Explain the difference between internal and external growth, a takeover, a merger and the LBO.

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Most businesses which grow in size do so through internal growth, also called organic growth. This is where sales and profits grow through means such as increased investment, new product development or better marketing. However, sometimes a business will grow in size through external growth. This can be a takeover or acquisition, where one business buys another business. Or it can be through a merger where two or more businesses join together to become one business.

Takeovers and mergers can take place in any sized business with any legal organization. For example, a sole trader who owns two chemist shops may buy up, and therefore take over, a third chemist shop from its owner. Two partnerships may merge to become one partnership.

However, takeovers and mergers tend to be associated more with limited companies. Usually, one company must acquire more than 50% of the shares of the company which is being taken over. They buy these shares from existing shareholders.

Some takeovers are contested or hostile. This means that the board of directors of the company recommends to its shareholders that they should not accept the bid. Some takeovers, however, are agreed takeovers. The board of directors recommends to its shareholders that they should sell. Often a company will make a takeover offer, which the board of directors rejects because the price is too low. The takeover company must then raise a bid, which the board of directors of the company being taken targeted accept or reject.

In a merger, the boards of directors both agree to the merger having negotiated the terms of the merger. These terms include how existing shareholders may get shares in the new company. It also typically includes who will become the new chairman and chief executive of the company, and who will become its directors. Cost cutting plans may also be announced. For example, if each company has a headquarters, then it may be announced which headquarters will be closed and which will become the new one.

A further type of acquisition is the leveraged buy-out (LBO) or management buy-out (MBO), by which a group, usually managers of the company, make an arrangement, through a loan or venture capital finance, to buy out the company’s equity. The LBO is thus a means for achieving corporate restructuring, often financed by venture capitalists.

Билет №6

1. Describe and compare three management levels.

What is marketing? Explain the difference between the traditional marketing mix and the customer relationship marketing approach.

Marketing plays a key role in the company’s strategic planning process in several ways. First, marketing provides a guiding philosophy - the marketing concept - that suggests company strategy should revolve around building profitable customer relationships with important consumer groups. Second, marketing provides input to strategic planners by helping to identify attractive market opportunities and by assessing the firm’s potential of strategies for reaching the unit’s objectives. Once the unit’s objectives are set, marketing’s task is to carry them out to mutual advantage.

One component of a firm’s marketing strategy is the marketing mix which has been described as the set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the market place with its intended target market. The marketing mix consists of everything the firm can do to influence the demand for its product. The various possibilities can be collected into four groups of variables - product, place, price and promotion.

The 4 P’s take the seller’s view of the market, not the buyer’s view. From this buyer’s viewpoint, in this age of customer relationship marketing, the 4 P’s might better be described as the 4 C’s, according to Robert Lauterborn. The relationship can be described by the following chart:

The 4 P’s	The 4 C’s
Product Price Place Promotion	Customer solution Customer cost Convenience Communication

Thus while marketers see themselves as selling products, customers see themselves as buying value or solutions to their problems. And customers are interested in more than just price; they are interested in the total costs of obtaining, using, and disposing of a product. Customers want the product and service to be as conveniently available as possible. Finally, they want two-way communication. Modern marketers would do well to think through the 4 C’s first and then build the 4 P’s on that platform.

Customer relationship management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Said another way, it is about developing long-term, mutually beneficial relationships. Modern marketers are going beyond designing strategies to attract new customers and create transactions with them. They are using customer relationship management to retain current customers and build long-term relationships with them. This new view is that marketing is the science and art of finding, growing and retaining profitable customers. The key to building lasting customer relationships is to create superior customer value and satisfaction. Customer perceived value is the difference between total customer value and total customer cost; whereas customer satisfaction is the extent to which a product’s perceived performance matches a buyer’s expectations.

Билет №7

1. What is the difference between functional and general managers?

What does the promotions mix include? Describe the main mass-promotion tools.

Marketing communications have their own ‘promotions mix.’Some of the elements of the promotions mix are:

Personal Selling
Sales Promotion
Public Relations
Publicity
Direct Mail
Trade Fairs and Exhibitions
Sponsorship
Advertising

The three mass-promotion tools are advertising, sales promotion and public relations.

Advertising is the use of paid media by a seller to inform, persuade and remind target audiences about its products or organization. It is a powerful promotion tool. Advertisements take many forms and have many uses.

Sales promotion covers a wide variety of purchasing incentives - coupons, premiums, contests, buying allowances - designed to stimulate consumers, the trade and the company’s own sales force. In general, sales promotions should be about consumer relationship building. In many countries, sales promotion spending has been growing faster than advertising spending in recent years. Sales promotion calls for setting sales promotion objectives, selecting tools, developing, pre-testing and implementing the sales promotion program, and evaluating the results.

Organizations use public relations to obtain favorable publicity, to build up a good ‘corporate image’ and to handle or head off unfavorable rumors, stories and events. Public relations involves setting PR objectives, choosing PR messages and vehicles, implementing the PR plan and evaluating PR results. To accomplish these goals, PR professionals use a variety of tools, such as news, speeches and special events. Or they communicate with various publics through written, audiovisual and corporate identity materials, and contribute money and time to public relations activities.

Билет №8

1. Explain the difference between functional, divisional, and matrix structures.

How should companies market their products if they go global?

Companies cannot simply stay domestic and expect to maintain their markets. Despite the many challenges in the international arena (shifting borders, unstable governments, foreign-exchange problems, corruption, and technological pirating), companies selling in global industries need to internationalize their operations.

In deciding to go abroad, a company needs to define its international marketing objectives and policies. The company must determine whether to market in a few countries or many countries. Then it must decide on which types of countries to consider. In general, the candidate countries should be rated on three criteria: market attractiveness, risk, and competitive advantage.

Once a company decides on a particular country, it must determine the best mode of entry. Its broad choices are indirect exporting, direct exporting, licensing, joint ventures, and direct investment.

In deciding on the marketing program, a company must decide how much to adapt its marketing mix (product, promotion, price, and place) to local conditions. At the two ends of the spectrum are standardized and adapted marketing mixes, with many steps in between. At the product level, firms can pursue a strategy of straight extension, product adaptation, or product invention. At the promotion level, firms may choose communication adaptation or dual adaptation. At the price level, firms may encounter price escalation and gray markets, and it may be very difficult to set standard prices. At the distribution level, firms need to take a whole-channel view of the challenge of distributing its products to the final users. In creating all elements of the marketing mix, firms must be aware of the cultural, social, political, technological, environmental, and legal limitations they face in other countries.

Билет №9

1. How does organizational structure of a business influence the activities and success of the business?

What role do smells, sounds and sights play in a customer’s decision to buy a product?

Билет №10

1. Explain the difference between centralized and decentralized organizations.

Prove that the customer is the king in the digital marketplace.

This new consumer power is changing the way the world shops. The ability to get information about whatever you want, whenever you want, has given shoppers unprecedented strength. In markets with highly transparent prices, they are kings. The implications for business are enormous: threatening for some, welcome for others. For instance, the huge increase in choice makes certain brands more valuable, not less. And as old business divisions crumble, a strong brand in one sector can provide the credibility to enter another. Hence Apple has used its iPod to take away business for portable music players from Sony; Starbucks is aiming to becomea big noise in the music business by installing CD-burners in its cafés; and Dell is moving from computers into consumer electronics.

Билет №11

Describe the basics of Maslow’s hierarchy of needs.

2. What is the essence of a good brand?

Brand management is the application of marketing techniques to a specific product, product line or brand. It seeks to increase the product’s perceived value to the customer and thereby increase brand franchise and brand equity. Marketers see a brand as an implied promise that the level of quality people have come to expect from a brand will continue with present and future purchases of the same product. This may increase sales by making a comparison with competing products more favorable.

The value of the brand is determined by the amount of profit it generates for the manufacturer. This results from a combination of increased sales and increased price.

A good brand name should:

· be legally protectable

· be easy to pronounce

· be easy to remember

· be easy to recognize

· attract attention

· suggest product benefits (eg.: Easy off) or suggest usage

· suggest the company or product image

· distinguish the product’s positioning relative to the competition

Brand rationalization refers to reducing the number of brands marketed by a company. Companies tend to create more brands and product variations within a brand than economies of scale suggest they should. Frequently they will create a specific product or brand for each market that they target. They also do this to gain precious retail shelf space (and also reduce the amount of shelf space allocated to competing brands). But this can be a very inefficient strategy so a company may decide to rationalize their portfolio of brands from time to time. They may also decide to rationalize their brand portfolio as part of an overall corporate downsizing.

Билет №12

1. Define theory X and theory Y. Compare them.

2. What are the main points of successful brand management?