Exam Rules and Regulations

Please read these carefully
1. Admission to the Exam Room


a) You must bring the following to gain entry to the exam room:

• Your admission advice which you need to download from the CIMA website. Students sitting exams in Sri Lanka must also download their attestation form from the CIMA website and have it signed. This will not be posted to you.
• Identification showing your photograph, with your name printed and your signature.
• You should also bring a blue or black pen, a pencil and a calculator

b) You should be at your desk ten minutes before the start of the reading time for each exam. It is your responsibility to:

• Make sure you sit at the correct desk by checking that your desk number matches the desk number on your admission advice for that paper. Please note that your desk number may change with each paper you sit.
• Fill in the attendance slip before the start of each exam. This is a two-part slip – the bottom half is your receipt as confirmation that you attended the exam. Retain the completed receipt for four months from the date of the exam.

c) The doors to the exam room close 35 minutes after the start of the exam. You will not be allowed to enter the exam room after this time unless you have the permission of an invigilator.

2. Completing the front cover of your answer book

a) You will be issued with an answer book at the start of the exam.
b) You must write your candidate number on the front of your answer book. Your candidate number is on your admission advice. The invigilators will tell you when and where to complete these details on your answer book.

3. Completing your answer book
a) Write your answers in blue or black pen. You may use a pencil to draw diagrams or graphs.
b) Begin the answer to each question on a new page and write the question number in the boxes provided at the top of the page. You must clearly show the marker where a question is continued later in the book.
c) Any rough workings must be included in your answer book and then crossed through with a single line.
d) Supplementary answer books will only be handed out when you have completed your initial answer book. You must state that you are also using a supplementary answer book on the front cover of your answer book and ensure they are fastened together before collection at the end of the exam. November 2011 2


4. Permitted exam materials
a) Any personal belongings such as briefcases, mobile phones, books, dictionaries, revision notes or written material of any kind must be left in an area designated by the invigilators. They should not, under any circumstances, be left near your desk.
b) You must switch off all mobile phones prior to entering the exam room.
c) You may bring a bottle of water into the exam room.
d) Calculators must be clearly visible on your desk so that invigilators can inspect them.

We allow the following types of calculator:
- scientific calculators, including those with basic programming functions
- those with standard memory functions
- solar powered (at your own risk).

We do not allow the following types of calculator:
- those with alpha-numeric keyboards (an alphanumeric display of stored data – including text- equations or
alphanumeric formulae)
- personal organisers
- checklists and memo pads
- those that make a noise
- those that are programmable from other sources by detachable modules, barcodes, tapes or cards
- those that feature graphical displays (can often be identified by model types that end in the letter ‘G’ and
typically have larger screens)
- those that do not have their own internal power supply
- those that allow text to be saved in their memory
- calculator functions on watches or mobile phones
- those with symbolic algebraic capability.

• You cannot use your calculator instruction booklet during the exam. It is your responsibility to check the functionality of your calculator before you use it in the exams. 
• Please remember that, in your answer book, you must show the steps you took to arrive at your answer.
• For more information on calculators please visit our website at:
• www.cimaglobal.com/Documents/ImportedDocuments/guidance_on_calculators.pdf

5. Reading time

• 20 minutes reading time is added to the three hours exam time for all exam papers.
• During the 20 minutes you can:
• make notes on or highlight your question paper.
• You are not allowed to:
• write in your answer book
• use your calculator.

6. Conduct during Exams
a) If you need to leave the room to go to the toilet you must be accompanied by an invigilator.
b) Eating, unless for medical reasons, is not permitted in the exam room.
c) Smoking is not permitted.
d) If you contravene exam rules by, for example cheating, helping another candidate to cheat or by having materials or items with you that could give you an unfair advantage, you will be reported to CIMA’s Examinations and Assessment Oversight Panel. This is likely to result in your exam paper being voided. It may also result in CIMA taking disciplinary action against you. The following are deemed to be examples of contravention of exam rules:

• Having any book, notes or documents on you at any time during the exam November 2011 3 Having any book, notes or documents in a situation which suggests you could have used them during the exam
• Talking to, copying from, or in any way communicating with, another candidate
• Using a mobile phone, including the calculator function
• Leaving the exam room without the permission of an invigilator
• Removing answer books and/or question papers, whether used or blank, from the exam room, during or after the exam.This list is not exhaustive.

e) Disruptive conduct during exams will not be permitted. The invigilator has the right to terminate the exam of any candidate whose behaviour is disruptive and to have the candidate escorted from the exam room. In such cases a full report will be made to CIMA’s Examinations and Assessment Oversight Panel.
f) Your answers must be written in the answer book. This includes answers to the objective questions. Any answers written on your question paper will not be marked.
g) Do not write any personal communications to the examiner or marker in your answer book. Any such
communication, particularly where it contains vulgar or threatening language will be reported to the
Examinations and Assessment Oversight Panel.

7. At the end of the exam
a) You must stop writing as soon as you are told to do so. If you do not stop writing when told, the invigilator will report your actions to CIMA.
b) You must ensure that you fasten all supplementary answer books and pieces of graph paper inside your answer book before the invigilator collects it.
c) At the end of the exam you must stay in your seat until all answer books, question papers and any other materials provided have been collected by the invigilators.
d) If you wish to leave the exam before the normal finish time you must notify the invigilator who will collect your answer books, question papers and any other provided materials before permitting you to leave the exam hall. You cannot leave the exam room during the first hour and 20 minutes or the final 15 minutes of the exam.

8. Liability
CIMA will not be liable for any loss of, theft of or damage to personal belongings left in or outside the exam room. Any personal items brought to the exam are done so at the owner’s risk CIMA Contact Centre.

If you need more information, please contact our staff at the CIMA Contact Centre.
Email: cima.contact@cimaglobal.com
Phone: +44 (0)20 8849 2251
Fax: +44 (0)20 8849 2450
CIMA Contact
26 Chapter Street
London SW1P 4NP
United Kingdom
www.cimaglobal,com

If you are based outside the UK you might find it easier to contact your local office

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Managing Human Capital

A – Human Resource Management


1) Human resource management


a. What is human resource management?
Human Resource Management (HRM) – process of
- evaluating an organizations human resource needs,
- finding people to fill those needs, and
- getting the best work from each employee by providing the right incentives and job environment

b. The objectives of HRM (DOCS)

D – Develop an effective human component for the organization which will respond effectively to change

O – Obtain and develop the human resources required by the organization and the use and motivate them effectively

C – Create and maintain a co-operative climate of relationships within the organization and to this end to perform a ‘firefighting’ role dealing with disputes as they arise

S – Social and legal responsibilities will be met relating to the human resource

c. Why is HRM important?
Benefits of HRM (PEER)
P – Increased productivity
E – Enhanced group learning
E – Encouragement of initiative
R – Reduced staff turnover

d. Human resource management
HRM is based on the assumption that the management and deployment of staff is a key strategic factor in an organization’s competitive performance.

i. Armstrong – HRM as ‘strategic approach to the acquisition, motivation, development and management of the organization’s human resources.’

ii. Bratton and Gold – HRM as
- emphasizes that employees are crucial to achieving sustainable competitive advantage
- that HR practices need to be integrated with the corporate strategy
- and that HR specialists help organization controllers to meet both efficiency and equity objectives


iii. Tyson and Fell – suggest four major roles for HRM which illustrate the shift in emphasis to the strategic viewpoint (COBS)

C – Change
O – Organization’s central value system
B – Boundaries of the organization are maintained
S – Stability and continuity are provided

e. The human resource cycle (SPART)
S – Selection, people with the qualities and skills required
P – Performance, truly dependent on the other 4 components
A – Appraisal, targets set that contribute to the achievement of the overall strategic objectives of the organization
R – Reward, motivate and ensure valued staffs are retained
T – Training and Development, skills remain up-to-date, relevant, and comparable with the best in the industry

f. The Guest model of HRM – aim to result in high staff commitment and high quality flexible employees. Achieving these three HRM outcomes will facilitate the achievement of the behavioral, performance and financial outcomes.

g. Limitations of HRM models

External factors – competition, technology, political/legal, economic factors and social/cultural factors will all impact upon HRM
Internal factors – organizational structure and culture will also impact upon HRM

2) Human resource management theories


a. Ability – skill, knowledge and capability required of employees in order to fulfill the objectives of the organization
Taylor: Scientific management
According to Frederick W Taylor, management should be based on ‘well-recognized, clearly defined and fixed principles, instead of depending on more or less hazy ideas’

Principles of Scientific management (BIDS)

B – Bringing together of the science and the scientifically selected and trained men
I – Intimate co-operation between management and workers
D – Development of a true science of work
S – Scientific selection and progressive development of workers

b. Opportunities – employees work within an environment that is provided by their employer
Weber: Bureaucracy, rational form
Max Weber developed a theory of bureaucracy which divides the organization into jurisdictional areas (production, marketing, sales and so on) each with specified duties.

Lawrence and Lorcsch: Contingency theory
Contingency theory is based upon the idea that the organization’s structure and management approach be tailored to the situation

c. Motivation – an employee’s desire to perform their role. It is often linked to the outcome and any reward
i. Taylor, maximizing prosperity – using science to determine fair pay and selection. He believes that highest remuneration motivates the workers


ii. Mayo, Schein: Human relations – people are motivated by social or belonging needs


iii. Maslow’s hierarchy of needs – there are 7 innate needs that motivate people


iv. Herzberg’s two-factor content theory – motivators and hygiene factors


v. Adams: Equity theory – deals with issues of fairness


vi. McGregor’s Theory X and Theory Y


Theory X – most people dislike work and responsibility and will avoid both if possible
Theory Y – individuals wants to satisfy their individual needs through work and wish to make a contribution towards goals that they have helped to establish

vii. Vroom: Expectancy theory – human beings are rational and are aware of their goals and behavior.

There are two factors that strengthen the motivation;
1) preference for a certain outcome or valence and
2) outcome will result from certain behavior.

viii. Schein, common behavioral traits – there are four groups of man;
1) rational economic man,
2) social man,
3) self-actualizing man, and
4) complex man

ix. Goal-setting theory – goals can motivate


x. Mullin’s classifications of motivation – three classifications
1) economic reward,
2) intrinsic satisfaction and
3) social relationship

d. Psychological contracts – between individuals and organizations

• Coercive contract – individual considers that they are being forced to contribute their efforts and energies involuntarily
• Calculative contract – accepted voluntarily by the individual
• Co-operative contract – individual identifies themselves with the organization and its goals to that they actively seek to contribute further to the achievement of those goals

3) Employee motivation: Remuneration
Pay is part of the reward system, and can be a motivator in certain circumstances.
a. Payment systems – two elements; pay and benefits
b. Pay structures
- Graded – levels of job grades
- Broad-banded structures – whole workforce
- Individual – used for senior management
- Job family structures – in terms of skill levels or responsibility
- Pay or profession/maturity curves – pay must be progressive to allocate pay fairly
- Spot rates – market price
- Rate of age – bracket for employees based on age
- Pay spines – relative across a range of roles
- Manual work pay structures – recognize the difference in status between those who work in manual roles against those in other parts of the organization
- Integrated structures – one grading system


c. Pay differentials – key to determining salaries for employees


d. Incentive schemes – to improve performance by linking it to reward
i. Performance related pay (PRP) – the most common individual PRP scheme for wage earners is straight PEICEWORK: payment of a fixed amount per unit produced, or operation completed
ii. Bonus schemes – supplementary to basic salary, and have been found to be popular with entrepreneurial types, usually in marketing and sales
- Group incentive schemes – offer a bonus for a group
- Value added schemes – improvements in productivity increases value added, and the benefit can be shared between employers and employees on an agreed formula
iii. Profit-sharing – offer employees bonuses, perhaps in the form of shares in the company, related directly to profits. This is based on the belief that all employees can contribute to profitability and that contribution should be recognized.
iv. Difficulties associated with incentive schemes
- Increased earnings simply may not be an incentive
- Workers are unlikely to be in complete control of results
- Greater specialization in production processes means that particular employees cannot be specifically credited with the success of particular products
- Instrumental orientation may encourage self-interest performance at the expense of teamwork
- It is easy to manipulate the rules of incentive scheme
- Poorly designed schemes can produce labor cost increases out of proportion to output improvements
v. Total reward schemes – is a bundle of cash and non-cash motivators offered to staff

4) Employee motivation: Other factors

a. Job redesign, rotation, enlargement and enrichment – can be used to improve the motivation of employees by introducing changes in their work

i. Job redesign – to improve performance through increasing the understanding and motivation of employees

ii. Job rotation – allows for a little variety by moving a person from one task to another

iii. Job enlargement – increases width of the job by adding extra, usually related tasks

iv. Job enrichment – increases the depth of responsibility by adding elements of planning and control to the job, therefore increasing its meaning and challenge

b. Job characteristics model – (Hackman and Oldman) sets out the links between employee motivation, satisfaction and performance and the characteristics of their job or role

MPS or Motivating Potential Score – attempt to measure a job’s potential to produce motivation and satisfaction.

Five core characteristics SITAF

S – Skill Variety: the breath of job activities and skills required
I – Task Identity: whether the job is a whole piece of work with a visible outcome
T – Task significance: the impact of the job on other people
A – Autonomy: the degree of freedom allowed in planning and executing the work
F – Feedback: the amount of information provided about the worker’s job performance

5) HR management in different types of organization


a. Project-based teams – away from traditional hierarchies towards flatter structures with reporting lines that cross functional boundaries. They operate using multi-skilled employees organized into various work team based around factors such as customer groups or particular projects

b. The new organization
i. Flat structure – more responsive because there is more direct relationship between the organization’s strategic center and the operational units serving the customer
ii. Horizontal structure – functional versatility is key to flexibility
iii. Chunked or unglued structure – teamworking and decentralization or empowerment, creating smaller and more flexible units within the overall structure
iv. Output-focused structure – focus on results, and on the customer, instead of internal processes and functions for their own sake
v. Jobless structure – the employee becomes not a job-holder but the vendor of a portfolio of demonstrated outputs and competences

c. Virtual organization (TACO)

T – Territorially organized without the overhead cost of local offices, without the difficulties of supervision, communication and control
A – Adopt flexible cross-functional and multi-skilled working, by making expertise available across the organization.

C – Centralize shared functions and service without the disadvantages of geographical centralization and with the advantages of decentralized authority
O – Outsource areas of organizational activity without losing control or co-ordination


6) Working arrangements


a. Attitudes and values
i. Multi-skilling – involves individuals who are able to perform a variety of team tasks, as required
ii. Flexibility – about being able to respond and adapt quickly to rapidly changing customer demands
iii. Empowerment – involves giving employees the freedom to take responsibility for their goals and actions

b. Flexible working arrangements – balance between professional and personal responsibilities
i. Flexitime – arrangement where employees work the standard number of hours in a workday, but are given some flexibility as to when they work these hours
ii. Compressed week – employee works the standard number of hours in one-or two week period, but compresses those hours into fewer work days
iii. Job sharing – two employees share one position
iv. Part-time/reduced hours – employee works less than the standard work week hours
v. Telecommuting or homeworking – employee works either part or all the week from a location other than the standard place of work

c. Flexibility in organizations

i. Numerical – use of temporary workers – both contractors and agency staff
ii. Financial – achieved through variable systems of reward
iii. Task – involves having employees able to undertake a wider range of tasks.

7) The HR plan
a. HR planning – concerns the acquisition, utilization, improvement and return of an enterprise’s HR

• Budgeting and cost control
• Recruitment
• Retention
• Downsizing
• Training and retraining to enhance the skills base
• Dealing with changing circumstances

b. Strategic analysis

• Environment – population and education trends, policies on the employment of women and on pension ages and trends generally in the employment market must be monitored
• HR strengths, weaknesses, opportunities and threats need to be analyzed
• HR utilization – how effectively the organization is currently utilizing its staff
• Objective – core and subsidiary objectives should be analyzed to identify the manpower implications

c. Forecasting

• Estimating demand – accurate forecasts of turnover and productivity
• Estimating supply – current works and the external labor market
• Position survey – compares the demand and supply

d. Closing the gap between demand and supply: The HR plan

• Recruitment plan – numbers, types of people, when required, recruitment program
• Training plan – numbers of trainees required and/or existing staff needing training, training program
• Redevelopment plan – program for transferring, retraining employees
• Productivity plan – improving productivity, reducing manpower costs, setting productivity targets
• Redundancy plan – where and when redundancies are to occur, policies for selection and declaration of redundancies, re-development, re-training, or relocation of redundant employees, policy on redundancy payments, union consultation
• Retention plan – actions to reduce avoidable labor wastage

e. Tactical plans

• Pay and productivity bargaining
• Physical conditions of employment
• Management and technical development and career development
• Organization and job specifications
• Recruitment and redundancies
• Training and retraining
• Staffing cost

f. Staffing shortages or surpluses
i. Shortage
- Internal transfers and promotions, training
- External recruitment
- Reducing labor turnover, by reviewing possible causes
- Overtime
- New equipment and training to improve productivity so reducing the need for more people
ii. Surplus
- Allowing employee numbers to reduce through natural wastage
- Restricting recruitment
- Introduce part-time working for previously full-time employees
- Redundancies – as a last resort, and with careful planning

g. Stages in human planning


h. Control over the HR plan

• Actual numbers recruited, leaving and promoted vs planned numbers
• Actual pay, conditions of employment and training vs assumptions in the HR plan
• Periodical review of HR plan

8) Ethical behavior


a. Ethics in business practice – the application of ethical values to business behavior
Three Elements (I DO BEST)
I – concern an individual’s professional responsibility to act
DO – concern the ‘real world’ practical actions an individual can take
BEST – concern choices between different courses of action

‘Trust me’ – family owned business
‘Involve me’ – run by board of directors
‘Show me’ – demonstration of trust
‘Prove to me’ – required independent verification and assurance
‘Obey me’ – when the law creates legislation to cure instances of unethical behavior

b. Social Responsibility policies and reports
i. Corporate social responsibility – approach to helping the community and reducing the environmental impact of the organization
ii. Corporate Responsibility reports – focus included figures or statistics covering areas such as the organization’s carbon footprint and impact on the environment

c. CIMA’s Ethical guidelines
i. Observe the highest standards of conduct and integrity
ii. Uphold the good standing and reputation of the profession
iii. Refrain from any conduct which might discredit the profession

Fundamental principles (BIOP-C)

B - Professional behavior – protect the reputation of the professional and the professional body, and comply with relevant laws and regulations

I - Integrity – must not be party to anything which is deceptive or misleading
O - Objectivity – fairness and avoiding all forms of bias, prejudice and partiality
P - Professional competence and due care – remain up-to-date with current developments and are technically competent
C - Confidentiality – confidential information will not be revealed without specific permission or unless there is a legal professional right or duty to do so


B – Human Resource Practices


1) Good HR practice
a. Recruitment and selection
Recruitment – concerned with finding applicants: going out into the labor market, communicating opportunities and information and generating interest

Selection – consists of procedures to choose the successful candidate from among those made available by the recruitment effort

b. The recruitment process
i. Job Analysis – process of collecting, analyzing and setting out information about the content of jobs in order to provide the basis for a job description and data for recruitment, training, job evaluation and performance management.
ii. Job Design – current approach is the development and outlining of competences
Competence – capacity that leads to behavior that meets the job demands within the parameters of the organizational environment and that, in turn, brings about desired results.

Different types of competences (POG)

P - Behavioural/personal – underlying personal characteristics and behavior required for successful performance, for example ability to relate well to others
O - Work-based/occupational – expectations of workplace performance and the outputs and standards people in specific roles are expected to obtain
G - Generic – can apply to all people in an occupation

Parameters of job design
a) Job specialization
b) Regulation of behavior
c) Training in skills

iii. Job Description and person specification
Job Description – sets out the purpose of the job, where it fits in the organization structure, the context of the job, the accountabilities of the job and the main task the holder carries out

4 Main Purposes of a Job Description
a) Organizational – job’s place in the organization
b) Recruitment – information for identifying the sort of person needed
c) Legal – basis for contract of employment
d) Performance – set around the job description

iv. Advertising job vacancies – the choice of advertising medium will depend on COST, FREQUENCY, the frequency with which the organization wants to advertise the job vacancy and its SUITABILITY to the target audience

v. Initial screening – reviewing curriculum vitaes and selecting some candidates for interview

c. Selection – involves a filtering process, by reviewing applications forms, interviewing and testing


i. Application forms – usual for jobs below executive level and all levels in the public sector

ii. The interview: Preparation – finding the best person for the job through direct assessment and giving the applicant the chance to learn about the business

iii. The Interview: Conduct – layout of the room and number of interviewers, manner of the interviews, questions should be put carefully, give candidates chance to talk and ask questions

iv. Type of job interview (TIPS)

T - Tandem
I - Individual
P - Panel
S - Sequential


v. Limitations of interviews CASEL

C – Contagious Bias
A – Assessment is incorrect
S – Stereotype
E – Halo Effect
L – Logical error

vi. Testing the candidates
- Psychological tests and personality test
- Cognitive test – thinking processes
- Proficiency test – measure ability to do work involved
- Psychometric test – All of the above

vii. Advantages and disadvantages of test
Advantages: (3S)
- Sensitive measuring instrument
- Standardized
- Same
Disadvantages
- Over-simplify complex issues
- Culturally-specific
- Results should only be used to support other selection methods

viii. Group selection methods – consist of series of tests, interviews and group situations over a period of two days or so, involving a small number of candidates for a job.

ix. Assessment centers – refers more the process of selection rather than to any specific building. It involves the candidate’s behavior being observed and judged by more than one assessor, using specifically developed situations.

x. Are assessment centers effective? – also used to identify training and development needs or to enhance skills.

xi. References – enables an employer to check the basic accuracy of the candidate’s CV.

xii. Negotiation - it is important that both employer and employee feel that the exchange they have contracted is a FAIR one.

xiii. Realistic job previews – know what they are letting themselves in for. It involves a prospective employee spending some time shadowing an existing employee in a similar role

d. Induction – orientation

Dialogic learning – integrating recruits into how the organization operates including the overall culture, beliefs and mission

e. Legal and ethical issues

2) Human resource development


a. Training and development strategy
b. Effective learning programs
c. Training and the organization
d. Training and the employee
e. Possible shortcoming of training
f. Training and development needs
g. Setting training objectives
h. Incorporating training needs into individual development program
i. Formal training
j. On the job training
k. The learning cycle (Kolb)
l. Training in different industries or sectors
m. Evaluating training
n. Career management
o. Management development
p. The transition from functional to general management

3) Appraisal
a. Why are appraisals needed?
b. The purpose of appraisal
c. An appraisal system
d. Problems of appraisal system
e. Appraisal techniques
f. Self-appraisal
g. Upward appraisal
h. Customer appraisal
i. 360 degree appraisal
j. The appraisal report
k. Interviews and counseling
l. Follow-up
m. Improving the appraisal system
n. Appraisal and reward
o. Management expertise and employee empowerment
p. Making improvements

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Marketing

A – Marketing and Business Strategy

• The marketing concept
• The marketing environment
• Marketing and corporate strategy
• Marketing strategy

B – Marketing Plans, Branding and Communications

• Marketing action plans
• Branding
• Marketing communications

C – Developments in Marketing

• Consumer behaviour
• Marketing not-for-profit organisations
• Internal marketing
• Corporate social responsibility and social marketing

A – Marketing and Business Strategy

1. The marketing concept


a. What is marketing
Marketing – process of planning and executing the concepts of pricing, promotion and distribution of ideas, goods and services in order to create exchanges that satisfy individual and organizational objectives.

Kotler – right product at the right price at the right time

b. Products, goods and services: a note on terminology
Product – something that is offered to a market

Examples:
FMCG – fast moving consumer goods like soaps and shampoo
Services – like haircut or tailor services

c. Strategic and tactical marketing
Strategic – this is the corporate strategy which identifies the products and markets the organization wishes to operate in (i.e. Fashion retailer opens a
Tactical – short-term and particular elements of marketing mix (i.e. Year-end Sale)

d. Exchanges – the role of marketing is to identify, anticipate and supply satisfaction to customers, to facilitate mutually beneficial exchanges

e. The marketing concept and marketing orientation – these are two interrelated terms.

Brassington and Pettit (2000)
Marketing concept – a philosophy of business
Marketing orientation – approach of the business

f. The marketing concept – a belief system. Can incorporate to culture. Normally refers to the customer satisfaction.

g. Marketing orientation – there are three types of other orientations that marketing orientation can relate to: production, sales and product

Production orientation – success is achieved through producing goods or services of optimum quality as cost-efficiently as possible
Sales orientation – makes the product and actively and aggressively sells it
Product orientation – focus on product development; new product features

h. The potential impact of a marketing orientation – bottom-line is that companies should focus on customer needs

i. Push VS Pull Marketing

Push marketing – traditional; pushing goods out to resellers and consumers
Pull marketing – produce a product that consumer demand will pull into retail outlets

j. Three Dimensions of Marketing (CST)

C – Culture, consumer needs
S – Strategy, select the markets it intends to sell to and the products or services it will sell
T – Tactics, 7Ps of the marketing mix


2. The marketing environment


Three levels:
Macro – all factors that can influence the organization (i.e. PESTEL factors)
Micro – factors specifically related to the organization (i.e. customer and suppliers)
Internal – factors within the organization (i.e. assets, employees and finance)

a. PESTEL Factors


P – Political, changes in gov’t policies will affect consumers’ spending power or rights
E – Economic, economic growth, exchanges rate which affects the demand for product or services
S – Social/Cultural, demography suggests the size and the purchasing power of the customers
T – Technological, new products or processes, which the customers have different attitudes towards innovation
E – Ecological, climate change or catastrophes can change the customers’ attitude towards products that will aid them
L – Legal, laws affect ways of doing business and it is the question to customers if they are willing and able to take legal action

b. SWOT Analysis
Internal appraisal: strengths and weaknesses – to shape the organization’s approach to external world
External appraisal: opportunities and threats --

3. Marketing and Corporate Strategy

a. Corporate and marketing strategy (BIOGESIC)

B – Between and among corporate and marketing strategy
I – Internal appraisal, corporate will review the effectiveness of different aspects of the organization, marketing will conduct marketing audit
O – Setting objectives, corporate will increase profit, marketing will increase market share
G – Gaps, corporate has gaps between objectives and forecast, marketing will focus on growth
E – External appraisal, corporate will review PESTEL factors that impacting on the whole organization, marketing will review the factors that affect customers, products and markets
S – Strategy, corporate will develop strategies to fill up the gap, marketing will focus on resources that will be allocated to them to be able to identify the target market, plan the product to produce and organize them.
I – Implementation, corporate will delegate this to each department, marketing will put this into action like ads space
C – Control, corporate is reviewing the results and starts planning again, marketing will review if the market share objectives have been achieved

b. The marketing plan – must be consistent with the corporate strategy (STAGES ABC)

S – Marketing Strategy, target markets, the marketing mix and marketing expenditure levels
T – Tactical marketing plan, one year time horizon
A – Situation analysis, SWOT analysis and forecasts
G – Goals and objectives, what organization is hoping to achieve
E – Executive summary, finalized the planning document
S – Strategic marketing plan, defines scope of product and market activities
A – Action plan, how strategies are to be achieved
B – Budgets, action programme
C – Controls, monitor the progress of the plan and the budget


4. Marketing strategy


Key activities (RMTP)

R – Research, initial stage on obtaining data about the customers and their needs
M – Market segmentation, group of customers with similar characteristics
T – Targeting, choose one or more targets after analyzing the attractiveness of the segment
P – Positioning, act of designing the company’s offer and image

a. Market research – gathering, recording, analyzing and reporting data and information relating to the company’s market, customers and competitors

Five Steps:
1) Defining the problem (i.e. why sales are decreasing, what are the potential demands in the market)
2) Developing hypotheses to be tested (i.e. the product is not effective?)
3) Analyze and interpret the data
4) Report the findings

Quantitative vs qualitative data
Quantitative – enables measurement (i.e. surveys)
Qualitative – not measurable but useful to get people to say what they feel and thing

Secondary vs primary
Secondary – generated by sources internal or external to the organization. It is not intended for specific research and cheaper than primary data (i.e. accounting data, customer databases, and published statistics from government)
Primary – intended for specific research (i.e. experiment, observation, focus groups)

b. Forecasting demand (CPF MISES)
C – Current Demand
P – Past-sales analysis, trends, seasonal factors
F – Future Demands
M – Market test
I – Survey of buyers’ intentions
S – Sales force opinions
E – Expert opinions
S – Sales potentials

c. Market segmentation – subdividing of a market into distinct and increasingly homogeneous subgroups of customers, where any subgroup can conceivably be selected as a target market to be met with a distinct marketing mix.

Bases of segmentation:
Simple – like geographical area, age, gender, level of income, occupation
Lifestyle – deals with person’s distinctive ways of living adopted by particular communities or subsections of society.

Four categories of lifestyle segmentation (SHUT)

S – Security and status seeking, safety and ego-defensive needs
H – Hedonistic preference, enjoying life now
U – Upwardly mobile, ambitious, more affluent lifestyle
T – Traditional and sociable, compliance and conformity to group

d. Target markets – market or segment selected for special attention by an organization
Mass or Undifferentiated – produce a single product and get as many customers as possible
Concentrated – produce an ideal product for a single segment of the market (Rolls Royce, Ferrari)
Differentiated – several products for different market segment

e. Positioning – market position refers to how customer perceive a brand or product relative to other brands or products

f. Developments in market segmentation and product positioning – refers to the evolution on how segmentation and positioning are considered in organizations (D’CASH)

D – Data Mining, interest on customer database analysis and the idea of ‘letting the data speak for itself’
C – Computer models are used
A – Awareness that consumers should be segmented
S – Soft data, focusing on the lifestyle rather than the hard or basic segmentation
H – Hybrid segmentation, sub-dividing a segment to different sub-segments

g. The Ansoff matrix – (1987) showing possible strategies for products and markets

Market penetration – existing products and markets
Market development – existing products for new markets
Product development – redesign or repositioning of existing products
Diversification – new products for new markets

B – Marketing Plans, Branding and Communications

1. Marketing action plans

a. The marketing mix (7P’s of marketing mix)


Four P’s of consumer goods:

• Product
• Price
• Place
• Promotion

Three P’s of services

• People
• Processes
• Physical evidence

b. Product – anything that satisfies a need or want.
Organization’s point of view: what is being sold
Customers’ point of view: solution to a problem or a package of benefits

Product classifications
Consumer goods – sold directly to the person (CUSS)
C – Convenience goods (i.e. groceries)
U – Unsought goods (i.e. wardrobe organizer)
S – Shopping goods (i.e. durable items like furniture or appliances)
S – Specialty goods (i.e. jewelries)

Industrial goods – used in the production of other products (RACIS)

R – Raw materials (i.e. plastic, metal, wood)
A – Accessories (i.e. PCs)
C – Components (i.e. Intel microchip in most PCs)
I – Installations (i.e. factory assembly line)
S – Supplies (i.e. office stationery)

Product levels
Core – all products should have
Actual/basic – features offered as part of the product
Expected – attributes that the customers expect, either will disappoint or delight them
Augmented – extra benefits that differentiate it from other products
Potential – possibility to enhance or develop the product

The BCG Matrix
Question mark – a small market share in a high growth industry, which means competition, is really strong and to be successful will require substantial funds
Star – high market share in a high growth industry, which has potential of generating significant earnings, currently and in the future.
Cash Cow – high market share in a mature slow-growth market, this has high degree of consumer loyalty and will make a substantial contribution to overall profitability
Dog – low market share in a low-growth market, losing consumer support.

The product life cycle
Introduction stage – offering something new to customers
Growth stage – the volume of demand for the product increases
Shake out – weaker players in the market are shaken out by the stronger organizations
Market Maturity – Demands levels off
Decline stage – total demand declines and competitors will start to withdraw from the market

c. Place – how product reaches its customers
Channel – supermarkets, corner shops
Logistics – warehouses
Direct distribution – retailers

d. Promotion
Aims of promotion (AIDA)

A – Arouse Attention


I – Generate Interest


D – Inspire Desire


A – Initiate Action

e. Price
Three main types of influence on price setting:

• Cost – most important influence on price, like cost-plus rules (cost plus profit margin)
• Competition – average level of price becomes the norm including the standard price differentials between brands. Price competition may be avoided by informal agreement, in cases of cigarettes and petrol.
• Demand – strong demand may lead to a high price, and a weak demand to a low price

f. Price Setting strategies

Market Penetration – sets a relatively low price for the product or service in order to stimulate growth of the market
Market Skimming – sets a high initial price for a new product in order to take advantage of those buyers who are ready to pay a much higher price for it.
Early cash recovery – aims to recover the investment in a new product or service as quickly as possible to achieve a minimum payback period.
Product line promotion – focuses on profit from the range of products which the organization produces rather than to treat each product as separate entity.
Cost-plus pricing – marking up its unit costs by a certain percentage or fixed amount
Target pricing – price that gives a specified rate of return for a given output
Price discrimination/selective pricing – different prices for the same product when it is sold in different markets
Going rate/competitive prices – keep in line with industry norm for prices
Price leadership/predatory pricing – price leader generally has a large market share. The role of the price leader is based on a track record of having initiated price moves that have been accepted by both competitors and customers.

g. Services and service marketing
Characteristics of services (as distinguished from goods) (IHI PO)

I – Intangibility, lack of substance which is involved with service delivery
H – Heterogeneity, lack of sameness or consistency. The quality of service may depend heavily on who it is that delivers the service
I – Inseparability, services cannot be separated off from the provided. Should instill values of quality, reliability and to generate a service ethic
P – Perishability, services cannot be stores. Anticipating and responding to levels of demand is key planning activity
O – Ownership, services do not result in the transfer of property.

h. The extended marketing mix (3P’s)
P – People, services are provided by members of staff who are inseparable from the service
P – Process, services involve a process, for example a haircut may involve waiting to be served, a hair wash, styling, colouring and hair dying
P – Physical evidence, as services are intangible, some physical item should be provided to give the customer evidence of ownership

2. Branding


Brand – is a name, term, sign, symbol or design intended to identify the product of a seller and to differentiate it from those of competitors.

Brand name – refers strictly to letters, words, or groups of words which can be spoken

Brand Image – distinguishes a company’s product from competing products in the eyes of the user

a. Objective of branding
Key benefit of branding is product differentiation and recognition. Products may be branded for a number of reasons (DARED ME)
D – Product differentiation helps customers to identify the goods or service and creates customer loyalty to the brand
A – Advertising, maximizes the advertising for product identification and recognition
R – Readier acceptance, by wholesalers and retailers
E – Brand extension, or stretching which other products can be introduced into the brand range to ‘piggy back’ on the articles already known to the customer
D – Price differentials, reduces the differences on prices between goods
M – Market segmentation, different brands of similar products may be developed to meet specific needs of categories of uses
E – Eases the task of personal selling, by enhancing product recognition.

b. Branding Strategies
Three broad branding strategies

• Brand extension – introduction of new flavors, sizes etc to a brand, to capitalize on existing brand loyalty
• Multi-branding – introduction of a number of brands that all satisfy very similar product characteristics and normally used where there is no brand loyalty
• Family branding – uses the power of the brand name to assist all products in a range

c. Brand value
Three approach on valuing brand: (MIC)

• M – Market approach
• Based on market transactions
• Relief-from –royalty
• I – Income approach
• Based on net present values
• Calculating the overall economic benefit that will generate over its life
• C – Cost approach
•  Based on the costs incurred to build the brand
• Example are costs involved in registering trademarks and promotional activities

3. Marketing communications


a. The promotion mix – consists of the blend of promotional tools that are considered appropriate for a specific marketing campaign

b. Consumer and business to business markets
Consumer markets (business-to-consumer markets B2C) – consists of mass audiences which are cost-effectively accessible by television or national newspaper advertising
Business-to-business markets (B2B) – involve a great deal of personal selling at different levels in the organization.

c. Integrated marketing communications – represent all the elements of an organization’s marketing mix that favorably influence its customers or clients.

d. Types of marketing

i. Consumer marketing (4Ps)
ii. Service marketing (3Ps)
iii. Direct marketing
iv. Indirect
v. Guerrilla
vi. Viral
vii. Interactive
viii. Experiential
ix. E-marketing
x. Internal marketing

e. Direct marketing – the planned recording, analysis and tracking of customer behavior to develop relational marketing strategies. (RIRAS)

R – Response, getting people to respond to invitations and offers
I – Interactive, two way involving supplier and customer
R – Relationship, on-going process of communicating and selling again and again to the same customer
A – Recording and Analysis, for most cost-effective procedures
S – Strategy, part of a comprehensive plan stemming from clearly formulated objectives

Example of direct marketing is TELEMARKETING. Telemarketing is a quick, accurate and flexible tool for gathering, maintaining and helping to exploit relevant up-to-date information about customers and prospects

Characteristics of telemarketing (IT FITS)

I – Interactive
T – Targeted
F – Flexible
I – Immediate
T – Telemarketers are attending personally
S – So costly

f. Indirect marketing – marketing of products as a consequence of another activity or action. Organization doesn’t push products or services onto customers. (i.e. posting blogs on internet, ‘word of mouth’)

g. Guerilla marketing – involves taking people by surprise and creating a buzz in unexpected places. It relies more use of imagination that large sums of money.

Principles of guerilla marketing:
- Small organization
- Based on psychology rather than experience
- Based on time, energy and imagination
- Judged on profit not sales
- New relationships created
- Standard of excellence
- Number of customer referrals
- Co-operate with competitors
- Combination of marketing methods should be used
- Use of technology

h. Viral marketing – involves the use of pre-existing social networks to spread brand awareness or other marketing objectives.

i. Interactive marketing –ability to address the customer, remember what the customer says and address the customer again in a way that illustrates that we remember what the customer has told us. Example is Amazon.com

j. Experiential marketing – involves providing an experience that creates an emotional connection between a person and a brand or idea. This is an effective way of connecting with customers, as the emotional connection encourages brand loyalty

k. E-marketing – includes website, SMS e-mail, online surveys and use of social networks like Facebook and Twitter.


C – Developments in Marketing

1. Consumer behaviour

a. The customer
Different roles of customer (PUB)

P – Payer, the person who finances the purchase
U – User, receives the benefit of the product
B – Buyer, who selects a product

b. Buyer behavior – describes the activities and decision processes relating to buying
i. Consumers as buyer
ii. Organization as buyer

c. Consumer buying behavior (HCL)

H – Habitual decision making, emphasizes habit and brand loyalty
C – Cognitive paradigm, purchase as outcome of a rational decision-making process
L – Learned behavior, importance of past purchases

5 stages of consumer buying process:
1) Need/problem recognition – the customer recognizes a need or a problem to solve. There is a motive to search for a solution
2) Pre-purchase/information search – the customer searches for information they can use to base their decision on
3) Evaluation of alternatives – the customer evaluates the various options they have generated
4) The purchase decision – is made and the product or service selected based on how it meets their needs and other factors such as cost
5) Post-purchase evaluation – if dissatisfied, they will be back at the problem recognition stage. If they are satisfied, the next decision process for the product may be cut short and they may skip straight to the decision, on the basis of loyalty

d. Influences on consumer buying
Social – relate to social groupings a consumer belongs to or aspires, and trends in society which influence buying patterns
Cultural – comprises the values, attitudes and beliefs in the pattern of life adopted by people that help them integrate and communicate as member of the society
Personal – include such things as age, stage of family and life cycle, occupation, economic circumstances and lifestyle
Psychological – includes the four factors;
1) Motivation – inner state that energizes, activates or moves that directs or channels
2) Perception – people select, organize and interpret sensory stimuli into a meaningful and coherent picture
3) Learning – individual’s behavior changes as a result of their experience
4) Beliefs and attitudes – descriptive thought that a person holds about something. Attitude describes a person’s enduring favorable or unfavorable cognitive evaluations, emotional feelings, and action tendencies toward some object or idea

e. Organizations as buyers


Organizations are viewed as more RATIONAL than individuals

Business-to-Business or B2B - transactions between organizations
Business-to-Consumer or B2C - transactions involving an organization and a consumer

Organizational markets (PICO)

P- Purchase decision is usually made by consensus in an organizational setting, rather than being the responsibility of one person
I - Inelastic demand for industrial goods, which means these are not affected by price changes
C - Close relationship between buyer and seller
O - Organizational markets normally comprise fewer buyers responsible for the majority of sales


Decision Making Unit (DMU)

Webster and Wind (1972) suggested six groups within DMU (GUIDES)

G - Gatekeepers. By controlling the flow of information, may be able to stop sellers from reaching individuals within the buying center
U - Users. Initiate the buying process and help define purchase specifications
I - Influencers. Help define the specification and also provide an input into the process of evaluating the available alternatives
D - Deciders. Have the responsibility for deciding on product requirements and suppliers
E - Example of approvers are Finance Director/Manager
S - Suppliers or Buyers. Have the formal authority for the selection of suppliers and negotiating purchase terms




2. Marketing not-for-profit organizations

a. Charity and not-for-profit marketing
b. Characteristics of charity and not-for-profit marketing
c. The charity marketing mix

3. Internal marketing
a. Implementing internal marketing
b. The internal marketing mix
c. Segmenting the internal market
d. The importance of internal customer communications
e. Challenges for internal communication
f. Tools of internal communication

4. Corporate social responsibility and social marketing
a. Social responsibility, ethics and the law
b. Ethical marketing
c. Social marketing

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Operations Management

A – Operations Management and the Organizations

• Operations Management – the transformation of ‘inputs’ into ‘outputs’ that meet the needs of the customer.
• Operations Strategy – common strategies involve what is known as the value chain and supply chain management.
• Sustainability in operations management – Sustainability is a long-term programme involving a series of sustainable development

B - Quality Management

• The scope of quality management
• Quality management approaches
• Total quality management (TQM)
• Managing quality using TQM
• Processes of continuous improvement
• Lean production
• International Organization for Standardization (ISO)
• Total productive maintenance (TPM)
• The TQMEX Model
• Service quality

C - Managing Capacity and Inventory

• Capacity management
• Balancing capacity and demand
• Capacity planning
• Capacity control
• Inventory management
• Just-in-time (JIT)

A – Operations Management and the Organizations


Operations Management – the transformation of ‘inputs’ into ‘outputs’ that meet the needs of the customer.

The Operations Function – the core function includes the following: (Code: MOP)

M –Marketing and sales – identifying customer needs


O – Operations – fulfilling customer orders and requests through production of the goods or services.


P – Product and service development – designing new products and services that will meet customer needs

Mintzberg’s Operating Core -- Henry Mintzberg suggested five parts of looking at organizations. (Code: ATOMS)

A – Strategic Apex or Finance Director/Manager


T – Technostructure or Human Resource Managers


O – Operating core or Operators


M – Middle line or the Supervisors


S – Support Staff or ISS

The transformation process model – could be a physical transformation, a change in nature or form, a change in location, a change in ownership or psychological changes

Operations Strategy – common strategies involve what is known as the value chain and supply chain management.

The Value Chain – sequence of business activities by which, in the perspective of the end-user, value is added to the products or services produced by an entity.

Business activities are not the same as business functions

Primary Activities (Code: LOOMS)

L – Inbound Logistics
O – Operations
O – Outbound Logistics
M – Marketing and sales
S – After –sales services

Secondary Activities (Code: TRIP)

T – Technology development


R – Human Resource management


I – Firm Infrastructure


P – Procurement


 The Value System – is the set of value chains to achieve competitive advantage

Purchasing and supply chain management – concerned with the flow of goods and services through the organization with the aim of making the firm more competitive.

Reck and Long – identified the four-phased development of purchasing within organizations. (Code: IPIS)

I - Independent


P - Passive


I - Integrative


S – Supportive

Cousins – investigate the level of strategic maturity in the purchasing function of UK/European companies. (Code: SARCASM)

S – Skills
A – And Competences
R – Portfolio of Relationships
C – Corporate and Supply Strategy
A – Cost/Benefit Analysis
S – Organization structure
M – Performance Measures

Supply chain networks – interconnecting group of organizations which relate to each other through linkages between the different processes and activities involved in producing products/services to the ultimate customer.

Demand Networks – recent evolution of supply chains. Supply chain is formed to ‘push’ the product out into the market. Demand Networks are ‘pulled’ into existence to demand signals.

Four-stage process (RACO)

R – Reacting
A – Anticipating. Six Sigma
C – Collaborating. External relationships
O – Orchestrating. Flow of information

To create competitive advantage, organizations within a demand network have to manage THREE FACTORS: 3A’S

A – Alignment – of shared incentives


A – Agility – to respond to demand quickly


A – Adaptability – to adjust the structure of the supply chain to meet demand

Supply portfolios and sourcing strategies
Single – the buyer chooses one source of supply
Multiple – the buyer chooses several sources of supply
Delegated – a supplier is given responsibility for the delivery of a complete sub-assembly. For example, rather than dealing with several suppliers a ‘first-tier’ supplier would be appointed to deliver a complete sub-assembly.
Parallel – mixing/combining the other three approaches to maximize the benefits of each.

Process Mapping – aims to identify and represent the steps and decisions involved in a process, in diagrammatic form

Types of process maps:

• Basic flowchart – basic ‘birds eye’ view
• Deployment flowchart – overview and indicates where or by whom actions are performed. This includes a ‘department’ or ‘unit’ dimension along the top of the chart.

Operations strategy -- concepts on the strategy formulation

O – Structure of Operations
N – New products/services

C – Capability required
R – Range and location of operations
I – Investment in Technology
B – Buyer-supplier relationships


Sustainability in operations management – Sustainability is a long-term programme involving a series of sustainable development

Efficiency – reducing waste, using less energy and recycling
Stakeholder support – reducing greenhouse gas emissions, employee cycle schemes, employee flexible working
Market edge – innovation, supply chain improvements, R&D

B – Quality Management

The scope of quality management

Quality – totality of features and characteristics of a product or service which bears on its ability to meet stated or implied needs

M – Quality Management. This is concerned with controlling activities with the aim of ensuring that products or services are fit for their purpose and meet specifications.
A – Quality Assurance. This focuses on the way a product or service is produced.
C – Quality Control. This is concerned with checking and reviewing work that has been done.
Quality management approaches

SERVQUAL – by Zeithaml, Parasuraman and Berry in 1980s; method of measuring quality in service organizations. To measure the gap between a customers preconceived expectations and the actual experience they receive
(Code: Rater)

R – Reliability. Service dependably and accurately
A – Assurance. Inspire confidence and trust in the customer
T – Tangibles. The tangible environment, like facilities, equipment and staff appearance
E – Empathy. Caring and Personal service is provided
R – Responsiveness. Willingness to help and respond to customer requests

The Balanced Scorecard – by Kaplan and Norton (1990). Quality measures should cover operational, financial and customer aspects.
(Code: I CFO)

I – Innovation and Learning


C – Customer


F – Financial


O – Operational: Internal Operations

Value of money audits – involves identifying and measuring key aspects of performance, such as money spend, inputs purchased, outputs and outcomes achieved.

Total quality management (TQM) – aims to continuously improve quality in all aspects of the organization. Customer satisfaction is key objective of TQM.

TQM is the continuous improvement in quality, productivity and effectiveness obtained by establishing management responsibility for processes as well as output.

a. Deming – decrease in process variability will increase quality and productivity

b. Ouchi (Theory Z) – devised by William Ouch in the early 1980s.

B – Building relationships
I – Interpersonal skills
G – Group interaction and decision-making
P – Participative management
A --
R – Retention of hierarchical rules and control
T -- Trust
S – Formal procedures for planning and setting objectives
c. Juran (Fitness for use) – quality should focus on the role of the customer, both internal and external.

d. Ishikawa (Quality circles) – stressed the importance of people and participation to improve quality.

e. Crosby (Quality costs) – worker participation and the need to motivate individuals to do something about quality.

f. The elements of TQM – (CODE: PRECEPT)

P – Prevention. Prevent poor quality
R – Right first time. Develop a culture that encourages workers to get their work right first time.
E – Eliminate waste. Most efficient and effective use of all its resources
C – Continuous improvement. Kaizen philosophy
E – Everyone’s concern.
P – Participation. Workers should share their views and the organization should value them
T – Teamwork and empowerment. Form team bonds to become one.

Managing quality using TQM 

TQM promotes the concept of internal customer and internal supplier, which some requires SLA – Service Level Agreement. This is a statement of the standard of service and supply that will be provided to the internal customer and will cover issues such as the range of services supplied, response times, dependability and so on.

Kaizen – or the continuous improvement, looks for uninterrupted incremental change.

Principles of continuous improvement: CARNAGE

C – Changing customer needs
A – Assets are the people in the organization
R --
N – New technologies
A – Alignment on resources, measurements, rewards and incentives
G – Gradual improvement
E – Evaluation (statistical/qualitative) should be the basis of improvement

Quality of costs (Code: A PIE)

A – Appraisal/inspection Cost. Cost incurred after a product has been made or service delivered
P – Prevention Cost. Cost prior to making the product or delivering the service
I – Internal Failure Cost. Cost from inadequate quality before the transfer of the item to customer
E – External Failure Cost. Cost from inadequate quality after the transfer of the item to customer





TQM Philosophy (CODE: QUEZON)
Q – Quality that is poor and a failure
U – Unacceptable
E – Estimated seriously the failure cost
Z – Zero defects
O – Optimal quality level
N – No further challenge to management to improve quality further

Failure of TQM (CODE: RC LTD)

R – Rejection
C – Cynicism
L – Lack of management buy-in
T – Tail-off
D – Deflection

Processes of continuous improvement
Quality circles – is a team of workers from within organization which meets at intervals to discuss issues relating to the quality of the product or service produced

Benefits of Quality Circles (Code: MUSIC)

M – Morale of employees improves
U – Unity in organization is fostered as the circle includes all levels
S – Savings should materialize
I – Improvement/solutions are likely, as workers know the process involved
C – Culture of quality

Drawbacks of Quality Circles (Code: RIPE)

R – Rejected suggestions may cause resentment
I – Influence can be very wide
P – Power is hard to control
E – Eg cost, business practicalities many not be fully understood

The 5s – (lean production), there is a place for everything and everything goes in its place

Six Sigma – near perfect products and services. This is customer focused, rather than operations oriented. Looks at critical outcomes that affect customer satisfaction.

Lean production – Toyota Production System. This is the philosophy of production that aims to minimize the amount of resources used in all activities. Identify and eliminate non-value-adding activities


 International Organization for Standardization (ISO)

a. ISO 9001:2000 – ISO’s current quality management system requirements (to be registered)
b. ISO 9000:2000 and ISO 9004:2000 – ISO’s quality management system guidelines
c. ISO 19011 – covers quality auditing standards
d. ISO 14001 – relates to environmental management systems

ISO 9000 certified or registered – an independent registrar has audited their processes and certified that they meet the ISO requirements

ISO 9000 compliant – met ISO’s quality system requirements, but have not been formally certified by an independent registrar. It is a self-certified.

Total productive maintenance (TPM) – the productive maintenance carried out by all employees through small group activities

Five goals of TPM (Code: TAIPE)

T – Train all staff in maintenance skills
A – Autonomous maintenance
I – Improve equipment effectiveness
P – Plan maintenance
E – Early equipment management



Benefits of TPM (Code: BUCAO)

B – Breakdowns are reduced
U – Uniform output and production consistency
C – Cost of quality and reduction in waste
A – Accuracy of production schedules is improved
O – On time delivery

The TQMEX Model – understand the relationship between quality management and other aspects of operations management.


BPR – Business Process Re-engineering is the rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service and speed.

Four themes of BPR (C A R P)

C – Creative use of IT
A – Ambition
R – Rules are broken and challenged
P – Process reorientation

Five phases of BPR (P I E R I)

P – Planning
I – Internal learning
E – External learning
R – Redesign
I – Implementation


Service quality – measure quality in service organizations by reference to customer expectation. This is the totality of features and characteristics of that service which bears on its ability to meet stated or implied needs.

Service quality factors (CHEN)

C – Critical factors
H – Hygiene factors
E – Enhancing factors
N – Neutral factors


C – Managing Capacity and Inventory

Capacity management

Capacity – measure of what an operation is able to produce within a specified period of time.
a. Overcapacity – resources are available for production are not fully utilized
b. Undercapacity – more production is being demanded than is able to be produced

Balancing capacity and demand


Four planning and control activities
L – Loading. This is the amount of work that is allocated to an operating unit.
S – Sequencing. The order in which different jobs will be done or different orders fulfilled.
S – Scheduling. Detailed Timetable
M – Monitoring and controlling. Work is proceeding as planned
        Push control – pushing work through each stage of the process
        Pull control – calling for work to be delivered from the previous process when it is needed.

Capacity planning – maximize profits and customer satisfaction

Capacity control

MRP I – (Materials requirement planning) technique for deciding the volume and timing of materials, in manufacturing conditions where there is dependent demand
MRP II – (Manufacturing Resources planning) plan for planning and monitoring all the resources of a manufacturing company: manufacturing, marketing, finance and engineering
OPT – (Optimized Production Technology) scheduling production that focuses on the known capacity constraints of the operation.
ERP – (Enterprise Resource Planning) like MRP II but uses databases from all parts of the organization.

Inventory management

Inventory control levels (MR MAR)

M – Minimum level, inventories are approaching a dangerously low level and the outages are possible
R – Reorder level, needs to replenish stocks
M – Maximum level, inventories are reaching the potentially wasteful level
A – Average inventory, inventory levels fluctuate evenly between the minimum inventory level
R – Reorder quantity, inventories reach the reorder level (EOQ)

Just-in-time (JIT) – goods and services should be produced only when they are needed

Characteristics in Operations required by JIT (FRESH)

F – Flexibility, respond immediately to customer orders
R – Reliability, not subject to hold-ups
E – Elimination of errors that brings lower costs
S – Speed, throughput should be past
H – High quality

Three Key Elements in JIT philosophy (ETC)

E – Elimination of Waste
T – The involvement of all staff in the operation
C – Continuous improvement/Kaizen

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