations used a mixture of approaches integrated with corporate clients, for example Quality Function Deployment (QFD); Product and Cycle-time Excellence (PACE) (Gehani, 1992; McGrath, 1992).

An analysis of thirty small firms for product design and development revealed that very few SME's consider risk analysis. They tended to be visionary types of firms in scientific or technology based businesses; few consider risks in terms of opportunity cost. There was a tendency to initially fund new projects from revenues, until cash flow difficulties emerged.

Success is measured in terms of return on investment in successful projects that means that while encouraging innovation the firm must evaluate ideas. There is a tension between these objectives, as most entrepreneurs don't want to be annoyed with evaluation. You can get over this by the fact that evaluation is conditional for funding. Often outside consultants are engaged to carry out some initial evaluation. On each occasion there is a tension between product development funds and working capital. An initial outline risk assessment is carried out and if successful a second evaluation process involving external consultants is undertaken to identify market needs, this often involves critical market research.

Posted by Lisa
Categories: Business Entrepreneurship

Basic Design Cycle

May 28, 2007 0 comments

The basic design cycle is conceptualized in "Product Development Flowchart".

Note - here will be a link to flowchart, now is not available

It demonstrates the flow of ideas into an organization. Any of these sources may provide a fruitful product concept, however it is the designers’ task to pull the concept together. During the cycle the designer integrates knowledge and information to produce specifications that clearly define the product so that agreement can be reached with both customers and management. There is evidence to support the claim that customer requirements are paramount in this process, therefore it is imperative that designers find ways of getting close to customers (Peters and Austin).

Sometimes, however we don't deal with the consumer of products but work through a logistics chain of agents and distributors who may be highly influential in the decision-making chain. In this case there is a need to get beyond the immediate customer and find out about consumers requirements and motivators. The consumer valued benefit may appear to be of little consequence to agents in the logistics or supply chain, who may view the product as another product line, but if the consumer does not recognize value in the product then the supply chain will fail. It is therefore important to look at all the elements in the supply chain and design the product in such a way that everyone involved in the process adds value and receives valued benefits in return (Zimmer and Scarborough).

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Categories: Business Entrepreneurship

Consumers Perception for Product Evaluation

May 28, 2007 0 comments

Customers, or consumers, of goods and services are attracted to them by the ways in which their own needs might be satisfied. They perceive some form of utility that match their set of needs and provide the most satisfactory solution at the time. The ideal product or service may not exist; the one that comes closest may then match the consumers’ estimate of the overall capability to satisfy their needs at that time. (Kotler and Armstrong)

Designers should take the target customers need set into consideration early on so that risks can be estimated.

 As the project develops intelligence gathering will firm up data on perceptions and customer expectations for risk reduction or risk avoidance activities.

The main forces are likely to be perceptions of utility, value, and the satisfaction when measured against alternative designs. The risks identified here can then be assessed against the overall market intelligence and decisions reached with this knowledge in mind.

It may be that the new product will carry some risk, however the designer may choose to ignore the risk and combat it by some marketing strategy. Consumers often act irrationally, emotionally, and idiosyncratically, however much of this can be predicted with a little pre-planning to establish the current need set and the environmental factors likely to have a bearing on consumer values

Posted by Lisa
Categories: Business Entrepreneurship

Motivation Theory

May 28, 2007 0 comments

There is a general consensus that it is difficult to produce a basic list of human needs which satisfy all a designers requirements, however two general categories may provide the core route for the development of specialist checklists. These are biogenic and psychogenic. Biogenic needs, also described as primary needs, contain the basic physiological needs which when unfulfilled create feelings of deprivation that tends to overwhelm and dominate the individual’s attention, these include: hunger, thirst, sleep, sex, exercise, cleanliness, health. During a state of felt deprivation, these needs can become obsessive, however once the need has been satisfied others needs emerge and become more important until the condition is experienced once more. For example food intake is required at intervals according to life style, should the interval be extended beyond the norm the sense of deprivation and desire for satisfaction will grow, should it progress beyond endurance any intake of food will be acceptable no matter how awful (Chisnall, 1985).

Here will be a picture of Biogenic and Psychogenic Model of States of Felt Deprivation

Psychogenic needs, emotional and psychological needs are complex human behavior needs which emanate through cultural, social, emotional, and intellectual interests. These needs will have a bearing on the way in which biogenic needs are satisfied; for example the food intake may be combined into a social event or a cultural occasion where aesthetic requirements play a significant role. (Chisnall 1985)

A convenient classification of psychogenic needs may be affection needs, ego-bolstering needs, ego-defensive needs (Bayton 1958). These needs may apply in combinations, however there is often one that is most dominant or 'prepotent'. For example, customers may buy a new car because they need transport, but their dominant need may be to display a powerful image and position in society by demonstrating their wealth and exclusivity. While another new car customer may purchase their transport to get them to work, or for reliability because their last form of transport kept failing, or for economic reasons such as increased fuel economy or to escape rising maintenance costs.

Posted by Lisa
Categories: Business Entrepreneurship

Designing a Venture

May 28, 2007 0 comments

'The successful entrepreneur is one who first detects and seizes a profitable opportunity. He may not make a comprehensive market survey, but he'll know when to move boldly and quickly.' (Olm and Eddy 1985)

However, when entrepreneurs rush into the market they run the risk of contracting marketing myopia due to their obsession with the features and characteristics of their 'unique' idea (Levitt, 1960; Zimmerer and Scarborough, 1996). Often entrepreneurs guard their ideas and develop them in secret to prevent others from copying. All too often this leads to the production of new products and or services that have neither been analyzed or market tested. Conservative strategies founded on in-depth scientific research and analysis can stifle entrepreneurial flair and lead a form of operational paralysis that can slow down product design and development, often leading to production of staid, unexciting, but nevertheless highly reliable designs. Excessive research costs accrue from this strategy and deplete the entrepreneurs' resources before any real income can be generated. New products and services are often brought to the market after the wave of opportunity has passed (Lynch and Kordis, 1988). The tension between the extremes of these strategies can contribute largely to the entrepreneurs' dilemma and affect the attitudes of their key stakeholders.

It is often difficult for entrepreneurs to establish the extent to which research should be undertaken beforehand (Collins and Porras, 1996). Therefore the first model proposed in the this paper aims to enable entrepreneurs to focus their research by evaluating their ideas from a customer's perspective to articulate customer valued benefits into specific capability requirements. Analyzing product and service benefits against core customer drivers that are likely to generate customer attraction can reduce risks associated with new venture creation. This involves a matching process to determine the core 'state of felt deprivation' (Kotler 1967) responsible for initiating customer desire. The outcomes from such a process provide data for the identification of critical success factors and core criteria for assessing implications to product and service excellence, reliability and maintainability. This in turn leads to the identification of the critical success factors governing the development requirements for the capability of the supply chain to sustain competitive advantage.

The second model leads to the development of quality management strategies for growth of the venture by developing effective metrics in the form of score cards for continuous assessment activities. It builds on the concepts of total quality which aims to get everyone in the organization to do the right things for their customers by identifying the best way to do them to eliminate faults within the resource constraints of the venture. It then addresses the need to constantly improve and create innovation.

The design function is the heart of the process, however the heart cannot function alone, it requires the lifeblood of a steady stream of input from all other functions in the organization, especially from marketing and operations management (Oakland 1994). Innovation may originate from any number of sources such as marketing, technology, conceptual design, serendipity or pure research identifying a new form of technology or materials, or product and market research identifying opportunities and threats (Crawford 1994). Designers should consider magnetic attractions that will attract customers. These forces are rooted deep in the customers core needs and wants and influenced by the current state and degree of satisfaction of their physiological, safety, belongingness and love, esteem, and self actualization needs. Curiosity and aesthetics (Kotler and Armstrong, 1994; Maslow, 1954; Chisnall, 1994) may further motivate the intensity of attraction.

You can also check articles on the subjects "Designing for Competitive Advantage" and "Service Characteristics"

Posted by Lisa
Categories: Business Entrepreneurship

Venture Design

May 28, 2007 0 comments


service package design issues in venture creation and development

Entrepreneurs are often caught up in their enthusiasm to take advantage of what they perceive to be a marketing opportunity that they don't always analyse risk factors during the process of venture creation.

Because entrepreneurs' obsession, they often miss the need to develop a total service package, resulting in lost opportunities and customer dissatisfaction.

To avoid this, the entrepreneur should spend some time analysing the needs and expectations of potential clients; identifying the need to increase customers'expectations.

During business development and growth, the entrepreneur has to keep a finger on the pulse of the market.

This strategy means that management remains proactive, not only should it meet the customers changing needs, but also make it to be ahead of the competition because additional benefits and services are provided.

All businesses, whether rooted in manufacturing or service sectors, need to design their total service package and determin how the target customer groups are likely to perceive the benefits the firm has on offer.

Entrepreneurs should therefore examine the characteristics of total service package design to identify the key success factors that are likely to affect their customers perceptions and further choice of a provider.

Entrepreneurship and Small Business Start-up

During the 1980's entrepreneurship became fashionable and many people, who had previously not considered starting their own business, launched a venture for the first time. They felt that the time was right because they had an idea to exploit their talents.

On the contrary, there were many others, who just started out to explore alternatives due to desperation or corporate downsizing, and against an employment dependency.

In early 1990', though, not so many new small start ups were born because, according to numerous surveys, 'Loss of Market’ has become the major cause of business failure.

For a business to become successful and grow, there is a need for sufficient people to recognize the values to be gained through interacting with it, and exchange resources as a consequence. There is a need for people who has understands the target customers, their range of expectations and then how to meet or exceed these expectations.

The entrepreneur also needs to know how to manage the 'value chain'; how to combine his or her own resources with those available from suppliers -- at the right time, place and form; and how to maximize opportunities for customers to access the benefits on offer (Porter, 1985).

Many new ventures fail to recognize the value of this activity or don't manage it very well. This can result in stagnation or venture failure. The waste created by poorly designed ventures can effectively depress entrepreneurial activity and have dramatic consequences for the venturers, so that venture may lose money -- even not learning from the mistakes.

There is therefore a need for entrepreneurs to undertake 'customer needs assessment' and to match it to its value adding capabilities.

There is a need for the design of a unique service package that meets the customers' requirements so well that clients automatically recognize and accept what is being offered to them (Drucker, 1973; Peters and Austin, 1985).

Posted by Lisa
Categories: Business Entrepreneurship

Building the Start Up Team

May 28, 2007 0 comments


Self analysis

  • Identifying personal strengths and weaknesses
  • Questionnaire
  • Ownership and control issues
  • Characteristics of entrepreneurs
  • Business Ideas Generator

Key players

  • Who have or are involved in developing the business ideas
  • Who is critical to the success of the venture
  • Job definition and individual qualifications

Team building

  • Leadership
  • Attitude

Functional analysis

  • Team leading issues


  • Locking key players into the business

Posted by Lisa
Categories: Business Entrepreneurship

Developing an Understanding of Customer Needs and Wants

May 28, 2007 0 comments

Design success depends entirely on how well the design meets the customer's requirements. This means that it is necessary to identify, and where possible, to establish and agree requirements with customers prior to the design process. For example we need to know: what design features are required; why they are wanted; what benefits are needed; what benefits are expected; which benefits are critical to the success of the product; what the performance criteria are; how performance will be measured; what values they are prepared to exchange; where they want the benefits; when they want the benefits; how often they will want them (Timmons et al 1987). There is a complexity of influences that need to be research to access both qualitative and quantitative data. The environmental influences may be grouped into social; political; economic; legal; technological factors. These may be further influenced by factors such as: culture; historical group norms, beliefs and values, behavior patterns, life styles, religion, politics etc.: sociological factors; social class structure, family and peer group pressures, fashion, stage in life: economic factors; level of disposable income, cost in relation to competing goods or services, perceived value etc. All of these will contribute to the individual’s psychological profile governing their view of how well new goods or service packages can satisfy their needs (Maslow 1954: Chisnall, 1994)


Shostack’s Molecular Model

In Adrian Palmer’s book on the ‘Principles of Services Marketing’ 1994 there is an adaptation of Shostack’s Molecular Model to demonstrate how an analysis of the tangible elements and intangible elements of a service experience can help focus on critical elements.

below will be a product development flowchart

Posted by Lisa
Categories: Business Entrepreneurship Product Innovation

Service characteristics

May 28, 2007 0 comments


Service characteristics include intangibility, inseparability, perishability, heterogeneity and ownership. Services are intangible in that they cannot be touched like goods. Precise standardisation is therefore difficult to establish, as services cannot be examined prior to purchase. The prospective customer can only rely on evidence of past performance; this will establish a range of expectations of the benefits to be received from the provider. When designing a service package it is essential to consider the range of customer valued benefits that would differentiate the venture from competing goods or service packages. The total customer experience must be considered by designers of 'Pure Goods' to identify ways of enhancing their total offering by including some form of intangible benefits. This means removing barriers to enable customers to access the goods, or to maximise performance, or maintain and extend productive life of the goods. Activities such as product information and demonstration, application advice, training, clear 'user friendly' manuals and parts lists, maintenance advice, user 'hot lines', rapid delivery, certified performance, just in time supply, quality assurance, all add to the range of intangible benefits which create expectations of excellence. (Palmer, 1994)

At the other extreme designers of 'Pure Services’ must identify ways to provide tangible evidence so those customers perceive that they will get, or have received, a valuable service. As perception of service quality is often objective as well as subjective the evidence may include the corporate identify, livery, presentation, premises, certification consumables etc. Service providers must therefore consider the customers' expectations of the total service package. (Berry et al, 1990)


Because it is difficult to separate the server from the service process the attitude, appearance, personality, ability and reliability of the server will combine during the service process and create customer perceptions concerning the quality of service. The server is often seen as the service and variations can occur between individuals performing similar tasks as well as by the same individual performing the same task at different times. This means that all members of the team should fully understand not only the mission of the business, but also the policies governing their behaviour to both customers and other members of staff. They need to understand and adhere to agreed operational procedures to ensure that the level of service that they provide is both effectively and efficiently performed consistently (Thomas, 1995).


Service can only occur when the customer demands it. Services cannot be produced beforehand and then stored. Every service provision is different due to the combination of circumstances at that time. This means that service providers need to interpret situations then immediately act. Users of services tend to remember the bad elements long after the event while the feeling of satisfaction tends to decay rapidly (Peters and Austin, 1985).


The heterogeneity of service customers can present problems as it is not always possible to customise at will therefore it is often necessary to screen customer groups to focus on effective provision of service for a frame of characteristics. The wide range of characteristics of service customers are conditioned by their variety of backgrounds, status, origins, peer groups, personal environment, wealth, intelligence, disablement and understanding. This is further complicated by irrational behaviour that may be emotional, traumatised or just purely idiosyncratic. Against these conditions it is often difficult, or even impossible to achieve a standardised output. Even though standard systems exist, and are mandatory, staff may experience difficulties in presenting them consistently. The quality of service is determined completely by the individual who deals with the customer. Designers can condition customers' expectations by providing clear messages about the range of products and services offered by the business through advertising and promotion.


Ownership, or the lack of it, is a basic difference between the provision of services and goods. Customers buying goods can keep them and use them, as they require. Service customers on the other hand may gain advantage from a service but never own it. Therefore the customer who buys goods will receive satisfaction through ownership while the customer of a service will gain satisfaction by accessing the use of the service at the required location, time and duration necessary (Palmer, 1994).

The characteristics throw up issues about empathy, assurance, reliability, cost effectiveness, responsiveness, competence, access, courtesy, communication, credibility, security, understanding and knowing the customer, and the provision of tangibles (Berry et al, 1990; Palmer, 1994)

Posted by Lisa
Categories: Business Entrepreneurship

Designing for Competitive Advantage

May 28, 2007 0 comments

The product /service continuum

Successful designers must combine customer requirements within their design concept and identify the means of achieving production of the goods or service packages. Every organization will provide some form of service to its customers, therefore it is essential that the total service package be designed to take account of all the customers' requirements to ensure that there are no barriers to accessing or enjoying the benefits available through the total service package. The continuum created by the extremes of 'Pure Goods' and 'Pure Service' often leads to confusion as the characteristics of services are often more difficult to specify than the characteristics of goods. The latter can be defined by physical properties, dimensions, textures, colors, weight, form and function etc, also by durability and performance tests to predict reliability. Services on the other hand are defined in terms of expectations of the provision of a range of benefit packages to customers.

when the service available, insert Picture

Posted by Lisa
Categories: Business Entrepreneurship Product Innovation

Planning Market Research Surveys

May 28, 2007 0 comments

Define ideas before data collection

Begin by creating a broad picture of the topic which can then be reduced through a series of stages until a precise focus is achieved

Find out as much as possible about prospective customers:

  1. What are they likely to want?

  2. When will they want it?

  3. How will they want it?

  4. Where will they want it?

  5. How often will they want it?

  6. What are they prepared to exchange to get it?

  7. What service will they require?

  8. Where will they place priorities?

Posted by Lisa
Categories: Business Entrepreneurship

Nature and Purpose of Market Information Systems

May 28, 2007 0 comments

"Time spent on reconnaissance is seldom wasted"

Field Marshal Montgomery

"Know your enemy, know yourself and you can fight a hundred battles without disaster"

Sun Tzu

Developing an approach to research for a new business:

  1. What information will help make decision-making?
  2. What are we going to do with this information?
  3. How should we collect this information?
  4. What are we going to measure?
  5. How should we analyse the results?
  6. How much time should we spend on collecting the information?
  7. What decisions are we faced with?
  8. What is the potential cost of taking the wrong decision?
  9. What level of accuracy is required?
  10. How can we reduce risks during start-up?

Posted by Lisa
Categories: Business Entrepreneurship

Sources of Ideas

May 28, 2007 0 comments

The Practice of Ideas: Identifying, Advocating and Making It Happen

  • Your education

  • Professional work based experience

  • Hobbies, leisure, adventures

  • Associating with friends, relations, business or social acquaintances who have ideas

  • Visiting trade fairs, exhibitions, conferences, craft fairs

  • Analysing other peoples successful ideas

  • Redesigning successful ideas to:

    (1) deliver to new markets;

    (2) adapt for alternative products or services

  • Researching published secondary sources of information:

    (1)patent applications;


    (3) experimental and technological advances

  • Purchasing
    (1)intellectual property rights, licenses, franchises,
    (2) incomplete projects
    (3) from a shortage, or absence of supply, unobtainable personal requirement

  • Accessing sponsorship funding to carry out pure research

Posted by Lisa
Categories: Business Entrepreneurship

Scoring Business Ideas

May 28, 2007 0 comments

The process of selecting the most appropriate business idea can now be analysed. By scoring each idea against the chosen criteria, for example Andrew chose to investigate the possibilities of setting up three different ideas.

  1. Software Design House to design, build, implement and market software packages
  2. Internet Cafe, for people who are interested in using computers and accessing the Internet.
  3. Software Doctor, a service to business customers to select, install, upgrade and debug computer software.

Each idea was analysed to allocate points for each of the criteria and when multiplied by the weighting factor the following chart was produced.

Big Ideas
Criteria Weigh-
Points Score Points Score Points Score
Good profit margins 5 5 25 4 20 5 25
Challenging Work 5 5 25 3 15 3 15
Low Start Up Costs 5 3 15 2 10 5 20
flexible hours 4 5 20 0 0 3 12
Meeting People 3 4 12 5 15 3 9
Variety of Work 2 5 10 2 4 4 8
No need to learn new skills 1 0 0 4 4 2 2







By totalling the rating point scores recorded against the criteria for each business idea a comparative Total Score can provide a focus for further development. The highest score indicates the idea that best meets Andrew's criteria.

This method can be used in the selection process to identify the business idea which is the closest match to individual preferences for further investigation. It does not guarantee success as the individual may have to trade off some personal preferences to meet market requirements - we often are asked to do things which are not at the top of our own priority list but are highly valued by others.

If you are still having difficulty in selecting your business idea for the Creativity Analysis coursework try analyzing yourself and generate your own BIG Ideas Scorecard.

Posted by Lisa
Categories: Business Entrepreneurship

Identifying Personal Priorities

May 28, 2007 0 comments

First thing I suggest you to do is to:

Prioritise possible business areas against your own order of importance and create a table to identify ranking. The criteria used during this process will be entirely your own, for example these may include: low start up costs; would suit your life style; interesting work; easy to do; challenging market; good profit margins; revenge against previous employer; opportunity to travel; opportunity to meet new people; etc. There are many varieties of criteria, the above are just a few, which criteria are important to you?


Decide your most important criteria and place them in a list in order of importance. Next, for each of your chosen criteria apply a weighting factor of between 1 and 5. Now score each criteria by multiplying it by the weighting factor.

For example:

Andrew is studying for a MA (Hons) in Information Technology. He really enjoys designing software for business and multimedia applications and has just completed a training interactive toolkit project for a large electronics equipment manufacturer. The work involved site visits and team briefing meetings, which to his surprise, he really enjoyed. He also found that he got a buzz out of problem solving. To support his studies at university, Andrew not only had an internship acting as a programer, he also has undertaken a range of part time jobs, mainly in catering and bar work. Both he and his friend -potential biz partner enjoy working together while doing Professional IT consulting; and meanwhile both of them enjoy cooking and often organize student and other entertaining networking events. He wants to set up his own business so that he can be control. He owns a 'state of the art' computer and can raise a small amount of capital if he finds people interested in his ideas. He is not worried about unsociable hours as long as the money is good and he finds exciting learning new skills.

Andrew's Criteria Weighting factor
Good profit margins 5
Challenging Work 5
Low Start Up Costs 5
flexible hours 4
Meeting People 3
Variety of Work 2
No need to learn new skills 1

Since cash flow with good margins was important to Andrew, he allocated a weighting factor of 5, on the other hand the need to learn new skills didn't really worry him, so he allocated a weighting factor of one.

Posted by Lisa
Categories: Business Entrepreneurship

Essential "Soft Skills"

May 27, 2007 0 comments

John Welch, an author of The Entrepreneur's Master Planning Guide, concluded from his studies of the activities of entrepreneurs that they appear to have

the following characteristics:

  • good health
  • a basic need to control and direct, with freedom to act and choose courses of action (although no need to exert power over others)
  • self-confidence especially in the face of adversity, as long as he is in control; uncomfortable as a team member (a real maverick); a little increase in control generates a large increase in self-confidence
  • a relentless drive; high degree of achievement orientation
  • a comprehensive awareness of total environment
  • realistic; wants to measure results, personally verify data; his word is his bond; high sense of integrity superior conceptual ability; can see important relationships in seemingly confusing situations; quite clear in approach and in seeking alternatives
  • low need for status; status is achievement; wants to be where the action is objective approach to interpersonal relationships
  • sufficient emotional stability
  • attracted to challenge where the odds are "interesting," which may create the impression of a high risk taker, though this is not true

Posted by Lisa
Categories: Business Entrepreneurship

Questionarie: Which business would be right for you?

May 27, 2007 0 comments

One way of establishing your opportunities for starting a business is to carry out a personal attribute analysis to identify how your characteristics could fit within a range of business types.

Check yourself against the following questions. Score the answer that says what you feel or comes closest to it. Be honest with yourself.

Are you a self-starter?

  • I do things on my own. Nobody has to tell me to get going.
  • If someone gets me started, I keep going all right.
  • Easy does it, I don't put myself out until I have to.

How do you feel about other people?

  • I like people. I can get along with just about anybody.
  • I have plenty of friends - I don't need anyone else.
  • Most people bug me.
  • I can get most people to go along when I start something.
  • I can give orders if someone tells me what we should do.
  • I let someone else get things moving. Then I go along if I feel like it.

Can you take responsibility?

  • I like to take charge of things and see them through.
  • I take over if I have to, but I'd rather let someone else be responsible.
  • There's always some eager beaver around wanting to show how smart they are.I say let them.

How good an organizer are you?

  • I like to have a plan before I start. I'm usually the one to get things lined up when the gang wants to do something.
  • I do all right unless things get too mixed up. Then I cop out.
  • You get all set and then something comes along and blows everything.So I just take things as they come.

How good a worker are you?

  • I can keep going as long as I need to. I don't mind working hard for something that I want
  • I'll work hard for a while, but when I've had enough, that's it!
  • I can't see that hard work gets you anywhere

Can you make decisions?

  • I can make up my mind in a hurry if I have to. It usually turns out OK, too
  • I can if I have plenty of time. If I have to make up my mind fast, I think later I should have decided the other way.
  • I don't like to be the one who has to decide things. I'd probably blow it.

Can people trust what you say?

  • You bet they can. I don't say things I don't mean.
  •     I try to be on the level most of the time, but sometimes I just say what's easiest.
  • What's the sweat if the other person doesn't know the difference?

Can you stick with it?

  • If I make up my mind to do something, I don't let anything stop me.
  • I usually finish what I start - if it doesn't get messed up.
  • If it doesn't go right away, I turn off.

(the questionnaire adapted from Gillian Clegg and Colin Barrow, 1984, How to Start and Run your own Business, Macmillan Press, London)

Posted by Lisa
Categories: Business Entrepreneurship

Choosing your Business

May 26, 2007 0 comments


Factors which will influence your choices

You have to answer the following questions:

1) What are you good at?

2) Is there a market for your idea?

3) Will you enjoy doing it?

4) What are you prepared to put into the business?

5) How much money will be required to start up?

6) Are you prepared to share your business with others?

7) How much control are you prepared to give away?


Posted by Lisa
Categories: Business Entrepreneurship

Entrepreneurship and Venture Management Summary

May 26, 2007 0 comments

Entrepreneurs need to maintain the same enthusiasm for management as they do for their idea if their vision of something different is to be successfully achieved in the long term. They need to motivate their associates and provide them with a vision of the new order to help them through the transitional process. Entrepreneur and organization need to achieve harmony, where transactions between all players produce a win win situation. Venture management skills, like entrepreneurial skills, develop through training and experience.

Entrepreneurs need to recognize and manage the benefits that drive other members of the organization to ensure they receive adequate opportunity to achieve them. But above all they need to identify and manage customer-valued benefits and make them readily available by channeling the organizations energy towards complete customer satisfaction. If the business satisfies a customer-valued benefit, customers will be prepared to pay to receive it.

The ability to spot the opportunity presented by the unfulfilled customer valued need is the archetypal entrepreneurial skill.

Effectiveness and efficiency in mobilising resources, while motivating and leading others to achieve complete satisfaction of customer valued needs is the acme of managerial skill. The organisation requires both entrepreneurial and management skills, without the one the other may not be required.

Posted by Lisa
Categories: Business Entrepreneurship

Entrepreneurial Venture Management

May 26, 2007 0 comments

There is a tension between conventional management information and control systems and entrepreneurial management. Conventional management has a mission, a set of aims and objectives with defined rules, goals and budgets, all of which can be measured the degree of variance between actual outcomes and planned or forecast outcomes. This form of management is governed by grand designs protecting events and outcomes into the future.

Entrepreneurial management participates in trial and error. A kind of gamesmanship, where new ideas are introduced as experiments to find better products, better methods, greater customer satisfaction. This requires having systems with fast response rates linked to analysis methodologies to enable rapid recognition of desirable changes for adoption, and those undesirable changes to be eliminated.

An organization develops routines to match its operational requirements over time. On the other hand the ridged requirements of conventional management information and control systems demands routines to be agreed at the planning stage. Preplanned routines require grand designs and tremendous foresight to cover all eventualities. There is tendency to become bureaucratic and depend to a high degree on policing. Empirical evidence suggests that control by grand design is not always managed as planned, often associated documents find their way into filing cabinets or desk drawers to be pulled out when occasion demands, but otherwise remain untouched and ignored. The routines which do get followed are those which emerge out of everyday usage. Routines drift as new ideas are introduced, or people change roles, enter the organization or leave it. The routines are often forgotten through lack of demand and can get replaced by new routines invented by new people carrying out similar functions or roles.

Entrepreneurs need to develop a range of skills and perform a range of roles throughout the growth stages of the organizations development cycle.

Clark and Pratt developed a typology of Entrepreneurial/Administrative types where the differing roles and organizational skills seen to develop through four phases entitled: Champion; Tank Commander; Housekeeper; Lemon Squeezer.


This role is the one most associated with entrepreneurial activity. It is where the most excitement exists, where new ideas and challenges abound. Inventors operate mainly in this phase of development as they are often obsessed by their concepts and pursue experimental designs based on the outcomes of previous experiments. Visionaries who have invented or discovered new ideas are driven by their need to convince others of the new values and benefits of their ideas. The challenge of winning over others, gaining acceptance of new products or service packages stimulates their motivation. There is a strong need for success. The emphasis here is on doing things.

Tank Commander

This is where operational management is established, strategies conceived and combined into operational plans and procedures. Systems are designed and communications networks defined. Resources need to be identified and procurement initiated. Resource management, communication lines and targets setting are the features of this role. The emphasis is on doing the right things.


In this role leader ensures that the agreed strategies are employed and systems operated. Efficiency is the order of the day. The housekeeper ensures that people follow the plans correctly and maintain the systems to ensure that they do what they said they would do. Budgetary control, management information and control systems are of major importance. The emphasis is on doing things right.

Lemon Squeezer

The role of the Lemon Squeezer is in optimization of resource allocation, and return on capital invested. The search is on for: improved productivity; reductions in waste; maximization of profitability; optimizing human resource allocation; identification of more profitable activities. The emphasis here is on ensuring effectiveness and efficiency.

Entrepreneurs need to learn how to make the role transition from champion right through to lemon squeezer. They need to recognise their current mode in relationship to emerging requirements. Organisations are not stable, new ideas for products, technologies, and markets emerge randomly while environmental disturbances create both opportunities and threats. Before championing new products or services entrepreneurs need to assess how they are likely to affect existing commitments as well as organisational functions. The biggest risks to entrepreneurs are in pursuing opportunities with insufficient or incapable resources. Scarce resources need to managed effectively to optimise results. Often the role of housekeeper is required to discipline the organisation and maintain budgetary control. Or in the lemon squeezer role to slim down the organisation, conserve resources and rationalise operations. The ability to make the transition between roles is an essential attribute.

Posted by Lisa
Categories: Business Entrepreneurship

Characteristics of a Good Manager

May 26, 2007 0 comments

The way a manager gets things done is through people; the achievement of goals depends on the interactions of those people.

"Reciprocity and social exchange occurs in all business interactions. Any business exchange involves the reciprocation of tangible or intangible outcomes which are seen as valuable' Carsrud.

Managers need to understand the motivational factors governing the actions of others and provide reciprocal transactional benefits, because if they don't the exchange will cease.

A good manager must be able to perform the four basic management functions of

planning, organizing, motivating, and controlling.

The implied areas of excellence in performance of these functions include

  1. leadership qualities,
  2. decision-making techniques
  3. and the ability to communicate.

Managers should also possess

  1. the personal qualities;
  2. sense of responsibility; willingness to co-operate with others;
  3. demonstrate integrity and intelligence;
  4. be fair and just;
  5. a willingness to work hard; loyalty to the company;
  6. loyalty to the workforce.

Posted by Lisa
Categories: Business Entrepreneurship

Venture Management

May 26, 2007 0 comments

Just because someone is an entrepreneur or acts in an entrepreneurial manner doesn't mean that they are necessarily a good manager. Managers are not born 'good managers', just as entrepreneurs are not born 'good entrepreneurs'. They may have natural abilities, but to be good at either they have to work at it.

From its inception the development and growth of an organization is dependent on the driving force of the person who champions the idea. The managerial style of the entrepreneur or entrepreneurial team, who set up the organization, will be reflected in its structure.

Management of a venture, company, division, requires more than just a vision, it requires a set of business and operational management skills to direct, monitor, and control all aspects of the organization.

A functional structure is required to set authority and responsibilities levels and provide a framework for decision making.

Entrepreneurs must possess these skills, or be prepared to learn them, or acquire them, if they are to be successful in the long term.

Posted by Lisa
Categories: Business Entrepreneurship

Entrepreneurship and Venture Management

May 26, 2007 0 comments

1. Introduction

The skills needed to set up and start a business and those required for successfully running a business may not be the same. Entrepreneurs may have a need to modify their behaviour pattern to become good managers while good managers may need to introduce new attitudes to realise their entrepreneurial potential.

Entrepreneurs are not readily identifiable because they come in all shapes and sizes, age groups, social, economic and ethnic backgrounds as well as political spectrums. It is therefore important to define what is meant by the term 'entrepreneur'. It is therefore important to define what is meant by the term 'entrepreneur'. Gibb and Ritchie in their social development have described it as a trait, a view supported by Crosby. He believes it is something a person is born with. Carsrud maintains that given the right combination of circumstances anyone can learn to be an entrepreneur. Kets de Vries emphasises the formative role of social influences.

Managers can also be difficult to spot; they have been variously described as individuals who engage in planning, organising, directing, co-ordinating and controlling the actions and utilisation of individuals combined with other available resources. A basic definition of management purpose by Michael Armstrong is 'deciding what to do and then getting it done through the effective use of resources'.

2. Entrepreneurship

People are not born entrepreneurs, they may possess characteristics that are conducive to acting entrepreneurially under the right conditions, and when the emerging combinations of opportunities and threats offer the right conditions, the entrepreneur emerges and acts. Professor Alan Carsrud maintains that "entrepreneurship is more than just a trait, it is socially determined," and "situational determined." But more than that, entrepreneurs act because of the way they view situations and value conditions. They see combinations of opportunities where others see only threats and problems.  He states "entrepreneurial behaviours occur or are most prevalent in unstable socio-economic environments especially an organisations which are subject to rapid change, in situations where they are resource poor and where ultimately the entrepreneur is creating value."

Professor Brian Loasby defines an entrepreneur  'as someone who conceives of a new theory and introduces a new policy', he recognises that this is not the only definition, nor is it complete. Buchanan and Huczynski suggest "An entrepreneur is someone who introduces new technical and organisational solutions to old problems, an innovator who introduces new products, new processes, new organisational arrangements.  This may involve promoting change in the face of resistance from others, and, at risk to the time and money involved.

There is a consensus that entrepreneurs tend to be highly motivated individuals who have a vision of something different and are prepared to mobilise resources and spend time in pursuit of its realisation, often risking both.  They don't gamble, but take calculated risks to maximise advantage and achieve objectives.

3. Types of Entrepreneur

All entrepreneurs are not the same, Ray Bagby offers a typology of six entrepreneurial types:

  1. craftsman-inventor;
  2. psychodynamic;
  3. displaced socially marginal;
  4. innovative entrepreneur;
  5. dealmaker-destructive entrepreneur;
  6. scientist.

However they all have different value sets and motivators that influence their degree of commitment. Their abilities differ, as do levels of satisfaction.  It is therefore useful to classify entrepreneurs into two broad categories of commitment. For this reason Carsrud employed the terms "craftsman" and "opportunistic" entrepreneurs, Bag by uses "small business owner" and "entrepreneur" for the same purpose.


The classification of 'craftsman or small business owner' includes all those skills based individuals who employ their skills to work for themselves; small professional businesses or small family businesses who want to keep control and are happy with the level of return against effort expended; artists and craft workers who see no point in growth; all those who for a wide variety of reasons want to remain small.

The 'opportunistic entrepreneur' is driven by a different value set, and is:

    someone who sees an opportunity for development and growth and does something about it;

    who is prepared to mobilize resources to achieve a profitable return;

    whose profit need not take a monetary form but come in a variety of benefits, some of which may be short or long term, personal or political, and not always readily identifiable;

    neither do they need to own the business or organization or resources, as long as they can control them over the period of use.

These simplistic definitions provide a guide to entrepreneurial types, however they are not stable characteristics as they fluctuate in response to environmental and operational disturbances.

Posted by Lisa
Categories: Business Entrepreneurship

Entrepreneur test

May 26, 2007 0 comments

Questions that you need to take in considerations if you want to become an entrepreneur

What makes an entrepreneur?

Why are some people entrepreneurial and others not?

How can people become entrepreneurial?

What motivates entrepreneurs to strike out on their own and set up new business enterprises?

Is there a pattern of motives, values, and interests that can properly be identified as entrepreneurial?

How do their life path circumstances influence their entrepreneurial behaviour?

What stimulates the birth rate?

How do entrepreneurs settle their ideas?

Do entrepreneurs evaluate risks in start up?

    If so - in what way?

Do entrepreneurs test their ideas?

    If not - why not?

    If they do - How do they do it?

How are results analysed?

Do entrepreneurs consciously create strategies?

        If so -  How do they formulate them?

        How are they structured?

        How are they communicated?

        How are they evaluated?

Are the strategies proactive or mainly reactive?

How different are they from other leadership groups in our society?

Posted by Lisa
Categories: Business Entrepreneurship

Some definitions for the word entrepreneur

May 26, 2007 0 comments

'Entrepreneur' origin French, translated means 'goes -- between' or 'between -- taker' when applied to business (Collins, et al. 1964) otherwise 'contractor' someone who marshals the forces to fulfil opportunities in the marketplace and ventures (Gray and Smeltzer, 1989).

In the past, entrepreneurs were considered to be either 'robber barons' who exploited people for their own success, or 'captains of industry' who led the nation in the development of the economy (Myres, 1907).

Social and clinical psychologists have described entrepreneurs as 'jungle fighters' characterised by 'sadistic authoritarian tendencies, (Maccoby, 1976).

Negative connotations include manipulation, greed, avarice and grasping acquisitiveness (Collins, et al 1964)

Professor Brian Loasby defines an entrepreneur  'as someone who conceives of a new theory and introduces a new policy.'

To sum up,

An entrepreneur is someone who identifies an opportunity for gainful change and who accesses and mobilises resources to effect the change and thereby provides benefits to all the participants.

Posted by Lisa
Categories: Business Entrepreneurship