Tuesday, February 10, 2015

Impact of Budget on Company Morale


In this post, you will get the idea how budget affect company morale and how budgetary process be made more beneficial to avoid any negative impact a budgetary concept can portray. You will get the answer of the follwoing qyestions :

1. How can a budget affect company morale?  How could the budgetary process be made more beneficial to avoid any negative impact a budgetary concept can portray? 

2. How does contribution margin differ from controllable margin in a responsibility report for a profit center?  How do controllable costs and non-controllable costs impact a manager's budget and decision making process?

Answer 1

Impact of Budget on Company Morale
A budget has both positive and negative impact over company morale. The budget padding, in which management considers unrealistic targets, reduces the employee morale and consequently company morale. On the other hand, a budget with accurate targets and measures increases employees’ effectiveness to perform their tasks that causes an increase in company morale. The bottom-up budgeting also provides benefits to the company in term of morale as it involves several people in making budgets (Sottini, 2009). On the other hand, top-down approach of budgeting process reduces company morale as budgeting process is performed by top management only without considering the other employees.



Elimination of Negative Impacts of Budgetary Concepts
The budgetary concepts may pose different negative impacts over an organization. In order to eliminate these negative impacts, the management of an organization should follow the bottom-up approach of budgeting. This budgetary concept will involve all the employees in making budgets and will facilitate more effective utilization of resources (Sottini, 2009). At the same time, it will also be effective to determine the appropriate measures and targets for the employees that would cause an increase in the effectiveness of employees and consequently organizational profitability. 

After reading of the Impact of Budget on Company Morale, You must read the Total Quality Management (TQM) because TQM refers to management methods used to enhance quality and productivity in organizations. 

Answer 2
Contribution Margin & Controllable Margin
The contribution margin determination distinguishes between fixed and variable cost in reporting the management. It can be defined as the difference between sales price and variable cost. On the other hand, controllable margin can be defined as the contribution margin less controllable fixed cost. The responsibility center reports for a profit center, in which, it defines controllable margin that is computed by deducting controllable fixed cost from the contribution margin, while the contribution margin is computed by deducting variable costs only (Weygandt, Kimmel & Kieso, 2010). Any type of fixed cost, whether controllable or not, is not deducted to calculate contribution margin.
Impact of Controllable and Non-controllable Costs
The controllable and non-controllable cost has significant impact over the budgeting and decision making process of management. it is because; managers are directly responsible for the profit remaining after subtracting all the controllable expenses. The budget is prepared by considering the controllable costs as appropriate and sophisticated cost system helps to increase the proportion of controllable cost in the business (Pizam, 2005). The controllable and non-controllable costs also help to determine the accurate cost of output that helps the mangers to make the unit decisions. Thus, controllable and non-controllable cost increases the effectiveness of managers in budgeting and decision making.


References 

Pizam, A. (2005). International Encyclopedia of Hospitality Management. Butterworth-Heinemann.
 Sottini, M. (2009). IT Financial Management. Van Haren Publishing
Weygandt, J.J., Kimmel, P.D. & Kieso, D.E. (2010). Accounting Principles (9th ed.). John Wiley and Sons.

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Monday, January 26, 2015

Marketing Research Approach to Assess Global Market Potential




The main objective of this marketing research is to assess the level of complexities of global business world with the help of adequate marketing research. So that the company can understand the potential of global market and develop strategies according to that

Table of Contents

Introduction
 . 3Purpose of Marketing Research. 3
Scanning the Environment 4
Secondary Data. 6
Primary Data. 7
Marketing Research Process to Achieve Objective. 8
Problem Definition: 8
Defining Objectives of the Research: 8
Development of an Approach. 9
Research Design Formulation Data Collection and Analysis: 9
Report Preparation and Presentation: 10
Conclusion. 10
References. 12




Introduction


Marketing research is a systematic design, collection, analysis and reporting of data & findings, which is relevant to a specific marketing situation.  It is a form of a business research (Andreas and Cliff, 2007). Marketing research anticipates customers’ future wants & desires and allows organizations to produce and promote their products and services in accordance with them. It emphasizes on the identification of market opportunities (Kotler, 2002).
An effective marketing research involves the following steps:  To define the problem, the decision alternatives, and research objective, to develop the research plan, to collect the information, to analyze the information, to present the findings, and to make the decision (Boone and Kurtz, 2005). By the marketing research, a company may develop the marketing strategy and tactics for its product.

This paper explains the approach of marketing research that should be followed by a company to assess the potential of the global market. Before entering in the global market, it is necessary for the firm to assess the potential of the market. In this concern, the best marketing approach would be the evaluation of past trends, growth and external environment to assess the global potential.

Purpose of Marketing Research

Marketing research is the objective, systematic and exhaustive search for and study of the facts relating to any problem faced by the organization in the field of marketing. With the increase in the complexities of business activities, marketing research too is growing in complexity and has emerged as a highly specialized function of marketing management (Bradley, 2007). Marketing research uses the marketing information as its input and simultaneously generates more of its output. 

Due to the globalization, almost all the business firms are targeting international market to expand the business market and increase the profitability of the firm (Gershon, 2003). The main purpose of marketing research is to analyze the opportunities available in the global market, so that the companies can utilize the advantages and improve the performance of the firm in the new market (Kerin, Hartley and Rudelius, 2003). The marketing research will also give the organization an insight into existing practices adopted by its competitors and the customer preferences.

It will further help the company to know whether the products and services are in alignment with the cultural shifts taking place in the society. It also comes to know about the acceleration in the trends of switchover from simple products to branded products or vice versa. Through MR, the organization can also analyze the requirement of adding any value to the existing product/service or fully replacing the old service with the new one.

Scanning the Environment
 
In order to assess the global potential, it is necessary for the company to analyze the global environment. Scanning of global environment includes numerous factors. A company has to monitor demographic, economic, technological, political-legal and social-cultural factors (macro environment forces) and customers, competitors, distributors, suppliers (micro environment forces), which affect its ability to earn profits and opportunities available in the global market (Kotler and Armstrong, 2007). 

It should establish marketing intelligence system to track trends and important developments. For each trend, management needs to identify the related or associated opportunities and threats. A marketing opportunity is an area of buyer potential interest in which a company can perform profitably (Schroeder, 2007).
Developments in the external environment represent threats. An environmental threat is a challenge posed by an unfavorable trend that would lead to deterioration in sales or profit. These threats are classified according to the seriousness and profitability of occurrence. An ideal business is high in major opportunities and low in major threats (Sheth, 2003).

For example, Nestle has assessed all these factors and trends of the global environment. Company has decided to target the market of China for the marketing of high-end coffee equipments. The Chinese region is appropriate for the development of the business. With the advent of globalization and privatization in the Chinese markets, MNC’s can enter into the Chinese region for the expansion of their business.

Due to an increase in the number of MNC’s in the market, the demand for coffee has increased and the Chinese people are adopting coffee culture. This has assisted many companies to flourish in the Chinese region. Nestle established its factory in China and encouraged the cultivation of coffee in the country (Patton, 2007).
Additionally, for the retail industry, Wal-Mart has also analyzed that global world has high potential due to changes in the preferences of the consumers. Due to the increases in the global economy, living standard of people has been raised. All the people need luxury and lavish products and services with high quality and low prices. Thus, Wal-Mart has numerous opportunities in Asian Countries like, India, China, Japan, etc. due to good economic growth and low political restrictions (Vignali and Zundel, 2003). 

Apart from the external environment, scanning of internal environment is also essential to assess the company’s strengths to cope with the changes in the global market. Each business needs to evaluate its internal strength and weaknesses.  These factors may include product, price, promotion, place (distribution channels); as well as personnel, finance, manufacturing capabilities etc. (Wrenn, Loudon and Stevens, 2001). The strength to one objective may be weaknesses for the other. Strength and weaknesses of a company are as follow: customer service, efficiency, infrastructure, quality, management, price, cost, capacity, relationship with customers, strong brand names, ethics etc. (Andreas and Cliff, 2007).

Secondary Data
 
In order to collect the secondary data in the marketing research process through secondary research analysis, the companies should concentrate on the increases in the complexities of the competitive environment, changes in the world economic status, comparison of economic condition of different countries such as, USA, UK, Asia, Australia, etc. (Kotler, 2002).

In order to collect the secondary data, the research on international market should focus on understanding the cultural, political, legal, social, technological and economic environment of the Global market. The research should focus on the business cycle of the product in the international market (Boone and Kurtz, 2005). Furthermore, the companies should also concentrate on the business activities of competitors, emerging technologies global customers, etc.

Secondary data will comprise of information about the political and legal environment as well as government policies of the different countries’ export import records, economical analysis, relations with neighbor countries, etc. Additionally, secondary data also comprise of performance of competitors in the relevant industry, assessment of fast growing market, identification of emerging market, etc. (Bradley, 2007).

In order to assess the secondary data, the company should concentrate on the past record of growth; data and information provided in economic and social development reports, trade report, technological development in the country, etc. (Gershon, 2003). Evaluation of secondary data is less expensive and easy for the company, because of the reliability and authenticity.

For example, with the help of secondary data, a sports company can analyze that how much teenagers spend their pocket money on basketball shoes. The secondary data will assist in understanding the competitors and their strategies for setting up the price of the product.

Primary Data
 
For accomplishing the research of international market, it is necessary for an organization to evaluate the demand for the product in the region which is to be tapped and explored. Primary data of market research comprises of evaluation of target market to identify the segment and understand the needs and preference of consumers (Kerin, Hartley and Rudelius, 2003). It will assist the organization in comparing the demand existing in one region with another region (Kotler and Armstrong, 2007).

It is necessary for the company to focus on the buying behavior of the customers and the trends in the market to evaluate the primary data and understand the potential of global market. In this way, the firm can develop strategies related to the demand and supply in the market of the target region (Schroeder, 2007). Primary data allows the firm to use best promotional method as per the consumer’s behavior and preference to promote the product in the international market by focusing on the target customers and the target markets (Sheth, 2003).

For example, the fast food company can also access which country invites multinational firms or how and why consumers prefer fast food with different flavors (Vignali and Zundel, 2003). Primary data allows the firms to understand the consumer behavior and market demand at the global level (Kotler, 2002).

Marketing Research Process to Achieve Objective
 
There are so many uncertainties, which prevail in the global market. The business organization learns to overcome these problems with experience. Without doing business in the international market, no business organization can handle its business process smoothly. These business organizations can research the global market with the help of an external business service agency (Wrenn, Loudon and Stevens, 2001). In order to achieve the objective of the marketing research, it is necessary for the company to conduct a research process, which comprises of following steps:

Problem Definition:

Here the problem is to select best approach of marketing research to evaluate the global market potential and identify the opportunities available in the market to become successful. 

Defining Objectives of the Research:

The main objective of this marketing research is to assess the level of complexities of global business world with the help of adequate marketing research. So that the company can understand the potential of global market and develop strategies according to that. 

Development of an Approach
As the objective and problem of this marketing research is associated with the global world, the secondary research would be best suitable for this company. The marketing approach should be based on following steps:

Evaluation of Social and Cultural Trend: The Company should analyze the changes in the global trend and cultural environment of different regions. For example, culture of China and India is entirely different from the culture of USA (Wrenn, Loudon and Stevens, 2001). On the other hand, social development in India and China is similar as like of USA. People have become conscious about brand name and luxury goods in China and India due to the economic and educational development. Thus, it is essential for the company to evaluate these areas to understand the global market potential (Andreas and Cliff, 2007).

Data Collection through Analysis of Government Policies and Economic growth: Different country has different policies and regulations to do business. Understanding of these regulations is necessary to analyze the global market potential (Kotler, 2002). With the help of this, it would be easy for the companies that which country and industry have low entry barriers and which have high entry barriers. Analysis of global economy report will help the company to identify the growth of different region (Boone and Kurtz, 2005). In this way, company would be able to assess that which market has high economic potential.
Research Design Formulation Data Collection and Analysis:

This is the blue print to conduct the market research. This would be secondary research. Firstly, the researcher has to collect latest reports about trends, cultural environment, political and social environment. After collecting all the latest reports, the research would prepare different section to put the reports (Bradley, 2007).
It is an important step in any research. This step reveals the information about the potential of global market to become an international firm. The data should be collected on the basis of their geographical distribution according to the different region (Kotler, 2002).

From each section, the researcher would compare reports of different countries to assess, which country has high potential. For example, Economy of China is highly growing, cultural environment of Saudi Arabia is totally different from USA and India, USA has low restrictions to enter for new companies in the market, etc. (Gershon, 2003).

Report Preparation and Presentation:
This is the final step to prepare a report of the marketing research. In this section, the research will present the data in tabular as well graphical format. Graphical and tabular presentation would help to compare different report in easy ways (Kerin, Hartley and Rudelius, 2003).


Conclusion
 
Thus, on the basis of above discussion, it can be concluded that above mentioned approach of the marketing research is based on secondary research methodology. This research approach would help the company to understand the potential of global market. It would surely help the company in expanding its business in the international market (Kotler and Armstrong, 2007). All the important points mentioned in the research analysis should be considered and implemented by the company. It will assist the company in gaining success and growth in the global market.


References

Andreas, B. and Cliff, B. (2007). Marketing mix standardization in multinational corporations: A review of the evidence. International Journal of Management Reviews, 9, 303- 324.

Boone, L.E. and Kurtz, D.L. (2005). Contemporary Marketing (eds.). New York: Thomson South-Western.

Bradley, N. (2007). Marketing Research: Tools and Techniques. Published by Oxford University Press.

Gershon, S.H. (2003). The value of market research. Retrieved November 9, 2010 from http://findarticles.com/p/articles/mi_go1622/is_200305/ai_n7542485

Kerin, R.A., Hartley, S.W. and Rudelius, W. (2003). Marketing: The Core (eds.). New York: McGraw Hill Professional.

Kotler, P. and Armstrong, G. (2007). Principles of Marketing Pearson (eds.). New Jersey: Prentice Hall Pvt. Ltd.

Kotler, P. (2002). Marketing Management (11th Edtiion). New York: Prentice Hall Pvt. Ltd.

Patton, D. (2007, November 25). Continent in a Fix as China Enters the Coffee Market. Retrieved November 9, 2010 from http://craigeisele.wordpress.com/2007/12/02/africa-in-a-dilemma-as-china-enters-the-coffee-market/

Schroeder, J. E. (2007). Critical Marketing: Insights for Informed Research. Critical Marketing: Defining the Field. London: Elsevier Butterworth Heinemann.


Vignali, C. and Zundel, M. (2003). The marketing management process and heuristic devices: an action research investigation. Marketing Intelligence & Planning, 21(4), 205 – 219.

Wrenn, B., Loudon, D.L. and Stevens, R.E. (2001). Marketing Research: Text and Cases (eds.). Routledge.

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