Marketing Management
As markets become increasingly competitive it is essential that employers and employees have a good working relationship and are pulling in the same direction.
Total Marks: 80 Attempt any 4 cases Each case 20 marks ACAS
AN ISO 9001 : 2008 CERTIFIED INSTITUTE
As markets become increasingly competitive it is essential that employers and employees have a good working relationship and are pulling in the same direction. The employment relationship can have a major effect on productivity and the success of a business. It is just as important in the public sector where services are provided through the government – including health and education. Increasingly, all types of organizations refer to how they aim to treat staff, in descriptions of their overall ambitions. This helps them communicate respect for staff, to people inside the organization as well as to customers and potential employees. A reputation locally as a fair employer is very important in attracting and retaining good employees. Recognizing that an independent, impartial third party can help the relationship between employers and employees, the government set up Acas in 1974 in the aftermath of a period of troubled labour relations. Over the last 30 years. Acas has built up an unparalleled reputation as an ‘honest broker’ and expert adviser. Acas’ ambition is to ‘improve organizations and working life through better employment relations’. The organization’s role is described by its full name Advisory, Conciliation and Arbitration Service (now rarely used). This also describes its statutory duties: Advisory – it advises on good practice in developing effective workplaces that are efficient producers of high quality goods and services because the employment relationship is right. Conciliation – it finds common ground between employers and employees, helping each side to see the other’s point of view so they can solve a problem or resolve a dispute. Arbitration – independent arbitrators listen to both sides and put forward a solution that they will both either adopt (binding) or consider (non-binding) in a dispute. Service – the organization works together with all parties, from a neutral position and seeks to provide the highest level of service itself. Mediation is becoming the general term used to describe processes like conciliation and arbitration – it is an alternative way to settle a dispute. The aim is to resolve problems without going through a formal legal process such as a tribunal or court. Many people associate Acas with large industrial disputes, but as this Case Study shows, its role is much broader. Due to its independence and impartiality, Acas is trusted by both employers and employees in workplaces. It is directed by a Council whose members reflect the views of employers, employees and independent interests. For example, there is usually a member from both the CBI (employers) and the TUC (trade unions). Acas is able to use that trust to work with organisations to improve employment relations and, if there is a breakdown in the employment relationship, to seek ways of resolving it at an early stage.
Working towards effective workplaces Acas believes that effective workplaces are determined by the right behavior, supported by policies and procedures. As part of its aim to improve workplaces, it has recently published a clear description of its view of an effective workplace – The Acas Model Workplace. Acas is working with organizations to move towards the Model. Acas believes the key features of an effective workplace are:
Formal procedures for dealing with disciplinary matters, grievances and disputes that managers and employees know about and use fairly.
Ambitions, goals and plans that employees know about and understand.
Managers who genuinely listen to and consider their employees’ views so everyone is actively involved in making important decisions.
A pay and reward system that is clear, fair and consistent.
A safe and healthy place to work.
People who feel valued so they can talk confidently about their work and learn from both successes and mistakes.
A good working relationship between management and employee representatives that in turn helps build trust throughout the business.
Fair treatment for everyone including being valued for their differences as part of everyday life.
Work organized so that it encourages initiative, innovation and people to work together.
An understanding that people have responsibilities outside work so they can openly discuss ways of working that suit personal needs and the needs of the business.
A culture where everyone is encouraged to learn new skills so they can look forward to further employment either in the business or elsewhere. A company’s performance is determined by that of its employees. They will be most effective if they know where they stand (e.g. their duties, obligations and rights) and feel involved in the company’s future by taking part in decisions and being well informed. This is particularly important when dealing with change. Communication and consultation are essential to an effective workplace (as described) and:
As markets become increasingly
improve organizational performance – time spent communicating at the outset can avoid any misunderstanding later
improve management performance and decision making – allowing employees to express their views can help managers arrive at decisions which can more readily be accepted by employees as a whole
improve employees’ performance and commitment – employees will perform better if they are given regular, accurate information about their jobs
help develop greater trust
Increase job satisfaction – employees are more likely to be motivated if they have a good understanding of their job and how it fits into the organization as a whole.
As markets become increasingly
These are two-way processes. Channels can include joint groups, team meetings, electronic, written, one-to-one, displays, etc. Alternative Dispute Resolution Even the best-run companies can have problems with employment relations and Acas is developing its services to help organizations resolve these at an early stage – the ‘prevention is better than cure’ approach that Acas is keen to spread. Disputes can be costly – especially in staff time, disruption to the business and the effect they can have on other employees. Tribunal hearings might also result in an award if the case is won by the employee. Acas, therefore, increasingly works to prevent employment issues turning into disputes – in other words helping businesses get their employment relationship right. Its work in this area includes:
providing mediation services to help resolve conflict between individuals – both employer/employee and employee/employer training company staff to provide their own mediation service.
Acas services
Resolving large scale disputes (Collective conciliation) Although it is the area that most people associate with Acas, only around 10% of its staff works on this. The number of such disputes has been relatively stable over the last five years at around 1,300 a year and Acas has traditionally become involved once parties have reached a stalemate. It is now starting to work with organizations at an earlier stage.
Resolving disputes with individual employees (Individual conciliation) When an employee believes s/he has been unfairly treated by an employer and they cannot resolve the problem between them, the employee can take their complaint to an employment tribunal. Employees now have around 100 rights covering aspects of employment such as holiday, working time, maternity leave and pay, flexible working and contracts of employment. Acas has a duty to try to resolve the case before it goes to a tribunal hearing. Acas contacts both sides in the dispute (this could be via representatives such as solicitors or union officers). This is to see if the problem can be resolved through conciliation before reaching a tribunal hearing. In 2004/05 77% of cases were settled or withdrawn at this stage. This is the largest part of Acas’ workload, although the number of cases has been declining slowly in recent years. Currently there are around 80,000 cases a year. The largest category (or jurisdiction) of applications to tribunals is claims of unfair dismissal. Acas has an additional role in these cases because tribunal panels use the Acas Code of Practice on Disciplinary and Grievance Procedures when deciding whether the dismissal has been handled in a reasonable way. In October 2004 new legislation came into effect requiring all organizations to follow minimum statutory discipline (where action is started by the employer) and grievance (where the employee starts the action) procedures. Tribunals still need to refer to the Acas Code for reasonable behavior guidance and the principles behind it. Acas offers a choice in cases of unfair dismissal and where an employee believes their request to work flexibly (e.g. part-time or during different hours) has not been dealt with properly. If both parties agree, they can opt for Acas arbitration – the advantage over a tribunal hearing being that it is less legalistic and not in public.
Training
Acas offers training to help employers introduce good practice and manage change. It will design courses especially for an organization. Typical subjects include tackling absence, managing recruitment and developing ways of working together effectively as a team, all of which contribute to business goals. Acas also offers standard sessions, specially designed for small businesses, which cover key points about employing people. SMEs with fewer than 50 employees often do not have a human resources (HR) management specialist. This lack of HR expertise is one reason why small businesses are involved in a higher proportion of complaints to tribunals than would be expected from employment statistics. It also provides training via its website on a number of subjects such as handling discipline and grievance for those who are unable to or do not want to attend one of its face-to-face sessions.
Advice and information Acas’ work in this area is growing. Acas uses a number of ways to deliver the information people need to make important decisions and to give advice on what good practice looks like in day-to-day life at work or how to improve the employment relationship. These include:
personal visits from Acas advisers
website
publications
helpline (08457 47 47 47).
Acas’ helpline answers around 900,000 calls a year from employers, employees and representatives on all sorts of employment matters. Equality, diversity and effective workplaces
Equality and diversity
The workforce and working patterns are changing. The working population is getting older and there are more women and men from different cultural and ethnic backgrounds. Employees rightly expect to be treated fairly and considerately. This expectation is generally supported by the law. It is illegal to discriminate against people at work on the grounds of:
gender
race
disability
sexual orientation
religion or belief
being or not being a member of a trade union.
Later in 2006 age will be added. Valuing the diversity of employees is also important from a business point of view. Companies with a diverse range of employees are better able to understand the needs of a diverse range of customers. They are also best placed to recruit and retain staff in an increasingly diverse and competitive labour market. These factors affect company performance. The starting point is a good equality and diversity policy with an action plan to back it up. Acas has specialist advisers who give hands-on help putting these in place.
Conclusion
Good working relationships are vital for every organization. The health of the UK economy is determined by the performance of all these organizations added together. The government set up Acas to help employers and employees avoid disputes and resolve them where necessary. As an impartial organization trusted by all sides, Acas encourages them to work closer together. Acas is increasingly concentrating its own resources on helping organizations to avoid disputes in the first place through informing, advising, training and working with individual businesses to create effective workplaces.
Questions:
1. Acas gives its services to various organizations. What benefits of these services reach the customers of these organizations?
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Explain the Acas services in terms of a. soft skills improvement b. goodwill.
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What are the commercial gains resulting from the services of Acas. AMWAY
Creating a corporate social responsibility strategy Introduction
Amway is one of the world’s largest direct sales organisations with over 3 million Independent Business Owners (IBOs) in over 80 markets and territories. It is a family owned company with a strong emphasis on family values. Its IBOs are mainly couples with many raising young families and therefore have a strong bond with children. These families are more than happy to be partnered with Amway, who as part of its Corporate Social Responsibility Strategy works with UNICEF, the United Nations Children’s fund.
IBOs sell Amway’s own branded products. They are Amway’s links with consumers and the communities in which they operate. This case study shows how Amway is a business that does more than simply provide customers with good quality products. In addition it plays a key role in the communities in which it operates. Businesses need to trade ethically i.e. in a principled way. Amway has put ethical behaviour at the top of its agenda. Ethical behaviour is part of Corporate Social Responsibility (CSR). This refers to business organisation’s wider responsibilities to society. Amway’s ethical beliefs are illustrated through the support of global causes. It defines a global cause as ‘a social issue affecting many people around the world engaged in a struggle or plight that warrants a charitable response’. This case study explains how Amway’s One by One Campaign for Children illustrates the businesses’ commitment to children in need across the globe. Amway’s vision is ‘To help people live better lives’. There are various ways in which this vision is delivered. Amway encourages staff and IBOs to support its One by One Campaign for Children. Values are important to a company. It is what an organisation stands for e.g. being trustworthy and honest, taking care for others, giving value for money, etc. An important value for Amway is being a caring company. As a result, Amway believes firmly in demonstrating that it cares, which is why it works with UNICEF. The values of UNICEF and Amway are closely aligned. Amway recognises that it must build its business based on ‘relevance, simplicity and humanity’.
Meeting stakeholder needs
A stakeholder is a group or individual who has an interest in the decisions made by a business. Amway’s CSR strategy has been developed with the interests of stakeholders in mind. The key groups are: Each one of these stakeholders has particular concerns: Amway takes corporate social responsibility seriously through its partnership with UNICEF. The two key partners in this relationship are UNICEF and Amway. Amway and UNICEF work in and for communities across the globe. They are therefore natural partners.
Growth and responsibility An understanding of how Amway operates as an organization gives a clearer picture of the contribution it can make to helping children in need across the globe. Amway distributes a range of branded products. These products are sold by IBOs worldwide. The IBOs are self employed and are highly motivated. They work to Amway’s Rules of Conduct and Code of Ethics which are about being honest and responsible in trading. IBOs sell to people that they know or meet. They can introduce others to the Amway business. Typical products that IBOs sell include:
personal care – fragrances, body care
skin care and cosmetics
durables such as cookware and water treatments systems
nutrition and wellness products such as food supplements, food and drinks.
IBOs play a key part in helping Amway to deliver its global Cause Programme. Amway launched the One by One Campaign for Children in 2002 across the whole organization. This programme:
helps Amway to bring its vision to life declares what the company stands for builds trust and respect in Amway brands establishes Corporate Social Responsibility to a high level. Examples of activities under the One by One program include: helping to set up a boat school for fishermen’s children in China helping to organize a Children’s Day Party for 3,000 orphans providing Braille books for blind children in India. Clearly the programme fits with the partnership with UNICEF and is a key motivating tool for IBOs who share the vision. As a business Amway is able to grow by: More IBOs joining the Amway business opportunity – Amway’s IBOs live and trade in over 80 markets and territories worldwide. IBOs selling more products – Sales by IBOs increase. This is partly because IBOs are entrepreneurial and committed to their work. It is also as a result of the support and range of products provided by Amway. Motivating IBOs – People are motivated if they believe in the products they sell and the ompany they represent. IBOs are pleased to work for a company with a high reputation. There is a natural fit between Amway’s desire to meet people’s needs and the way that UNICEF champions the needs of the world’s children. This fit exists in a number of ways as both Amway and UNICEF: are global organisations benefit from a high level of public and consumer trust are dedicated to helping people live better lives. Developing a strategy A strategy is an organizational plan. Implementing a strategy involves putting that plan into action. The strategy enables an organization to turn its values into action. Strategies are designed for the whole of an organization. Strategies are principally created by senior managers in an organization. However, effective strategies involve discussion and communication with a range of interested parties. The views of IBOs are thus very important in creating Amway’s strategies. Amway’s strategies for corporate social responsibility are cascaded through the organization, as shown below: Amway’s global strategy involves creating responsible plans that make a difference in everyone’s lives. However, the strategy is flexible. In other words in deciding on a cause that IBOs could partner it was essential to research their views. A key element of this was research into a cause that would motivate them – the research showed that the solution was a cause that helped children. There was a clear fit between Amway’s aims to help children and UNICEF’s ‘Immunization Plus’ programme for children. From the outset, Amway set out some clear objectives for its strategy. These were to: build loyalty and pride among IBOs and employees enhance Amway’s reputation as a caring organization make a real difference to human lives. Every year 1.7 million children die worldwide from avoidable infectious diseases. This situation is especially grave for the world’s poorest countries and poses a threat to the lives and well-being of children and families. Many children could still be alive if they had been vaccinated. For under £12 a child can be vaccinated against these diseases and has a fighting chance to reach adulthood. Contributing to UNICEF’s world child immunization programme therefore is a fitting focus for the activities of Amway UK and its IBOs. To date, Amway (UK) Ltd, its IBOs and employees have raised over £80,000 for UNICEF. Over £10,000 was raised for the Tsunami relief efforts alone. The UK initiative is part of a pan-European fundraising campaign for children. It recognizes the importance of building good working relationships with UNICEF in each market in order to roll-out fundraising programmes to Amway’s IBOs and their customers. In 2001 Amway Europe’s partnership with UNICEF became part of the Cause Strategy. In 2005 Amway UK’s contribution to the partnership was deepened through the development of a corporate partnership. This Corporate Partnership is a closer longer term relationship which benefits both parties. Working together the two parties raise money for UNICEF. At the same time this helps to build Amway’s reputation. The objective is to raise 500,000 Euros (approximately £325,000) every year until 2010 across Amway Europe. Creating a corporate social responsibility strategy Communicating the strategy Good, clear communication is essential in making sure that the CSR strategy aligns with company business objectives. Communication also helps in putting the strategy into practice. A number of communications media are used: i. Face-to-face communication is very important. Regular meetings take place between UNICEF, Amway and its IBOs. Through meetings with UNICEF staff the leading IBOs are able to share the vision and objectives and then pass the message on in meetings with other IBOs. In 2005 Amway (UK) Ltd and UNICEF UK organised an information day for IBO Leaders. They were able to hear first hand experiences from UNICEF staff about their roles and UNICEF’s work as well as where the money goes. ii. Printed material is also important. Amway produces a monthly magazine for all IBOs. Amagram is Amway’s European monthly title. It includes articles about the UK Partner Store and the UNICEF Lily pin. (Pins are very popular collectors items in the Amway business opportunity). E-mail communication is also important in the company – as e-mail plays a significant part in keeping IBOs up-to-date. Public Relations materials are also important, particularly at launch events for the initiative. iii. Online activities. There is a micro-site dedicated to the Amway UK UNICEF partnership on the UNICEF UK website. This can be found at www.unicef.org.uk/amway. Part of Amway’s website is also dedicated to supporting the partnership through the sale of UNICEF merchandise in the Partner Store. This can be found at www.amivo.co.uk. The Amway and UNICEF UK Partner Store sells a range of UNICEF items such as:
greeting cards
multi-cultural cards and gifts
stationery and wrapping paper
toys for children
Make Poverty History wristbands.
However, Amway UK’s support goes well beyond these activities. In addition, important events include staff fundraising and raffles organised by IBOs. UNICEF attends IBO major events (usually supported by 1000 or more IBOs) where requested. A UNICEF stand outlines the work with speakers, literature and merchandise. Creating a corporate social responsibility strategy
Conclusion
Amway is a family business. Its IBOs are people who want to make a difference in people’s lives – particularly those of children. Amway’s aspirations fit closely with those of UNICEF. They are both organisations with a global reach that care about people – particularly the lives of and opportunities for children. Amway’s IBOs want to be part of a socially responsible organisation because they know that this is the right way for businesses to behave. Social responsibility is thus a very important aspect of business. CSR is based on a recognition that the interests of the community and of business are closely related.
Questions:
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How does Amway manage to maintain global standards in marketing policies?
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Explain Amway marketing principles in terms of personalized and localized marketing
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What are the principles issues affecting marketing strategies?
Achieving Better Public Services – The Work of the Audit Commission Introduction Living in a safe community that provides such a wide range of public services is easy to take for granted. Even as students, the list of all the products and facilities that are provided for you is endless. The roads, schools and colleges, sports centres, parks, youth clubs, services of the police, hospitals, ambulances, teachers and nurses are all supplied by public money to create a certain standard of life. An ‘audit’ is a formal examination of a set of accounts to see that they are true and fair. It is also a check of quality and efficiency. It involves a proces of finding things out. In the public sector where public money has been raised from taxes and other sources, this is key as it helps to make sure it is used properly. This case study looks at the work of the Audit Commission as well as the roles of some of the people who work for it. The Audit Commission is an independent public body that ensures public money in areas such as local government, housing, health, criminal justice and fire and rescue services is spent efficiently. Although the Audit Commission is an independent body, it is accountable to the Office of the Deputy Prime Minister (ODPM). This means that its actions must be explained to the ODPM. By undertaking an audit of a local authority, auditors can find out if the accounts are correct. It can also see whether money has been spent unlawfully. This is so it can confirm there has been no fraud. The Audit Commission can also inspect operations of the local authority to find out how they are performing and whether they are effective. If they find any problems, the auditors and inspectors report to the people who make the highest decisions within that local authority. This is known as a process of governance. Decisions are then made to improve the way that money is spent, to provide better value for money that comes from taxation and other sources. This also means better services for the public. The work of the Audit Commission is part of a wider process of making public services accountable. In addition to its audits and inspection role, the Audit Commission also gives an overall judgment on the quality of local government services. The way it does this is through its Comprehensive Performance Assessment. The Audit Commission sees how well a local authority is delivering services and then gives it a star rating, with no stars for a council that is performing poorly to four stars for one that is a high performer. The star rating comes with a report that explains how it arrived at the grade. Local authorities with three or four stars have to undergo fewer audits and inspections. Auditors and inspectors need to understand the pressures on public services, and the challenges they face if the Audit Commission is to do its job well. Those who work for an organization need to know where they are going, as well as the direction that leads their organization. This is often expressed as a mission statement. The mission of the Audit Commission is ‘To be a driving force in the improvement of public services. We promote good practice and help those responsible for public services to achieve better outcomes for citizens, with a focus on those people who need public services most.’
Roles Working for the Audit Commission gives individuals an opportunity to help make local services better. This improves the lives of those who depend upon such services. Within the Audit Commission, there are many different jobs with varying levels of duties. They may start in junior posts, where staff might be involved with a range of administrative activities. It is possible for them to move upwards to supervisory posts, where they might be managing teams of people. A principal auditor will carry out audits and supervise a team and have the duties of looking after key areas of audits. They also help their trainees to gain their professional accounting qualifications. An audit manager plays a key role in planning and managing complex audits. This involves helping clients to develop a perception of issues and provide service improvements to those living in local areas. A district auditor leads and manages a team of auditors within a region in the UK, while building relationships with the client. This will involve inspiring and motivating the team as they audit local authorities, report their findings to members of the public and make proposals. There are three main areas in which the Audit Commission recruits. These are: 1. Financial audit – Financial auditors are mainly qualified accountants. They work in teams with clients, such as local authorities. Their work will involve them using accounting standards to judge the effectiveness of public services, part of which may involve examining fraud and testing financial systems. 2. Performance audit – These people will typically have worked in the public sector. They work with and support providers of public services in order to help them improve the quality of delivery. 3. Support – The Audit Commission employs many others who are there to ensure that the core business is delivered well. Some of these people work in research posts and within internal finance. Others work in human resources, information technology, communications and legal.
Mini studies Helen – project manager Helen is a project manager in the Audit Commission. Before working for the company, she was a recruitment consultant. She was firstly employed on a six-week contract but decided to stay because of the class of projects she was asked to work on. She feels that: ‘It’s been great having a chance to prove to myself that I can apply my skills to totally unknown territory and still deliver. The first project I was given was in the knowledge and information directorate. I was asked to produce a series of best-practice guides for local authorities, based on facts gathered by our field staff. My brief was…brief! I was just told to “make it happen”, but actually that’s the way I like to work. I hired teams of consultants to conduct the research and produce the first drafts. I also convened panels of internal and external experts, and redrafted the guides ready for publication.’ Helen has had job-related training and she has taken part in a development centre. This was a day of individual and group tests that gave her feedback on her strengths and weaknesses.
Arati – principal auditor
Arati studied law at the University of London. He joined the Audit Commission as a trainee auditor in the London region. He says that: ‘From the outset I was given a lot of duties, which included linking with a wide range of public bodies. Being flexible was crucial; I worked with different team leaders and managers on many diverse aspects of audit. Aside from the audit of financial statements and government returns, we also take on reviews of clients on their legal, fraud prevention and corporate governance arrangements, and make recommendations accordingly. Within the course of four years I had undertaken work for a wide range of clients. This included three London boroughs, two health authorities, eight NHS Trusts and a police authority. As a trainee I was funded to undertake my professional training through CIPFA (the Chartered Institute of Public Finance and Accountancy). The support that trainee auditors get is excellent. I never had to worry about books and course materials, as they were sent straight out to me. Working and studying at the same time is hard, mainly during the summer when tight deadlines have to be met for health audits. However, the training programme is both challenging and first-rate. I qualified in June 2004 and was then promoted to principal auditor.’
Competencies In order to use staff well, modern organizations focus their attention upon specialist skills, such as those required by the qualified accountants who work for the Audit Commission. They also concentrate upon a range of other ways of behaving and doing their job. Having this broad focus helps an organization reach its mission more easily. Core competencies are the standards that people have to accomplish if they are accepted to perform for the Audit Commission at a certain level. The Audit Commission has a variety of core competency headings at a range of levels. These depend upon the particular role of each employee. For example, a competency profile at one level requires the following core competencies. Each is split into very specific requirements that they need to undertake their role:
understanding clients
managing the business
developing services
using judgment
communicating and relating to others being technically knowledgeable and informed.
Training and development Every member of staff at the Audit Commission has a personal development plan. Staff may be given on-the-job training in the workplace.
This is where training courses and workshops are run for specific events. They can also get the opportunity to do off-the-job training outside the place of work. The chances the Audit Commission provides for self-development may involve secondments of three to six months with clients, such as local authorities or the National Audit Office. There are also openings for employees to take professional qualifications, such as CIPFA. The competency-based system and the personal development plan enable employees to take responsibility for their own growth. This means that the area in which they work uses and develops their talents. This results in high-quality output and work.
Conclusion The Audit Commission has a vital role in helping to improve public services by auditing financial information, efficiency and value. To do this well, it needs good-quality staff, not just in the area of accounting, but also in a host of other different roles. Competencies and training are all geared to ensuring that its activities and advice are of the highest quality. This is so everyone in society can benefit from its activities.
Questions:
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What are the principle tasks of the Audit Commission?
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How is the quality of the service at Audit commission maintained up to mark? Where does marketing strategy feature in overall quality assessment?
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Describe the hierarchy of Audit Commission and the respective roles in terms of accountability.
Calculating the risks in making investment decisions
Introduction Investment decisions involve weighing up the risk and the likely rewards of various options. It is often the riskiest alternatives that yield the highest possible gains while the least risky options may yield smaller rewards. Business decision makers therefore have to weigh up risk so as to provide the most suitable rewards for stakeholders including shareholders and customers. The starting point is a company’s overall aim which then filters down into a strategy, creating a balanced portfolio made up of numerous investments. This Case Study examines the processes involved in weighing up risks in order to create a balanced portfolio at BG Group, one of the leading energy businesses in the UK. The Case Study illustrates typical stages involved in deciding whether to bid for the right to explore for and develop new gas fields and, importantly, how much to bid.
Before weighing up the risks, ethics are an integral part of BG Group’s considerations – i.e. making morally correct decisions, whether these be concerned with environmental issues, health and safety or any other decision involving the difference between ‘right and wrong’ behaviour. In other words the ‘best’ investment decision will balance economic, social and environmental considerations.
More than just finance Ethical decisions are integral in making investment decisions. BG Group’s Statement of Business Principles sets out the fundamental values and ethical principles within which the Company operates. BG Group will only enter countries where the Company can operate in accordance with its Business Principles. The example below gives an outline of the important statistical and financial procedures involved in making an investment decision. However, it is important to emphasis the weight given to non-financial factors involved in decision making. Gas is the cleanest fossil fuel, but any form of energy production involves some form of environmental cost, e.g. the sight of wind farms located in fields, or harmful release of greenhouse gases when burning fossil fuels. BG Group will only bid to explore if it can operate within its ethical guidelines. The Company always seeks to apply its Business Principles. This can sometimes be difficult since natural gas resources are found in countries at different stages of economic, environmental, political and social development. Calculating the risks in making investment decisions BG Group The gas industry is today in the private and public sector and there are a number of companies competing in the industry. Some of these companies are government owned. Others are owned by private shareholders who appoint directors to represent their interest. The directors appoint professional managers to run the business. Like electricity and telecommunications, gas is a ‘network industry’. In the case of gas, consumers are linked to a central network of gas pipelines. BG Group is an integrated business in that it has activities across the whole range of gas operations, from the reservoir to the customer. BG Group’s exploration and production (E&P) business finds and develops gas reserves. Natural gas is delivered to customers either by BG Group’s transmission and distribution (T&D) business using pipelines or by the liquefied natural gas (LNG) business via LNG ships. BG Group’s power business focuses on the creation of electricity by natural gas-fired power generation plants. The illustration above shows the gas chain indicating the various links in an integrated business involved in bringing gas to final consumers. Demand for gas is projected to grow at an increasing rate over the next decade, outstripping the growth in demand for other major sources of energy. As an energy source, gas is a relatively clean fossil fuel, abundant and is increasingly becoming the fuel of choice for consumers, on both environmental and economic grounds.
Field development
The gas business has a number of characteristics that are particularly important in relation to investment decision making:
It is very capital intensive so that decisions may typically involve a spend of several hundred million pounds.
There are long lead times between the start of a project and the receipt of earnings from that project, typically over five years from first investment to first revenue.
The taxation and contract structure is unique to the energy industry and is complex. Gas is a finite resource for a nation. Its exploitation is of strategic importance to the host government for some time.
Governments own the rights to minerals found on land (onshore) and under water (offshore) in their countries. Governments divide the ground into exploration ‘blocks’ and invite energy companies to bid for the right to explore for oil and gas in those blocks. To earn the right to explore a block, the energy company commits to a work programme, which describes the steps it will take in order to find oil/gas. The energy company’s investment and expertise helps governments access the mineral wealth beneath the ground. BG Group makes important decisions as to whether or not to apply for the right to explore for new gas fields and how much to bid.
Key Risks Shown below are some of the key risks in a typical gas project and the experts responsible for addressing those risks:
geologists and geophysicists evaluate the risks around volume and the chance of finding those volumes
engineers examine facility and well design, costs, production rates
HSSE managers assess health, safety, security and environmental risks economists analyze market demand and price, government and partner commercial terms.
Investment appraisal
Discounted cash flow is an important technique for investment appraisal. The discounted cash flow approach is a way of valuing the future returns on investment by assessing the values of these returns in terms of their value today. It places emphasis on the cost of funds tied up in a project by considering the timing of cash flows.
For example, we all instinctively know that £1 in the hand today is worth more than a promise of £1 in the future. This is because:
Inflation may lower the real value of money.
The money cannot be put to constructive use in the meantime (i.e. earning interest in the bank or applied to another project).
There is always the risk that unforeseen circumstances will prevent you receiving the amount you have been promised.
Appraising investments using the discounted cashflow method allows the Company to undertake a capital allocation process, which involves ranking projects and selecting those that add the most value to the Company. It therefore incurs the opportunity cost of those projects that add value but cannot be financed as sufficient funds are not available to undertake them. Ultimately, the value of any investment is the present value of the future free cash flows – Net Present Value (NPV) – that the investment is expected to generate. Therefore, it is necessary to forecast the economic cashflows and discount them appropriately to allow for the fact that they will not be received until some time in the future. BG Group uses a discount rate that reflects the return its investors (shareholders and banks) expect for investing in a non risk free activity (compared to depositing money in a bank account). The NPV calculation always assumes the project is a success. However, there is a chance that no oil or gas is present (geological risk), this risk must therefore be reflected in the valuation. This is achieved by assigning probabilities to the values of successful and unsuccessful outcomes. The sum of these risked values is the Expected Monetary Value (EMV). The EMV calculation can be illustrated by a decision tree. Decision trees are a simple way of choosing from alternative courses of action when faced with uncertainty. The basic procedure for constructing a decision tree is to set out a series of alternative branches of the tree and then to calculate the probability of the event occurring and the likely money value of the return. In a decision tree, it is possible to distinguish between points of decision and points where chance and probability (uncertainty) may come into play. For example, this process can be used to illustrate possible returns from drilling a well and then exploiting a gas field. The diagram below shows how inputs from geologists, engineers and others underpin the economic analysis and ultimately the calculation of value.
These inputs relate to both internal and external data:
Internal – technical data – relating to the costs involved in developing the block, e.g. the costs of building and developing the gas platforms, likely volume and quality of hydrocarbons.
External – commercial data – about the future demand for, and price of, gas as well as likely tax changes, and information about local markets and other data.
Economists can then develop models projecting the likely costs and revenues of developing new fields.
Essential components of these models are:
revenues (price x volume)
costs
government take (e.g. taxes because the blocks that companies bid for are government property).
Revenues – costs – government take = the net cash flows which are discounted to give the NPV. BG Group then uses all of this information to calculate the EMV of decisions. The EMV is equal to: EMV = (NPV of success x chance of success) plus (NPV of failure x chance of failure) The following example uses estimated returns expected from BG Group committing itself to drilling one exploration well. The net present cost will be £16m. There is a 16% chance that the three year project will be a success, yielding a return at NPV of £114m. First of all we work forward across the diagram from the decision fork where the choice is: “drill exploration well” or “don’t drill exploration well”. Next, we set out the probabilities of gas being discovered and the NPV of success or failure (these are based on the geologists’ and economists’ calculations). If the well is not drilled there will be a return of £0. If the exploration well is drilled and no gas is found there will be a loss of £16m. There is an 84% chance of this being the case. If the exploration well is drilled and gas is found there will be a gain of £114m. There is a 16% chance of this happening. We can now work out the EMV if the decision is made to go ahead with exploiting the field. Therefore, on a risked basis drilling the well is attractive on economic grounds in that it generates a positive EMV. The opportunity would be presented to management to compete for funds in the capital allocation process.
Portfolio considerations At this phase of the investment decision a number of factors must be considered. The overriding goal of the company is to create shareholder value. In order to achieve the optimal growth for an acceptable level of risk the company invests on a portfolio basis. This means that it will invest in a number of different wells and at times share the costs and working interest with partners in order to improve the risk/reward balance and stay within a budget. Because the returns of these individual wells are likely to be uncorrelated or weakly correlated (e.g. failure in one exploration well is unlikely to affect the chance of success of another) the risk of the overall portfolio is lower than that of an individual well. This is especially important at the exploration stage due to the high risk of failure. In addition to this idea of investing in projects which help to reduce the overall risk profile of the Company, decision makers must consider the strategic fit to the current business and where the company’s skills and expertise lie. Only after considering all of these factors can a decision be made on whether on not to invest in a particular project.
Conclusion The gas market is an exciting one to be involved in. The world’s demand for energy is growing rapidly and it is imperative that it is supplied with clean energy reserves by principled companies. BG Group is a major world player in this market and it constantly needs to make the right sorts of investment decisions which balance the needs of global consumers, its shareholders, the communities in which it operates governments and other stakeholders.
Questions:
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What importance is attached to the ethical issues in the BG Group, should they be considered important at all.
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Comment on the investment strategies and policies of the BG Group.
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How is the appraisal system in the BG Group implemented. Is it sound?
Quality through standards
Introduction
BSI was the pioneer in creating standards. It is the UK’s National Standards Body – the world’s first. It also plays a prominent role in the development of global standards. BSI:
leads in the creation of standards
tests and certifies products and services
is one of the organizations that assesses Quality Management Systems (QMS).
Businesses gain an advantage over rivals and also gain a high reputation by producing high quality goods and services. Using standards helps businesses to do this. The standards are based on best practice – for example, in handling environmental waste or storing data.
BSI provides certificates such as the Kitemark. The Kitemark shows that a product or service conforms to rigorous standards for safety and performance and has been tested against them. It is a trusted symbol found on objects people can take for granted every day, such as electrical plugs and double glazed window. It is also on objects we all rely on in an emergency, e.g. fire extinguishers and surgeons’ gloves.
BSI works with all types of organizations:
The following table shows a breakdown of companies, by sector, that are licenced by BSI as a result of meeting the international standard for Quality Management Systems (QMS) (ISO 9001). This case study focuses on the benefits of quality and how an organization designs and implements a quality system. What is quality? Quality is defined by the customer. A quality product or service is one that meets customer requirements. Not all customers have the same requirements so two contrasting products may both be seen as quality products by their users. For example, one house-owner may be happy with a standard light bulb – they would see this as a quality product. Another customer may want an energy efficient light bulb with a longer life expectancy – this would be their view of quality. Quality can therefore be defined as being fit for the customer’s purpose.
There are three main ways in which a business can create quality:
Market research involves a business in finding out what its customers want and expect. It can be carried out with a small group of customers, asking them to provide detailed information about products and services. The research should reveal what the customer’ view of quality is and whether they are getting it. Obtaining lots of information from a small panel of customers is called qualitative research. Market research can also be carried out with large numbers of customers through questionnaires. This is called quantitative research. Working to best practice standards is another way an organization can create quality. BSI works with industry specialists to create these standards. For example, it delivers the confidence of customers in a business through BS 7799. This is the standard for a company’s management of information security. BSI developed this standard in 1995 to establish best practice for capturing, storing and handling data. This British Standard became the basis for the International Standard ISO/IEC17799. Today companies worldwide are seeking certification for their security management systems.
Why is quality important? The most successful organizations are those that give customers what they want. Satisfied customers are loyal to those suppliers they feel best understand their requirements. As a result they will make repeat purchases and will recommend a business to their friends. There are two main types of customers for a business:
end customers – people like you and me, looking to buy an iPod or plasma screen television
Organizational customers – for example, a company recording audio CDs would buy in blank CDs, record music to them and sell them on as a finished product.
When you buy a piece of electrical equipment, you will want to know a lot of information about its specification. Obvious information that you will be looking for include:
Is it safe?
Does it do what I want?
Does it meet the required standards?
As a customer you will have a lot more confidence in products you know have been tested and meet British, European and International Standards. In the same way, your school will want to purchase gym and science lab equipment that meets the specifications of the safety standards. Businesses therefore benefit from working with BSI to meet standards, because:
Standards protect consumers’ fundamental right to safety, the right to be informed and the right to choose. These rights relate to products, services, processes and materials.
Standardization promotes effective research and development, and makes products easier to use.
Standardization relies on all sections of society being involved in standards, providing an opportunity for everyone to share knowledge and make their voice heard.
Businesses that do not focus on quality will quickly find that there are costs to be paid. Examples of these costs include waste due to products being badly made and therefore not being able to sell them. The reputation of a business will quickly deteriorate as a result of poor quality work. It is very important for UK businesses to be associated with quality. Today, there is greater competition from abroad. Standards are continually changing so it is important for businesses to keep up. For example, ISO 9001 which is outlined in Section 4, started out originally as a British Standard, BS 5750 in 1979. It was developed as an international standard and became known as ISO 9001 in 1987. Today, the latest edition (2000) has been adopted by more than 400,000 organizations across the globe. Implementing a quality system – internal A system is a group of interrelated parts that make up a whole. A quality system therefore consists of parts (such as policies and processes) designed to ensure quality. A variety of organizations work with BSI to create standards for QMS. The standard specifies requirements for a QMS where an organization: i. needs to show that it can consistently provide products that: a) meet customer requirements b) meet any legal requirements. ii. aims to improve customer satisfaction as a result of applying the system. This includes continually improving the system. ISO 9001 sets out eight quality management principles. These include:
customer focus
leadership – a commitment to quality by the leaders of the organization
involvement of people – everyone in the organization having a part to play
making sure that those processes which create quality are identified
continual improvement of the system.
In practical terms, organizations wishing to apply QMS take the following steps: 1. Read and understand the standard. They read through the literature and discuss any issues with BSI. 2. Use supporting literature and software tools to help understand, develop and implement QMS. 3. Involve top management (heavily) in developing a quality management plan. Typically a Quality Manager will be responsible for the initiative. 4. The Quality Manager can be trained in ways of implementing the standard. 5. The QMS is then created and put into practice. 6. When the organization feels confident it is meeting the standard, it informs an assessor, who will assess the effectiveness of the QMS. If it meets the standard a certificate will be awarded. This is subject to regular reviews.
Implementing a quality system – external
Internal systems are ones that are built inside an organization. However, in addition, modern businesses need to build external systems. External systems are those that involve people outside the organization – e.g. suppliers. Today, many businesses have long supply chains in which they source materials, parts and finished goods from across the globe. Take, for example, a modern plasma screen television. Some of the components may come from India, others from China, or Eastern European countries. These separate components will then be assembled into a sub-assembly i.e. part of the finished television. This sub-assembly may take place in India, whilst a number of parts may then be transported and delivered to a final assembly plant in Wales. This has led to a change in attitude. Instead of a company having a ‘them’ and ‘us’ attitude – where ‘them’ are the suppliers, it now makes sense to see the process as a shared one in which everyone relies on each other. This is known as interdependence.
Conclusion
In world trade, for buyers and sellers to work together there must be trust. Standards can provide the necessary bridge of confidence and understanding that builds mutual trust, helping trade to thrive. Sales are the lifeblood of any business, so the implementation of standards helps sales. This is the case whatever the size of the business or the sector they are operating in. Following are case study samples of the implementation of quality:
About JC Garland & Co Garlands is a leading UK provider of outsourced customer contact services. Its services range from customer service to debt collection, customer retention, technical assistance, cross-selling, staff accounts, credit management, customer registrations and many other back office functions. The company owns five prestigious contact centres, and is the second largest private sector employee in the Tees Valley with over 3,000 staff. Prior to implementing a quality management system, the policies and procedures used originated from a variety of sources. Some met specific needs – e.g. legal requirements for Taxation, Accountancy, Health & Safety and Employment – some had evolved over time, while others were adopted to service specific client requirements. As a growing number of organizations required their suppliers to be ‘Quality Registered’ management decided to pursue ISO 9001:2000 accreditation. It saw clear benefits in accreditation – but were keen not lose the company’s strong corporate identity. All company procedures and processes were extensively reviewed internally and a formal Quality Management System (called Everest) was established to comply with the requirements of the standard. BSI undertook pre-assessment audits. Garlands gauged the effectiveness of the system and determined what improvements were needed. In February 2005, a formal accreditation audit was undertaken and Garlands was recommended for registration. After receiving the formal registration certificate Chey Garland, Chief Executive of Garlands Call Centres, said “Gaining ISO 9001:2000 certification isn’t just nice to have, it’s vital to the success of our business. It will enable us to expand in important sectors such as financial services and Government, where organizations frequently require proof that their business partners can adhere to tough quality standards. It will open up significant new business opportunities.” On-going internal audits and regular BSI continuous assessment visits ensure that Garlands maintains high standards, continues to conduct best practice and is able to establish areas of continual improvement.
About MC Fire Protection Ltd
MC Fire Protection was established by Mike Chilman, and has earned an impressive reputation whilst working within the fire industry based in Bicester, Oxfordshire. It employs a team responsible for covering the supply, installation and maintenance of Fire Extinguishers and Fire Alarm Systems, together with a consultancy service covering all aspects of fire risk management. New contracts are currently being driven by Insurance companies and changes in European and British legislation, which are partially responsible for increasing sales. Businesses are legally required to take steps to protect themselves, staff and customers from dangers like fire. Fire protection often relies on equipment like fire extinguishers and alarms. These have to comply with the fire safety standards. This provides the reassurance that the equipment will do its job. Companies offering fire risk assessments and consultancy services use these as industry standards. By obtaining ISO 9001 registration they are able to show that the whole service offered is professional and high quality. Mike Chilman, MD, explains why: “In 2004, our competitors were starting to publicise the fact that they complied with it. A lot of businesses choose to trade with companies that comply with recognized standards ahead of those who don’t. On a practical level ISO 9001 has made positive changes with improvements to our workshop, supply chain and record-keeping. All the standards we apply have brought us extra reassurance. They help us to show that we’re more professional, while our customers are assured that the services we provide are high quality. I would recommend standards to other businesses in the fire-protection industry – in fact, it’s becoming more and more of a necessity”.
Questions:
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Is the standardization process unique for companies and organizations of different fields? Justify your answer. 2. What contribution to an organization’ success and improvement is made by BSI? 3. Do you find this particular organization UK centric?
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Using promotional strategies to connect with stakeholders Young people leaving compulsory schooling must be motivated to continue learning and gain useful work skills. It is a big problem in all areas if many 16 to 19 year olds are neither in education nor in employment. This is wasting talent and storing up social problems. The Connexions Card helps to address this. The project is being delivered through a Public Private Partnership (PPP) between the Department for Education & Skills (DfES) and Capita. The Connexions Card is specifically targeted at 16 to 19 year olds. Cardholders are rewarded for their achievement and participation in learning through exciting and innovative rewards. To target a specific youth market involves marketing communications. All businesses must consider the needs of their target markets. The Connexions Card needs to communicate clear benefits to a variety of stakeholders. How will young people benefit from the Card? How will teachers, parents or trainers benefit? Marketing communications must be built upon key messages about the Connexions Card. Communications to the various stakeholders must be consistent and work in an integrated manner and so support the overall aims of the Card. This study illustrates the application of some key marketing tools. Stakeholders Every business organization has people or groups who have an interest in what it does. These are ‘stakeholders’. It matters to these groups what happens with a business and how it happens. Like all businesses, the Connexions Card has a number of different stakeholders, each with differing needs. Promotional messages about Connexions Card must register with each one. Whilst the benefit of holding a Connexions Card applies to young people, to reach them means communicating with learning centres. These are the first stakeholder group. Learning centres are the schools, colleges or work based trainers who provide learning. Collectively it is important that teaching professionals understand how the Connexions Card could be an incentive for their young people. The aim is that young people will be motivated to attend their learning centre and be more likely to reach their full potential. Connexions cardholders are able to earn points which are then exchanged for a wide range of rewards such as study guides, stationery, fashion accessories, money-off vouchers, books and travel tickets. This means that Connexions Card must have a number of reward partners. These businesses are prepared to offer suitably attractive rewards. Companies like BSM, Pentel, Orange, Letts and Arriva all offer rewards. Another benefit from the Card is the discounts a cardholder gets. This means that some businesses are discount partners. Many high street names offer discounts to cardholders including: Topshop & Topman, Blockbuster, Miss Selfridge, Hollywood Bowl and Silverscreen. Collectively, these business partners are a second group of stakeholders. Their interest is that the Connexions Card succeeds and brings young people to them, as customers. There are good PR opportunities involved in being associated with good causes. They have a stake in the success of the Card. The most important stakeholders are young people (aged 16-19) themselves. They must know why the Connexions Card is a great thing to have. The Card must make itself well known. It must keep in touch. To promote the Connexions Card to its target market and to various stakeholder groups, a number of methods are used. Some of these are said to be ‘below-the-line’, others ‘above-the-line’. Below-the-line – Non-media advertising or promotion when no commission has been paid to the advertising agency. Includes direct mail, point of sale displays, giveaways. Above-the-line – Advertising for which a payment is made and for which commission is paid to the advertising agency. The Connexions Card team employs a combination of methods, mainly below-the-line, keeping it in direct control. BELOW-THE-LINE Telephone The Connexions Card team employs Business Development Managers to set up appointments with learning centres interested in offering the Card. The telephone is the preferred means of doing this. Using the telephone, people get to know each other, and can instantly set up meetings. Once the Card scheme is set up, an Account Manager manages the relationship. Learning centres receive updates and raise queries. The telephone is a quick and cost effective communication tool. Face-to-Face Sometimes business relationships need more than telephone interaction. People need to meet face-to-face to gain better understanding. The Connexions Card offers many benefits to young people and learning centers, and meetings help learning centers to understand these. Literature Written literature plays a big role. This has to be tailored to different audiences. The Connexions Card team has conducted primary research to help it create better literature about the Card. This is known to have enhanced the effectiveness of these tools. New cardholders receive a welcome pack. This is written in language that is more likely to appeal to the target group. The look and feel of the pack is attractive. The benefits and potential gains are made clear. For the target group, the welcome pack must act as a motivator as well as an explanation. The learning centres need a different set of messages in their promotional literature. How to encourage take-up of the Card, the process involved, contacts and when to promote it will be key information. The Connexions Card team knows that it is often through enthusiastic staff that the Card will have an impact. Poster campaigns are used to reach everyone in learning centres. Posters obviously need to draw attention to the exciting benefits of the Card. These remind existing cardholders of the discounts and rewards available to them and potential new cardholders are persuaded to enquire. The image of the Card needs to be positive and vibrant. Posters have to be imaginatively designed. Letter Email has overtaken the necessity for a paper-based letter in many cases. Today Connexions Card writes to cardholders only for administration purposes. Letters however have the benefit of being formal, reasonably cost effective and direct. A letter can have an impact but this is very hard to measure. Direct Mail Not all Connexions cardholders have an email address. Some people have limited Internet access. The Connexions Card team on occasion will directly mail specific rewards information to cardholders. This is done only to those who have given them permission to do so. Connexions Card does not mount direct mail campaigns to a mass audience in order to encourage young people to apply for a Connexions Card. Mounting such a campaign involves using mailing lists. In such a diverse target group, mailing lists are hard to create or source. PR The Connexions Card team can make use of public relations. This is done by issuing media releases. This is a good, low cost tool. The results of these can be measured in column inches. Comparisons with the costs of newspaper advertising space show that free PR coverage is very good value. The number of publications reporting on Connexions Card stories can easily be measured. The Connexions Card initiative is rich in good images about young people. Newspapers and mass media coverage of the age group tends to be negative. The Connexions Card team seek to promote achievement. Many young people show initiative, enterprise and selfless care for others. In promoting these good things through Club Together and experience based rewards, the Connexions Card promotes itself. Business reward partners and discount partners also become associated with these fresh, uplifting aspects of young peoples’ lives. Email Email is now a very effective – and efficient – means of reaching cardholders. In an instant, millions of people can be contacted. Using e-newsletters and reward alerts cardholders are kept informed as the Connexions Card offers new rewards and discounts. New reward partners are joining the scheme all the time. The Card is a dynamic product. As it evolves, email is the ideal information vehicle. To make good use of the Card, and gain the most from it, cardholders must know what it is worth and what it can offer them. For all stakeholders the use of email must be carefully managed. Excessive use of email could mean loss of credibility. Connexions Card is aware that unsolicited promotional emailing goes straight into the ‘junk’ category. Worse, SPAM is a curse to all email users. The solution is to use ‘opt-in-mailing’. In this, Connexions Card seeks permission to email. If a potential recipient does not want emails, it does not get them. Research has shown that permission mailing is effective in giving positive messages about a business. Website Internet traffic is growing all the time. Promotional messages about the Connexions Card and the administrative detail can be delivered via the web. Rewards are an important motivator. Cardholders can gain points for learning achievements, good attendance or reaching personal goals. The Connexions Card website at www.connexionscard.com allows cardholders to check their points total and use their points to claim rewards. All the latest rewards and discounts available can be instantly uploaded and promoted on the site. The Connexions Card team have direct control of the site maintenance. Using the web allows the Connexions Card team to measure the effectiveness of the site. The success of the Connexions Card depends on young people valuing the rewards available. The more people know about the rewards, the greater numbers will go for them. Web graphics is the study of website visitors and trends. Connexions Card measures its site to find out which sections work best. This is regularly checked and statistics extracted. By monitoring the site’s statistics, pages viewed, click-through patterns, rewards claimed etc, it can be continually improved. Using promotional strategies to connect with stakeholders ABOVE-THE-LINE Advertising Wide scale advertising can be very effective. Yet, the Connexions Card is not promoted extensively this way. It would have to mount a huge advertising campaign with an external advertising agency. This is an expensive investment. How would Connexions Card be able to measure its effect? This is a question of strategic judgment. The target group is 16 to 19 year olds. This is a very broad category with no single means of reaching them all. The Card itself is a specific product that relates to personal learning achievement. The message of the Card does not fit well with the leisure time interests of young people. If they are happy reading about music, computer games or the latest DVD releases, a learning based product such as the Connexions Card will not sit comfortably in that context. The Connexions Card team feels that it might be an irritation. At best, people will ignore the message. For these reasons wide scale advertising as a means of promotion has been avoided. Conclusion The Connexions Card team must promote the Card to all stakeholders. Each promotional effort must add to the team strategy. This is to sell the benefits of the Connexions Card: raise the value of young peoples’ achievement Motivate the cardholders and engage learning providers.
Questions: –
1 What are the principles marketing policies employed by Connexions Card Teams?
2. What alternatives can Connexions Card use to increase popularity. What changes – to achieve this – need to be introduced in the strategic planning for this.
3. Huge profits can be made by employing above the line strategies, why then, has this organization not employed these strategies.
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