1. IB Business and Management HL Business tools

2. Stakeholder mapping HL, unit 1.4 Stakeholders Monitor (minimum effort)
Main Interests
Power and influence
Shareholders
Profit growth, Share price growth, dividends
Election of directors
Banks & other Lenders
Interest and principal to be repaid, maintain credit rating
Can enforce loan covenants Can withdraw banking facilities
Directors and managers
Salary ,share options, job satisfaction, status
Make decisions, have detailed information
Employees
Salaries & wages, job security, job satisfaction & motivation
Staff turnover, industrial action, service quality
Suppliers
Long term contracts, prompt payment, growth of purchasing
Pricing, quality, product availability
Customers
Reliable quality, value for money, product availability, customer service
Revenue / repeat business Word of mouth recommendation
Community
Environment, local jobs, local impact
Indirect via local planning and opinion leaders
Government
Operate legally, tax receipts, jobs
Regulation, subsidies, taxation, planning
Stakeholders are mapped on the chart below. This is used to decide who has the greatest priority and who has least priority.
Level of interest
LOW HIGH A
Monitor (minimum effort) B
Keep informed C
Keep satisfied D
Manage closely
HIGH LOW
Level of power

3. The Business CycleSL, unit 1.5 External environment
Peak or boom
Economic activity at its highest level
Consumer expenditure, investment and export earnings are high.
People receive pay rises as business make more profits.
Business have good cash flow
Slump or trough
Recession
Dip in level of economy for 2 consecutive quarters. (6 months)
Declining aggregate demand
Lower investment expenditure
Falling export sales
Rising unemployment
Most affected businesses are those sensitive to changes in income. (houses, cars, jewelery)
Last stage of decline in the trade cycle
Very high level of unemployment
Very low consumer spending, investment and export levels
Poor cash flow and liquidity…many close down
Lack of confidence in the economy
No job security
Low spending
Survival strategies…?
Reduces costs
Reduce price
Non – pricing e.g. after sales
Branding
Outsourcing
Increased efficiency

4. PEST analysisSL, unit 1.5 External environment
Political / Legal
Economic
Environmental regulation and protection
Economic growth (overall; by industry sector)
Taxation (corporate; consumer)
Monetary policy (interest rates)
International trade regulation
Government spending (overall level; specific spending priorities)
Consumer protection
Policy towards unemployment (minimum wage, unemployment benefits, grants)
Employment law
Taxation (impact on consumer disposable income, incentives to invest in capital equipment, corporation tax rates)
Government organisation / attitude
Exchange rates (effects on demand by overseas customers; effect on cost of imported components)
Competition regulation
Inflation (effect on costs and selling prices)
Stage of the business cycle (effect on short-term business performance)
Economic "mood" - consumer confidence
Social
Technological
Income distribution (change in distribution of disposable income;
Government spending on research
Demographics (age structure of the population; gender; family size and composition; changing nature of occupations)
Government and industry focus on technological effort
Labour / social mobility
New discoveries and development
Lifestyle changes (e.g. Home working, single households)
Speed of technology transfer
Attitudes to work and leisure
Rates of technological obsolescence
Education
Energy use and costs
Fashions and fads
Changes in material sciences
Health & welfare
Impact of changes in Information technology
Living conditions (housing, amenities, pollution)
Internet!
STEEPLE
PESTLE
POLITICAL
ECONOMIC
SOCIAL
TECHNOLOGICAL
LEGAL
ENVIRONMENTAL
SOCIAL
TECHNOLOGICAL
ECONOMIC
ETHICAL
POLITICAL
LEGAL
ENVIRONMENTAL

5. SWOT analysisSL, unit 1.6 Organizational planning tools
SWOT analysis is a method for analysing a business, its resources, and its environment.
SWOT is commonly used as part of strategic planning and looks at:
Internal strengths
Internal weaknesses
Opportunities in the external environment
Threats in the external environment
SWOT can help management in a business discover:
What the business does better than the competition
What competitors do better than the business
Whether the business is making the most of the opportunities available
How a business should respond to changes in its external environment
The result of the analysis is a matrix of positive and negative factors for management to address:
The key point to remember about SWOT is that:
Strengths and weaknesses
Are internal to the business
Relate to the present situation
Opportunities and threats
Are external to the business
Relate to changes in the environment which will impact the business
Positive factors
Negative factors
Internal factors
Strengths
Weaknesses
External factors
Opportunities
Threats
There is no point producing a SWOT analysis unless it is actioned! SWOT analysis should be more than a list - it is an analytical technique to support strategic decisions

6. Constructing the decision tree
Decision treesHL, unit 1.6 Organizational planning tools
A tool to help businesses in their decision making processes
Provides a pictorial approach to decision making
Maps out the different options available and the different outcomes of these options
Constructing the decision tree
Product A
Product B
High Demand
Low Demand
-£7m
-2m
£16m
£6m
£12m
£4m
0.7
0.3
0.6
0.4
Chance nodes represent alternatives with probabilities attached
A decision nodes are indicated by a square
Product B
High Demand 0.6 x £12m = £7.2m
Low Demand 0.4 x £4m = £1.6m
Expected Value = £7.2 + £1.6m = £8.8m
Net Expected Value = £8.8m - £2m = £6.8m
Product A
High Demand 0.7 x £16m = £11.2m
Low Demand 0.3 x £6m = £1.8m
Expected Value = £11.2m + £1.8m = £13m
Net Expected Value = £13m - £7m = £6m
Advantages
Limitations
Encourages a careful consideration of all alternatives
Sets out a problem clearly and encourages a logical approach to decision making
Encourages a quantitative consideration of chance
Takes risk into account
Discourages gut reaction decision making
Hard to get accurate or meaningful data for probabilities
Less useful in the case of completely new problems or one-off strategic problems
Easy for management bias to enter, or for a manager to manipulate the data
Ignores the changing nature of the business environment
May lead to managers taking less account of qualitative issues

7. The fishbone procedure
Ishikawa’s Fishbone Analysis
HL, unit 1.6 Organizational planning tools
Is a model used to identify cause and effect
An issue is identified
And then possible causes are identified
Often the 4 M’s are used
Management
Manpower
Machines
Materials
The fishbone procedure
Identify the problem
Construct diagram with possible categories of causes
For each ‘bone’ brainstorm the possible causes and place on the node
Consider each possible cause and think about which are likely to warrant further investigation and circle these on the diagram
Once root causes have been identified then the appropriate strategies can be devised to deal with the problem

8. Ansoff’s Matrix SL, unit 1.6 Organizational planning tools
The Ansoff Growth matrix is a marketing planning tool that helps a business determine its product and market growth strategy.
Created by Professor Igor Ansoff ( ) It suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets.
Market penetration
(Selling existing products into existing markets.)
Product development (A business aims to introduce new products into existing markets. )
Maintain or increase the market share of current products –competitive pricing strategies, advertising, sales promotion, more resources dedicated to personal selling
Secure dominance of growth markets
Restructure a mature market by driving out competitors- aggressive promotional campaign, pricing strategy
Increase customer loyalty - e.g. loyalty schemes
Focus on markets and products it knows well. It is likely to have good information on competitors and on customer needs. Little investment in new market research is needed.
New competencies
New skills
A successful product development strategy places the marketing emphasis on:
R &D and innovation
Substantial market research
Being first to market
Diversification A business markets new products in new markets
More risk
Clear expectations
Must conduct risk assessment
Market developmentMarket extension (seeks to sell its existing products into new markets.)
Related diversification
The business remains in the same industry in which it is familiar with. E.g. a cake manufacturer diversifies into a fresh juice manufacturer. This diversification is in the same industry which is the food industry.
Unrelated diversification
Usually no previous industry relations or market experiences. A food manufacturer diversifies into a mechanical industry
New geographical markets
New product dimensions or packaging
New distribution channels (e.g. moving from selling via retail to selling using e-commerce and mail order)
Different pricing policies to attract different customers or create new market segments
Market development is a more risky strategy than market penetration because of the targeting of new markets.

9. Porter’s Generic strategies HL Unit 1.7 Growth and Evolution
Michael Porter suggested that businesses could achieve a competitive advantage over rivals by following these strategies:
Cost leadership
Differentiation
Focus
Cost leadership
Differentiation
The lowest cost supplier within a market
Charge low prices
Often lower quality
Highly profitable
Predatory pricing methods used
These businesses do not compete with high quality providers
Focus on quality over cost
Packaging
Branding
USP
Focus
Target a niche or individual market segment
Cost focus
Differentiation focus
To be the lowest cost operator in one niche market
Also used by low cost specialised businesses such as small DIY shops…
Aims to offer the best or most distinctive in a niche market
Porter argued that for a firm to be successful in the long run, they can only choose one generic strategy.
Otherwise they will be stuck in the middle…
Stuck in the middle

10. Force Field analysis steps
Lewin’s force field
HL Unit 1.8 Change and the management of change
Many factors drive change in a business.
Lewin identified four forces: In Lewin’s model there are forces driving change and forces restraining it. Where there is equilibrium between the two sets of forces there will be no change. In order for change to occur the driving force must exceed the restraining force
Lewin’s analysis can be used to:
Investigate the balance of power involved in an issue
Identify the key stakeholders on the issue
Identify opponents and allies
Identify how to influence the target groups
Force Field analysis steps
List the driving forces for change in one column, and the restraining forces against change in another column.
Allocate a weight to each of these forces, from 1 (weak) to 5 (strong).
Draw a diagram adding the weights to each driving and restraining force.
Total the scores for the driving forces and the restraining forces.

11. The recruitment process HL Unit 2.1 Human resources planning
Charles Handy’s Shamrock
HL Unit 2.1 Human resources planning
A Shamrock organisation will have:
Core workforce/Core Staff
Full time Staff -Vital but becoming an increasingly smaller group
Flex workers/Peripheral Workers
Part-time, casual, temporary and portfolio workers
Freelance contractors/Outsourced Workers
Workers not employed by the organisation but paid to complete specialist tasks

12. Cash flow forecastingSL unit 3.3 Accounts and Finance
A prediction of the future flows of money in and out of the business for a specified period of time.
A cash flow forecast shows, month by month, the money that it is anticipated will be coming into the business and the money that the business will be paying out.
Uses of a cash flow forecast
Identifies potential shortfalls in cash balances in advance – think of the cash flow forecast as an “early warning system”. 
Makes sure that the business can afford to pay suppliers and employees. 
Spot problems with customer payments 
As an important discipline of financial planning – helps with planning the budget.
External stakeholders such as banks may require a regular forecast. 
Reducing cash outflows
Improving cash inflows
Seeking alternative sources of finance
The causes of cash flow problems
Overtrading
Overborrowing
Overstocking
Poor credit control
Unforseen changes 

13. Porter’s 5 Force analysis HL, unit 4.2 Marketing planning
The 5 forces analysis looks at assessing the nature of competition within an industry
It allows a manager to make decisions on how to improve his business.
Marketing managers may use it to modify their strategies (Marketing Mix)
Management guru!

14. Position Maps (perception or market map)
SL, unit 4.2 Marketing planning
The position map illustrates the range of “positions” that a product can take in a market based on two dimensions that are important to customers.
Examples of those dimensions might be:
High price v low price
Basic quality v High quality
Low volume v high volume
Necessity v luxury
Light v heavy
Simple v complex
Lo-tech v high-tech
Young v Old
Position maps are used to identify where there are “gaps in the market” – where there are customer needs that are not being met. 

15. SL, unit 4.3 Marketing planning
The Product lifecycle
SL, unit 4.3 Marketing planning
Sales
Time
R&D
Introduction
Growth
Maturity
Saturation
Decline
R&D
New ideas/possible inventions
Market analysis – is it wanted? Can it be produced at a profit? Who is it likely to be aimed at?
Product Development and refinement
Test Marketing – possibly local/regional
Analysis of test marketing results and amendment of product/production process
Preparations for launch – publicity, marketing campaign
Introduction / Launch
Advertising and promotion campaigns
Target campaign at specific audience?
Monitor initial sales / Maximise publicity / High cost/low sales
Length of time – type of product
Growth
Increased consumer awareness
Sales rise / Revenues increase
Costs - fixed costs/variable costs, profits may be made
Monitor market – competitors reaction?
Maturity
Sales reach peak
Cost of supporting the product declines
Sales growth likely to be low
Market share may be high
Competition likely to be greater
Price elasticity of demand?
Monitor market – changes/amendments/new strategies?
Saturation
New entrants likely to mean market is ‘flooded’
Necessity to develop new strategies becomes more pressing:
Searching out new markets:
Linking to changing fashions
Seeking new or exploiting market segments
Linking to joint ventures – media/music, etc.
Developing new uses
Focus on adapting the product
Re-packaging or format
Improving the standard or quality
Developing the product range
Decline
Product outlives/outgrows its usefulness/value
Fashions change
Technology changes
Sales decline
Cost of supporting starts to rise too far
Decision to withdraw may be dependent on availability of new products and whether fashions/trends will come around again?
Extension strategies aim to prolong the life cycle and often start in the saturation phase

16. SL, unit 4.3 Marketing planning
The Boston Matrix
SL, unit 4.3 Marketing planning
Examines the likely financial performance of your product or business portfolio
Market share
High
Low
(Growing)
(mature)
Stars
Problem children
Market growth
Cash cow....moo!
Dogs...woof..
market growth
Stars
Generate lots of cash!
Competing in markets where they are strong compared with the competition.
Need heavy investment to sustain growth. Eventually growth will slow and, assuming they keep their market share, Stars will become Cash Cows
Problem Children
May indicate poor marketing
Use up a lot of cash
Management - which ones should they invest in? Which ones should they allow to fail or shrink?
Potential, but may need substantial investment to grow market share
Cash Cows
These are mature, successful products with relatively little need for investment.
Need to be managed for continued profit - so that they continue to generate the strong cash flows that the company needs for its Stars..
They also may run the risk of becoming dogs – extension strategies may be needed!
Dogs
May generate enough cash to break-even, but they are rarely, if ever, worth investing in.
Too many dogs = liquidity problems
A criticism of the matrix…Higher profits do not always come from higher market share.
The matrix fails to place products exactly in the grid.
Should be used alongside Ansoff’s Matrix