The basics of business management – vol II

ELLY R TWINEYO KAMUGISHA THE BASICS OF BUSINESS MANAGEMENT – VOL II MARKETING, LOGISTICS, PROCUREMENT AND LAW Download free eBooks at bookboon.com The Basics of Business Management – Vol II: Marketing, Logistics, Procurement and Law 1st edition © 2017 Elly R Twineyo Kamugisha & bookboon.com ISBN 978-87-403-1607-0 Peer review by Timothy Esemu (PhD) Download free eBooks at bookboon.com THE BASICS OF BUSINESS MANAGEMENT – VOL II CONTENTS CONTENTS The Basics of Business Management – Vol I: Leadership, Financial Management and Economics Part I: Leaders And Managers Vol I Introduction to management and leadership Vol I Part II: Financial Management Vol I Management of Cash Vol I Credit Management Vol I Management of Working Capital Vol I Financial ratios and investment analysis Vol I www.sylvania.com We not reinvent the wheel we reinvent light Fascinating lighting offers an ininite spectrum of possibilities: Innovative technologies and new markets provide both opportunities and challenges An 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The Basics of Business Management – Vol II: Marketing, Logistics, Procurement and Law Part I: Marketing and international business The Marketing Environment The Marketing Mix 26 Consumer Behaviour 57 Market Segmentation 66 Branding 81 Services Management 94 Download free eBooks at bookboon.com THE BASICS OF BUSINESS MANAGEMENT – VOL II CONTENTS Relationship Marketing 108 Industrial Marketing 118 International Marketing 140 Part II: Logistics management 153 10 Logistics Management 154 11 Reverse Logistics 180 12 International Logistics 183 Part III: Procurement 192 13 Procurement and Disposal Management 193 14 Outsourcing 230 15 e-Procurement 233 16 Project Procurement 237 Part IV: Legal issues in business management 247 17 Law of Contract 248 18 Sale of Goods Act and Supply of Goods and Services Act 303 19 Agency and Bailment 315 20 Intellectual Property Rights 322 21 Insurance 326 Endnotes 329 Download free eBooks at bookboon.com PART I: MARKETING AND INTERNATIONAL BUSINESS Download free eBooks at bookboon.com THE BASICS OF BUSINESS MANAGEMENT – VOL II THE MARKETING ENVIRONMENT THE MARKETING ENVIRONMENT Types of marketing environment: here are two types of the environment that companies interact with: the micro and macro environment he microenvironment is of immediate concern to the management of businesses hese are factors that are close to a business and have a direct impact on its operations and success Common microenvironment factors cmprise of the employees, suppliers, customers, distribution channels, competitors, shareholders and the media his microenvironment is unique for each organisation hat is, no organisation has the elements of the microenvironment identical to those of another organisation he macro environment relates to factors in the environment that afect demand and supply for goods or services of all the organisations within a sector or industry Broadly, we can look at the external environment under PESTLE – the political, economic, socio-cultural, technological, legal and ecology or nature factors 1) Socio-cultural factors: Demographics (study of population dynamics): Marketers are interested in the issues of population (size, growth, age, distribution, etc.) because people make up markets he population age mix is very important to marketers Diferent age groups have diferent needs and wants that have to be satisied he composition of a country’s age distribution determines which products companies can produce for diferent age segments A country with a big percentage of older people implies a big market (and demand) for products for that group For example, for businesses in furniture and bedrooms items, older people are a target market for recliner chairs and lat mattresses Education levels matter to the marketers Diferent levels of literacy and education groups (illiterate, high school level, college and professional groups) have diferent sets of needs and wants A segment of people with low levels of education in most cases has less demand for such products as computers, magazines, and management books Lifestyles of a population also must be carefully analysed by marketers For example in Western countries (e.g EU, USA and Australia), there is an increasing number of households made up of single people Also, most women are no longer ‘sit and stay home’ moms (or house wives) hey go out and work In these markets there has been an increase in the sales of convenience foods his is in contrast with the household patterns in developing countries, especially in Africa and some countries in Asia, where there are big families with few women going out to work Convenience foods would not sale well in these countries Download free eBooks at bookboon.com THE BASICS OF BUSINESS MANAGEMENT – VOL II THE MARKETING ENVIRONMENT Culture: People’s beliefs, values and norms, tastes and preferences are shaped by the society in which they live We should note that societies are made up of sub-cultures A subculture is a smaller group of people where its members usually share ethnic background, beliefs, values and religion While a sub-culture group may arise out of a common race or religion, a social activity or hobby may also give rise to such a group Marketers have to learn the diferent consumption habits of sub-cultures as they may difer from one sub-culture to another 2) Ethnic groups and marketing: Two points can be presented concerning ethnic markets First, diferent ethnic groups have their speciic needs and wants as well as speciic consumer habits Marketers must, therefore, understand each ethnic group’s buying habits and the products they prefer Secondly, due to emigration, marketers can consider targeting ethnic groups from regions (Asia, Africa, etc.) with products from their countries of ethnic origin Marketers should be careful to never assume that if a product is popular among Latin Americans in the USA it will be highly demanded in Brazil or Argentina his is because migration inluences product consumption behaviour Migration and Chinese in Canada: Can the growth and expansion of the economy encourage the rich to migrate? Portfolio Magazine of June 2016 carries an article on the rich young Chinese whose members include the Chinese supercar club who are mainly below the age of 21)1 in mainly Vancouver Canada Some have diamond wrist watches costing $ 250,000 and go to school cruising Lamborghinis Some are driving Lamborghini Huracan – a car that costs nearly $281,000 Others are driving Lamborghini Aventador Roadster Galaxy, whose cost price is at $600,000 The cheapest they drive is around $115,000 – that is an Audi RS5 Even cops are mesmerized by these young Chinese “A cop once pulled me over just to look at the car”3, one remarked Watch an online reality show Ultra Rich Asian Girls of Vancouver and follow the story of their lives These are sons and daughters of the rich Chinese Many wealthy Chinese are sending their families and their riches in the West Some are looking for good schools for their children; but others are seeking to escape scrutiny by the Chinese government in China4 According to government statistics in British Columbia5, with welcoming immigration policies, between 2005 and 2012 at least 37 000 Chinese millionaires became permanent residents of Canada’s British Columbia This was under the then Immigrant Investor Programme In the metropolitan area of Vancouver, with a population of 2.3 million, the number of Chinese has risen from less than percent of the population in 1981 to 18 percent in 20116 Download free eBooks at bookboon.com THE BASICS OF BUSINESS MANAGEMENT – VOL II THE MARKETING ENVIRONMENT 3) Economics: Marketers are interested in markets whose people have the purchasing power Purchasing power in an economy depends on current income, savings, prices and availability of credit he marketers are interested in the country’s purchasing power parity as well • Income distribution: Diferent economies (developed, developing, less developed) have varying levels of wealth Not only is national wealth varying but there are also diferent categories of people classiied according to income In developed countries, income tends to be evenly distributed while in poor countries income tends to be highly unevenly spread3 he rich are usually markets for luxury goods and brands (wherever these rich are whether in countries with high levels of poverty) he greater number of people in the poor economies could form markets for inexpensive undiferentiated goods, even unbranded goods • he saving culture too should concern marketers In classical economics, when a person saves, it means he/she has foregone consumption he more a person saves, the less he/she spends on current consumption5 A high propensity to save will result in a lower propensity to consume Some countries have a higher propensity to save while others have less For most Indians, savings account for about 20% of personal income while they account for 18% among the Japanese, 6% in the US and less than 5% among the Africans According to Bloomberg’s Business Week, China has one of the highest savings rates in the world (38%), followed by India (34.7%)7 4) Legal environment: Businesses and marketing in particular is inluenced by the regulatory environment6 he regulatory environment that afects companies includes company laws, employment and labour laws, investment laws as well as the laws of contract, health and safety, data protection, environment and taxation 5) Political environment: Political environment is not limited to the regulator environment7 It also includes creation of an enabling macroeconomic environment, smooth political change, political stability and national ideology Most countries in the world (including those in sub-Saharan Africa) have embraced the market economy and favoured privatisation of public enterprises he political ideology that favours nationalisation of private enterprises discourages investment, research and development and marketing efort We will cover the issue of political risk later in this book Download free eBooks at bookboon.com 10 ... bookboon.com THE BASICS OF BUSINESS MANAGEMENT – VOL II CONTENTS CONTENTS The Basics of Business Management – Vol I: Leadership, Financial Management and Economics Part I: Leaders And Managers Vol I... bookboon.com Click on the ad to read more THE BASICS OF BUSINESS MANAGEMENT – VOL II CONTENTS Part III: Microeconomics Vol I Introduction Vol I Supply and Demand Vol I Theory of Production Vol I Market... TWINEYO KAMUGISHA THE BASICS OF BUSINESS MANAGEMENT – VOL II MARKETING, LOGISTICS, PROCUREMENT AND LAW Download free eBooks at bookboon.com The Basics of Business Management – Vol II: Marketing,