MSDL - Business studies

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  • Created by: Michelle
  • Created on: 29-05-13 11:33
Describe MSDL as a business
MSDL is an engineering business which specialises in laser cutting intricate shapes from sheets of steel. It is a family-owned business.
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From a marketing point of view, what is problematic?
The plunging sales, unable to defend prices against competitors, and customers have developed ''aggressive purchasing''
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What type of customer network do MSDL have?
A ''close knit group of customers, mostly within a 50 mile radius of the firm' location''
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How do they promote the business?
MSDL use word-of-mouth as their main promotion, with a few leaflets or posters to potential customers (usually past consumers)
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What have MSDL decided to move into?
'High quality garden accessories'
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The new product line, has been described as a...?
Quantum leap into the unknown - and is backed with little market research
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MSDL have radical plans for the near future, but what is wrong with their marketing objectives?
They are worryingly vague
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What is their fairly straight forward long term aim?
To get a ''20% profit margin''
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How could you advise MSDL? (What could they follow, to achieve this objective?)
SMART priniciples
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What are some of the huge risks MSDL could face, by taking this massive leap into the unknown?
Over spending which isn't compensated for by the sales, the guess work prices which haven't been considered with sufficient market research, and the fact that the garden accessories market, may not have big potential profit
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Describe MSDL's market share
They have a small market segment, selling to a close knit group of customers, within the firms location
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What sort of business is MSDL (where is it in the supply hierarchy?)
Bottom - supplier to suppliers
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What are the advantages and disadvantages focusing on such a market segment?
Helped minimise promotion expenses. Their segment is under attack, and their market share is being squeezed. However, the customers feel a loyalty to MSDL
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What don't we know about MSDL's leap into the unknown?
We do not know the potential size, growth and characteristics of their proposed new market and new customers - neither does MSDL
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How does the previous unknown data, potentially effect the business?
Lack of certainty, and the absence of clear marketing objectives casts a long shadow over the future of MSDL as a successful business that effectively identifies and meets the needs f a defined group of customers.
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What is the problem with MSDL, in the market (product)?
They are switching from one range of products to an entirely new one. It isn't that the market for components for major manufacturers industry is going into decline, its just MSDL are losing market share. l
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What in terms of the Boston Matrix are MSDL?
A cash cow
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What might the garden accessories market be described as?
As a mature market, and probably has some limited growth potential. But it is not clear to the extent to which the brothers have hit upon an exciting new growth opportunity
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What is worrying about "the planned venture into the unknown"?
It will be backed with limited market research
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MSDL are probably going to firstly release 'copycats', what problems come from this?
The copycats products might struggle to stand out, as their is a lack of USP.
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Their customers have been adopting "aggressive purchasing" - what constraint does this bring to the business?
Drives down the revenue the firm generates
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What factor influenced Tony and Lewis the most to move into a new market?
Their customers "adopting aggressive purchasing"
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Price is important to interest and attract customers, but with the lack of research and guess work prices, why might MSDL have to reconsider their prices?
Due to customers becoming increasingly sensitive to prices, customers are more likely to go for a cheaper object of the same function.
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In the place element of the marketing mix, their seems to be a common theme occurring of the unorganised and lack of planning - where has very little planning gone into?
Channels of distribution for the new product range - this is unsurprising as the firm is unclear who its customers will be
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Tony and Lewis hope to get more sales online, but give 2 problems with the website
Firstly, his wife made the website therefore it may not be professional, to keep costs down. Secondly, it's only set up for UK delivery and payment
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What is the current methods of promotion used by MSDL?
Word-of-mouth, network of contacts and printing a few leaflets and popping them to potential clients or past clients
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What is a budget?
Planned spending total for a department, action or process - they show what the firm can plan out its spending priorities as financial resource are always limited
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Does the budgeting process apply to MSDL?
No - therefore it could be a recommendation to unravel the current problems and putting a financial plan in place that establishes clear priorities and a platform for improvement
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What is cash flow?
The money consistently flowing in and out the business
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What could be a potential problem with MSDL's cashflow, in the near future?
Due to the big investment, to get suitable machinery etc, there will be considerable amounts going out the business and the inflows look highly uncertain, unpredictable - these features indicate a looming cash flow problems
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If you appraise something what does that mean?
To determine its value
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What are methods of investment?
Pay-back period and accounting rate of return
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What financial commitment has Lewis made?
Raw materials and tools
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Despite the lack of evidence contained in the case-study, you may still have to discuss MSDL's balance sheet, why might the company take out short-term borrowing?
Ordering new supplies for the new business venture
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Where may the company have to long-term borrow?
To sustain the business in the early phase of its new venture
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What is labour turnover?
The people who leave the business (in a year) in comparison to the current remaining employees
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What is the labour turnover like at MSDL?
Relatively low
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If you were to make a prediction on the future labour turnover (when the new venture starts), what would you say is likely to happen to the workforce
Labour turnover may oar as Tony pushes through his proposals.
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In most teams what is crucial for its performance?
Motivation, leadership and management
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What are some common features of a well-motivated workforce?
Workers are motivated by reward (Taylor), giving workers more opportunities (Mayo and Maslam), sense of security (maslow), delegation or greater autonomy (Ducker's and Perter's)
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What type of management does Tony use, in terms of McGregor? Describe the theory
Theory X - Behavior is a direct consequence of poor management
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What is a Theory Y manager like?
High aspirations for his staff, and believe that they are self-motivated and will seek opportunities for responsibility and advancement
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Describe the hierarchy of MSDL
Tony and Lewis at the top -> Then under them the 4 supervisors -> Then at the bottom the 28 full-time shopfloor employees
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Where is the power and authority in the organisation?
Centralised at the top
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What are some advantages of this hierarchy?
Decisions made quickly, due to the absence of consultations and dialogue
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What could be improved about the hierarchy?
Due to the span of control of the 4 supervisors, they could be offered a better salary
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Could a decentralised organisational structure benefit MSDL?
Yes, as it gives more power to managers and teams across the business
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What do MSDL need to increase and why?
Productivity, so that the business is more competitive when compared to their rivals
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If the company were to grow, what would they do (buying etc)?
Bulk buy materials and enjoy purchasing economies of scale
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The case study paints a picture of a firm that is set to struggle - at least in the short term - perhaps Lewis would be wiser to think about what sort of scenario might occur - describe this scenario
Where there is little demand and so need to cope with the problems of operating far below full capacity
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What methods of production have MSDL combined?
Job and batch production
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What benefit and disadvantage comes with using these methods?
It gives flexibility and the capability to respond swiftly to demand changes, but it tends to mean there are relatively high unit costs and high labour inputs
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What is an advantage of the proposed new product?
There is no need to make substantial new investment in alternative production methods - still maintaining the same production methods of batch and job
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What is their immediate future based on?
Batch production
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What is quality?
Meeting the needs and expectations of customers effectively
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Although there is nothing to suggest that MSDL's customers are dissatisfied with the quality of h products, what might be a problem with the new products being made?
They may not be able to manufacture to a high enough standard to meet the expectations of an entirely new group of customers.
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What is quality control?
Checks that are evidently part of the production process - those check provide an alarming picture: reject rates are high, and climbing
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Why should MSDL consider lean production?
Due to increasing waste rates, poor quality goods and over stocked goods (then being sold)
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How could quality assurance be applied?
By adopting a total quality management
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Why may this not happen? (total quality management)
Because of Tony's leadership style serves as a significant obstacle preventing MSDL from implementing the changes it so clearly needs to make
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Stock control is important, why?
Is an important route to greater business efficiency
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What is the basic principle of stock control?
Only hold just enough stock
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What is the problem for MSDL and ordering the stock?
Due to moving into the new product line, judging the correct levels of stock that will be necessary.
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What is the problem with ordering to little or to much stock?
Too little - If the new product range is a surprise success, MSDL could find themselves in a situation where production is halted because supplies are insufficient and the business waits three months until fresh supplies arrives. Too much - Stock is
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What is the obvious and direct way to improve profit margins?
Cut costs and reducing waste
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Where shows you increasing reject and waste levels?
Table 2
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How can reducing waste be achieved?
Quality assurance and TQM
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Where have the new changes forced on?
Employees - "with no training"
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What would cell production potentially do?
It could revolutionise approaches to quality and teamwork, tacklig production problems, costs and motivation all at the same time
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'Kaizen' would be unsuitable to Tony why?
Because it's a philosophy of 'continuous improvements', would probably be equally unsuited to an organisation lead by Tony
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What are the workforce at MSDL likely to do in the near future?
Likely to go on strike that they are to support any production changes
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What other efficiency initiatives at MSDL might include....?
JIT - Just In Time stock managment, used in an attempt to reduce stock holding. 'Kanban' - a scheduling system that helps determine what to produce, when to produce it, and how much to produce. This could help reduce waste.
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What are the key points to remember (4)
1 - address the specific question asked. 2 - is directed to evidence in the case study. 3 - Develops a small number of well-argued points in sufficient detail (analyse). 4 - Expresses an opinion on the question posed,
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Other cards in this set

Card 2

Front

From a marketing point of view, what is problematic?

Back

The plunging sales, unable to defend prices against competitors, and customers have developed ''aggressive purchasing''

Card 3

Front

What type of customer network do MSDL have?

Back

Preview of the front of card 3

Card 4

Front

How do they promote the business?

Back

Preview of the front of card 4

Card 5

Front

What have MSDL decided to move into?

Back

Preview of the front of card 5
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