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Mock Paper 2 Revision (Boston Matrix (Positives (Useful for analysing…
Mock Paper 2 Revision
Boston Matrix
What is it?
A protfolio of products can be analysed using the Boston Group Consulting Matrix. Categorises products into one of four different areas based on:
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Negatives
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Focus on market share and growth ignores issues such as developing a sustainable competitive advantage
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Leadership Styles
Authoritarian
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Most likely to be used when subordinates are unskilled, not trusted and their ideas are not valued
Paternalistic
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A softer form of authoritarian leadership, which often results in better employee motivation and lower staff turnover
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Democratic
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Likely to be most effective when used with skilled, free-thinking and experienced subordinates
Laissez-faire
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Effective when staff are ready and willing to take on responsibility, they are motivated and can be trusted to do their jobs
Importantly, laissez-faire is not the same as abdication
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Capacity Utilisation
A measure of the extent to which productive capcity of a business is being used. Defined as: The percentage of total capacity that is actually being achieved in a given period
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Pricing Strategies
Average cost pricing
Setting prices close to average cost. It is a way to maximise sales, whilst maintaining normal profits. It is sometimes known as sales maximization
Cost-plus pricing
Where a firm fixes the price for its product by adding a fixed percentage profit margin to the average cost of production. The size of the profit margin may depend on factors including competition and the strength of demand
Peak pricing
When a business raises its prices at a time when demand has reached a peak might be justified due to the higher marginal costs of supply at peak times
Penetration pricing
A pricing policy used to enter a new market, usually by setting a very low price
Price leadership
When one firm has a clear dominant position in the market and the firms with lower market shares follow the pricing changes prompted by the dominant firm
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Interest Rates
What is it?
The reward for saving and cost of borrowing expressed as a percentage of the money saved or borrowed
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Market Share
The share of the total market that is owned by a particular business, product or brand
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