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VT-F4/Entrepreneurship and Small Business Management/Module Booklet/BIS - A guide to legal forms for social enterprise.pdf

A GUIDE TO LEGAL FORMS FOR SOCIAL ENTERPRISE

NOVEMBER 2011

A Guide to Legal Forms for Social Enterprise Definition of a Social Enterprise The term “Social Enterprise” describes the purpose of a business, not its legal form. It is defined (by Government) as “a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners".

Setting up a social enterprise At the simplest level, a social enterprise can be a sole trader who has decided to donate the majority of the profit he or she makes to a good cause. Social enterprises may however take a variety of legal forms and the process for establishing one will depend on which legal form is chosen. Commonly used legal forms include Limited company, Community Interest Company (CIC), and Industrial and Provident Society. However some social enterprises may also take on an unincorporated legal form such as an unincorporated association or a trust (or a combination of the two).

This emphasises an important distinction between setting up a business (social enterprise or otherwise) – which simply involves the decision to trade in goods and services – and establishing a company (or other incorporated entity) which involves being subject to registration and other legal requirements.

Unincorporated forms If a social enterprise remains unincorporated, as a sole trader or partnership, its profits will be taxed as income of the individuals involved. They would normally be treated as self- employed and be required to use self-assessment to calculate the income tax and national insurance contributions applicable to any profits taken out of the business. Unincorporated associations may be similarly treated for tax purposes, although many are liable for corporation tax on their income and must register with HM Revenue and Customs (HMRC) for this purpose.

All businesses (whether incorporated or not) are required to register with HMRC for VAT if their VAT taxable turnover exceeds £70,000 per annum, and for PAYE and employer national insurance contributions if and when they decide to take on employees. Similarly certain other legal requirements apply to all businesses – for instance those governing business names, record keeping (for tax purposes as relevant), and consumer protection legislation.

Incorporated forms As with any business, there are some key advantages for social enterprises in choosing an incorporated legal form: such forms have a separate legal personality and limited liability for investors. Incorporation is advisable, and often necessary, where businesses are taking

on significant contractual obligations or raising external capital. A brief overview of the processes for establishing the main incorporated forms, and their applicability for use by social enterprises is set out below.

Limited companies: The most common incorporated form for business is the private company - limited either “by shares”, or alternatively “by guarantee”. The limited company is subject to stricter regulatory requirements than unincorporated forms: greater accountability and transparency to shareholders and to the public is the price to pay for the benefit of limited liability.

In order to establish a limited company the business must register with Companies House, and with HMRC for corporation tax. This “incorporation” process is relatively straightforward. Those intending to incorporate the company must submit a form to Companies House with the proposed company’s details which include, the company’s proposed name, registered office address, company officers, and whether it will be private or public, as well as a statement of capital and initial shareholdings or statement of guarantee. Alongside this they must submit a Memorandum of Association, for which Companies House provide a proforma on their website. They must also indicate if the company is adopting the model Articles of Association provided, or an amended version of these articles, or bespoke articles of their own (although note that the model articles apply by default if no indication is given).

Once a company has been incorporated, Companies House will inform HMRC that a new company has been incorporated, which triggers HMRC to send an information pack to the Registered Office Address of the company. The company is then required to file a paper form to register for corporation tax (if it has taxable income or profits).

The limited company form offers flexibility for various types of business, including social enterprises. It is quite possible for example for the members of a company to include provisions in its articles of association which define its social purpose. It is important to note that it will always be possible for these provisions to be overturned or amended by a special resolution of the company’s members. Note that this may not be an issue if, for instance, the social enterprise company is a wholly owned trading subsidiary of a charity, or if shares are given to other benefitting from the social enterprise.

Community Interest Companies (CICs): A Community Interest Company (CIC) is a form of company specifically created for the social enterprise sector. The CIC form has been growing in popularity since its establishment in 2004, and there are now over 5,500 registered CICs. CIC’s are required by law to have provisions in their articles of association to enshrine their social purpose, specifically an ‘asset lock’, which restricts the transfer of assets out of the CIC, ultimately to ensure that they continue to be used for the benefit of the community; and a cap on the maximum dividend and interest payments it can make. CIC structure provides a clear signal to investors that the enterprise operates for the benefit of the community, and that this social purpose is protected by proportionate regulation. A CIC may convert into a charity, or into a Community Benefit Society (see below), or it may voluntarily dissolve – but once established it may not convert into a standard limited company.

The process for setting up a CIC is relatively simple. It is essentially the same as that for a limited company except those wishing to register a CIC must also submit a second form comprising a community interest statement, providing evidence that the CIC will meet the community interest test defined in law. This statement is passed by Companies House, which manages the Registration process, to the CIC Regulator prior to registration for review and decision. The CIC Regulator also provides a series of model articles of association for prospective CICs to adopt “off the shelf” to ensure that the process is as straightforward as possible.

Industrial and Provident Societies (IPSs): There are two kinds of Industrial and Provident Society (IPS) – Co-operative Societies (which may be social enterprises) and Community Benefit Societies or ‘BenComms’ whose purpose must primarily be “for the benefit of the community”. IPSs must register with the Financial Services Authority rather than Companies House. This process consists of a short paper-based form to which the society must attach two copies of its proposed rules.

Limited Liability Partnerships (LLPs): A Limited Liability Partnership (LLP) has a separate legal personality similar to a company. Unlike a standard partnership, members of the LLP enjoy limited liability as the name suggests, but the partnership is essentially transparent for tax purposes: non-corporate partners register for self assessment and pay income tax on their share of the profits, while profits shared by corporate partners will be liable to pay corporation tax on this income.

Although not originally designed for the purpose, the LLP form provides a flexible model for social enterprises, particularly where they seek to work in partnership with other organisations or investors, or adopt a mutual model for ownership and control. LLPs have much more freedom than companies to arrange their affairs as they wish – for example in the way decisions are made, and the way in which profits are distributed to members. Thus is order to be a social enterprise an LLP need only decide that, rather than each member taking an equal share of the profits, a majority proportion of the profits will be dedicated to a social purpose.

Two considerations are especially important in drawing up the membership agreement of an LLP social enterprise. First, partners’ salaries are normally treated as profit in the LLPs accounts, whereas in a company they would be treated as operating costs. This can be misleading for investors and others, particularly when the business is starting out and profits after salary costs are limited, because in strict accounting terms a majority of the profits may not be reinvested or distributed for a social purpose. It is therefore crucial that the membership agreement makes the underlying social purpose and the terms of partners’s remuneration extremely clear. Second, as with a company, it is difficult to completely lock the social purpose into the LLP’s membership agreement. Ultimately if all partners resolved to amend the membership agreement they have the ability to do so. However it is of course possible to give partnership status in the LLP to those individuals or organisations benefitting from the social enterprise.

LLPs are straightforward to set up and register: Companies House provide a simple registration form. There is no requirement to submit an LLP’s full membership agreement to Companies House, and the ongoing requirements to file document with Companies House are less onerous than for a limited company.

You may re-use this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. Visit www.nationalarchives.gov.uk/doc/open-government-licence, write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected].

This publication is also available on our website at www.bis.gov.uk

Any enquiries regarding this publication should be sent to: Department for Business, Innovation and Skills 1 Victoria Street London SW1H 0ET Tel: 020 7215 5000 If you require this publication in an alternative format, email [email protected], or call 020 7215 5000. URN 11/1400

VT-F4/Entrepreneurship and Small Business Management/Module Booklet/Referencing Format.pdf

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ICON COLLEGE OF TECHNOLOGY AND MANAGEMENT

Harvard Referencing and Citation Guidelines

Referencing:

This is a method used to demonstrate to the assessors that a learner has conducted a thorough and appropriate literature search. Equally, referencing is an acknowledgement that you have used the ideas and written material belonging to other authors in your own work. As with all referencing styles, there are two parts: Citing and the Reference List. Referencing list format:

This is your list of all the sources that have been cited in the assignment. The list is inclusive showing books, journals, etc., listed in one list, not in separate lists according to source type. The list should be in Alphabetical Order by author/editor/company name, etc. (No bullet

points or numbering)

PRINTED/PUBLISHED SOURCES

Book: by one Author

Author (surname), Initials. (Year) Title of book (Italic). Edition. (only include this if not the first edition) Place of publication (this must be a town or city, not a country): Publisher. Reference List: Where 1st edition

Baron, D. P. (2008) Business and the Organisation. Chester: Pearson. Where 3rd edition Redman, P. (2006) Good essay writing: a social sciences guide. 3rd ed. London: Open University in assoc. with Sage. In text reference:

According to (Baron, 2008) organization structure … Leading social scientist (Redman, 2006; Baron, 2008; Smith, 2008) have noted … Book: by two, three authors The required elements for a reference are: Author, Initials.(Year) Title of book. Edition (only include this if not the first edition). Place: Publisher.

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Reference List: Barker, R., Kirk, J. and Munday, R.J. (1988) Narrative analysis. 3rd ed. Bloomington: Indiana University Press. In text reference for the above examples:

A new theory (Barker and Munday, 1988) has challenged traditional thinking … Book: by four or more authors Author (surname), Initials. et al (Year) Title of book. Edition (only include this if not the first edition). Place: Publisher. Reference List:

Grace, B. et al. (1988) A history of the world. Princeton, NJ: Princeton University Press. In text reference for the above examples: Leading business fellows Grace et al (1988) noted that… Foreign Book Author (surname), initial. (Year) Title of Book [either as given or an English translation in square brackets] Place of publication Publisher Language of translation in round brackets Reference List: Borges, J. L. (1995) [Ficciones] Madrid: Alianza Editorial.

Book: Translated Author (surname), Initials. (Year) Title of book. Translated from (language) by (name of translator) Place of publication: Publisher.

Canetti, E. (2001) The voices of Marrakesh: a record of a visit. Translated from German by J.A.Underwood. San Francisco: Arion.

Multiple Books by same Author published in the same year Author (surname), Initals.(Year a/b/c) Title of book. Place: Publisher.

Reference List: Soros, G. (1966a) The road to serfdom. Chicago: University of Chicago Press. Soros, G. (1966b) Beyond the road to serfdom. Chicago: University of Chicago Press. In text reference for the above examples:

Soros (1966a) mentioned in his …………… According to Soros (1966b) modern literature……….

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Chapter of edited book or Secondary reference for Book and Journal

When an author refers to another author’s work and the primary source is not available

Chapter author(s) surname(s) and initials. Year of chapter. Title of chapter followed by In: Book editor(s) initials and surnames with ed. or eds. after the last name. Year of book. Title of book. Place of publication: Publisher. Chapter number or first and last page numbers followed by full-stop.

References List:

Smith, J. (1975) “A source of information.” In: W. Jones, ed. (2000). One hundred and one ways to find information about health. Oxford: Oxford University Press. Ch. 2. Samson, C. (1970) “Problems of information studies in history.” In: S. Stone, ed. (2002). Humanities information research. Sheffield: CRUS, pp. 44-68. In text reference for the above examples: (Smith, 1975) (Samson, 1970)

N.B. You are advised that secondary referencing should be avoided wherever possible and you should always try to find the original work

Journal Articles

Author (surname), Initials. (Year) Title of article. Full Title of Journal, Volume number (Issue/Part number), Page number(if single page then use ‘p’ if more than one page use ‘pp’) References List:

Boughton, J.M. (2002) The Bretton Woods proposal: an in-depth look. Political Science Quarterly, 42(6), pp.564-78.

Foreign Journal

Author (surname), initials. (Year) Title of article [square brackets] Journal title Edition Page number Language of translation (round brackets) References List:

Caballero, D. (2003) [Policing without borders] Cambi16. 1(668) pg. 24 (in Spanish)

Report

Author (surname), initials. (Year) Title of report (underline or italicise) Publisher Report code and number (in brackets) References List:

Dearing, R. (1996) Review of qualifications for 16 – 19 year olds: quality and rigour in A Level examinations. London: SCAA Publications (COM/96/467)

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Annual Report:

Corporate author, Year of publication. Full title of annual report (if available), Place of Publication: Publisher.

Marks & Spencer (2004) The way forward, annual report 2003-2004, London: Marks & Spencer. For an e-version of an annual report. The required elements for a reference are: Author or corporate author, Year. Title of document or page, [type of medium]Available at: include web site address/URL(Uniform Resource Locator)[Accessed date]

Marks & Spencer (2004) Annual report 2003-2004. [Online] Available at: http://www- marks-and-spencer.co.uk/corporate/annual2003/[Accessed 4 June 2005]. Theses Author (surname), initials. (Year) of submission. Title of theses (underline or italicise) Degree statement Degree-awarding body References List:

Hounsome, I. W. (2001) Factors affecting the design and performance of flexible ducts in trench reinstatements. Unpublished Ph.D. thesis. Napier University.

Newspaper

Article with author

Author (surname), initials. (Year) Article Title (underline or italicise) Name of Newspaper Date (day, month, year) Page number References List:

Ward, L. (2004) Diploma plan to reward lower and higher abilities. The Guardian.18th February, p.4.

Article without an author

Title of publication Year of publication (in brackets) Title of article (underline or italicise) Day and Month Page number References List:

The Guardian (2004) HSBC CEO has come down at last. 23rd November, p. 10.

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ELECTRONIC SOURCES

Electronic Book (e-book)

Author (surname), initials. (Year) Title of book (underline or italicise) Name of e-book supplier [Online] Available at: URL (Date accessed) References List:

Krug, B. and White, S. E. (2004) EBay secrets: how to create Internet auction listings that make 30% more money while selling every item you list. Amazon [Online]. Available at: http://www.amazon.com/exec/obidos/tg/detail/ (Accessed: 16 August 2004).

Articles in Electronic Journal

Author (surname), initials. (Year) Title of article (in quotation marks) Title of journal (underline or italicise) Volume, issue, page numbers Database Name [Online] Available at: URL of collection (Date accessed). References List:

Haliday, J. (2004) 'Ford dealers test custom cable ads', Advertising age,75 (42), pg. 6. Proquest [Online]. Available at: http://proquest.umi.com/ (Accessed: 23 November 2004).

Article in Internet Journal Database

Author (surname), initials. (Year) Title of article (underline or italicise) Title of Journal (underline or italicise) [Online] Volume, issue Available at: URL of web page (Date accessed). References List:

Lloyd, J. (2001) Blessed are the pure in heart: globalisation. New Statesman, 23 April [Online]. Available at: http://www.findarticles.com/p/articles(Accessed: 23 November 2004).

Online Material in the Internet without Date

Author (surname), initials. (Year) Title of article (underline or italicise) [Online], issue [Online] Available at: URL of web page (Date accessed).

References List:

Lloyd, J. (No Date) Blessed are the pure in heart: globalisation [Online]. Available at: http://www.findarticles.com/p/articles (Accessed: 23 November 2004).

Online Material from Internet without Author’s Name

Name of the Organisation, (Year) Title of article (underline or italicise) [Online] Available at: URL of web page (Date accessed).

References List: Marks & Spencer (2010) Marks and Spencer’s Corporate Strategy [Online]. Available at: http://www.m&s.co.uk/corporate/ (Accessed: 23 November 2004)

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Name of sender and email address, (Year) Message or subject title from posting line. [type of medium] Recipient's name and email address. Date sent: Including time. Available at: URL (e.g. details of where message is archived). [Accessed date].

Jones, P. ([email protected]), (2005) Mobile phone developments. [email] Message to R. G. Schmit ([email protected]). Sent Monday 7 June 2005, 08:13. Available at: <http://gog.defer.com/2004_07_01_defer_archive.html> [Accessed 7 July 2005]. N.B: Permission should be sought before these sources are quoted. Copies of such correspondence should be kept, as these may need to be submitted as an appendix in an academic submission

Images from the Internet

Author (surname), initials. (Year) Title of image (underline or italicise) [Online image] Available at: URL (Date accessed) References List:

Marshall, J. (2000) Cathedral clock. [Online image]. Available at: http://www.westminstercathedral.org.uk/art/art_cathclock.html (Accessed 23 November 2004).

OTHER SOURCES

Computer Programme Author (surname), initials. (Year) Title of programme (underline or italicise) Version (in brackets) Form, i.e. Computer programme [in square brackets] Availability, i.e. distributor, address, order number (if given)

References List:

Sanders, B. and William, B. (2001) Java in 2 semesters. (version 2) [computer programme] Microsoft Inc. New York.

Atlas

As for books, using the title page to find the information

References List: The times atlas of the world (2004) London: Times Books.

Video / Film Title of programme/film (underline or italicise) Year of distribution (in brackets) Director [Videocassette] Place of distribution: distribution company

References List All about Eve (1977) Directed by Joseph Mankiewiez [Film]. United States: Twentieth Century Fox.

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Television programme Title of programme (underline or italicise) Year of publication (in brackets) Name of channel Date of transmission (day/month/time)

References List

Coronation Street (2004) ITV1, 25 November. 19.00hrs.

Audiocassette/CD/DVD

Author (if available, if not use title first) Year of publication (in brackets) Title of recording (underline or italicise) [Audiocassette] Place of publication: publisher. References List

Buenos: world Spanish (1995) [Audiocassette or CD or DVD]. London: BBC Books.

QUOTATIONS AND CITING INSIDE THE TEXT

Citation: When you use another person’s work in your own work, either by referring to their ideas, or by including a direct quotation, you must acknowledge this in the text of your work. This acknowledgement is called a citation. It is important that information taken from another author’s work is properly cited and referenced, giving credit to the original author. This includes the use of direct quotations as well as summaries, paraphrased information, statements and conclusions. If you do not cite information in the correct way you will be accused of plagiarism. This allows the reader to find the source of all the ideas including direct quotations that are presented in your work in the list provided in the Reference List. The information given at this point should be the author, and the date of the publication. The aim is to keep it short so that it does not detract from the text. There are a range of ways of presenting this and situations that might dictate the style.

You can incorporate references and quotations in a number of ways. The following examples use the Harvard Referencing.

Short quotations of a sentence or two are enclosed with quotation marks (“…”) and included in the main text.

Short Quotation

In this example, you are making a direct quote. Up to two lines can be included in the body of the text and must include the page number.

Smith (2003, p. 11) states that “Harvard referencing has to be done accurately”

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Longer Quotation

This should be indented in a separate paragraph. If part of the quotation is omitted, then this can be indicated by three dots.

Cottrell (1999, p. 10) in discussing plagiarism states that, plagiarism is using the work of others without acknowledging your sources of information or inspiration. This includes: using words more or else exactly as they……….

N.B: Longer quotations are separated from the text, placed in their own paragraph and do not need to be enclosed in quotation marks. Avoid long quotations as they will be picked up by (Turnitin) as plagiarism. Long words for quotation should be avoided but it is acceptable to include them if they are presented in the following way.

Citations (inside the text)  If the originator’s name occurs naturally in the sentence, the year of publication

should follow in brackets. Example Smith (2003) found that…or, In a recent study Smith (2003) argued that…

 If the author’s name would not naturally be included in the sentence add the author’s

name and year of publication in brackets i.e. Example

Management theories have become much more diverse (Anderson, 1996)

 For publications by two authors: Example

In a recent study (Smith & Jones, 2003) it was argued that…

 If you are referring to a particular page or section of a work and the author’s name

would naturally be included in the sentence the date and page numbers follow in brackets i.e.

Example

In a recent study Smith (1996, p.26) argued that….

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 If the author’s name will not normally be included in the sentence all information is given in brackets i.e.

Example

In a recent study (Smith, 1996, p.26) it was argued that…

 In cases where the name of the author cannot be identified, the item should be referred to by title:

Example

Figures in a recent survey (Tourism trends, 2003. p. 12) showed that…

 In cases where the date of an item cannot be identified, the item should be cited:

Example

The earliest report (Smith, no date, p. 231) showed that…

 If the author and date are unknown:

Example

 When you refer to a corporate publication e.g. a company report, use the Company

Name: Example

A survey (Tourism trends, no date) showed that…

The recession affected………..(Hanson Trust plc, 1990)

VT-F4/Entrepreneurship and Small Business Management/Module Booklet/Unit 9 Ent and Small Bus Mgmnt Assignment Brief Feb 2018 ZH.pdf

ICON COLLEGE OF TECHNOLOGY AND MANAGEMENT Pearson BTEC HND in Business

Unit 9 Entrepreneurship and Small Business Management (RQF) Assignment Brief

Session: February 2018

Programme title TNA67 Pearson BTEC HND in Business (RQF)

Unit number and title Unit 9 Entrepreneurship and Small Business Management

Unit Type Optional

Unit Level and Credit Value

Level 4 15 Credit

Assessor (s) Prof Zakir Hossain, Dr Reza Aboutalebi; Mr Tony Doherty, Mrs Kavita Seth, Mr Chris Dampare

Issue Date 3 March 2018

Final assignment submission deadline

11-16 June 2018

Late submission deadline

18-23 June 2018

The learners are required to follow the strict deadline set by the College for submissions of assignments in accordance with the BTEC level 4–7 submission guidelines and College policy on submissions.

Resubmission deadline TBA

Feedback

Formative feedback will be available in class during the semester.

Final feedback will be available within 2 weeks of the assignment submission date.

General Guidelines

 The work you submit must be in your own words. If you use a quote or an illustration from somewhere you must give the source.

 Include a list of references at the end of your document. You must give all your sources of information.

 Make sure your work is clearly presented and that you use correct grammar.

 Wherever possible use a word processor and its “spell-checker”.

Internal verifier Prof Zakir Hossain

Signature (IV of the brief) *

[email protected] Date 1/3/18

mailto:[email protected]

Assignment Brief – continued

ICON College of Technology and Management Pearson BTEC HND in Business (RQF)

Unit 9: Entrepreneurship and Small Business Management Session: February 2018

Coursework Recommended Word limit: 3,000–4,000

This Unit will be assessed by assignment. You are strongly advised to read “Preparation guidelines of the Coursework Document” before answering your assignment. ASSIGNMENT Assignment Context and Scenario: You have been approached by a growing UK-based small business enterprise of your choice to

help them introduce a new business/branch in the UK with an objective to diversifying products and

services as part of innovation.

You are required to write a report on exploring the range of venture types which are of

entrepreneurial. You need to assess the impact of the proposed business in the local and

national economy. You are to identify the key aspects of an entrepreneurial mindset after a

thorough assessment. You are also required to identify the environmental factors and examine

how those factors foster or obstruct entrepreneurship. This report should be submitted to the

manager of your chosen small business enterprise.

What you must do The following tasks are required to be carried out: LO1 Explore and illustrate the range of venture types that might be considered entrepreneurial. Examine different types of entrepreneurial ventures and explain how they relate to the typology of entrepreneurship. [P1] To achieve M1, you should investigate a diverse range of entrepreneurial ventures to demonstrate an understanding of entrepreneurship in both public and corporate sector. To achieve D1 you should critically examine the scope, development and growth of entrepreneurial ventures. Explore the similarities and differences between entrepreneurial ventures. [P2] LO2 Assess the impact of small business on the economy.

Interpret and assess relevant data and statistics to illustrate how micro and small business

impact on the economy [P3].

Assignment Brief – continued

To achieve M2, you should evaluate the differences small, medium and large businesses make to

the economy, applying relevant data and statistics.

To achieve D2, you should critically examine how small businesses have an impact on different

levels of the economy (local, regional and national) and an international context. Explain the importance of small businesses and business starts-ups to the growth of social economy. [P4].

LO3 Determine and assess the key aspects of an entrepreneurial mindset.

Determine the characteristic traits and skills of successful entrepreneurs that differentiate them

from other business managers. [P5]

To achieve M3, you should explore and examine different lines of argument relating to

entrepreneurial characteristics.

To achieve D3, you should analyse the characteristic traits, skills and motivational drivers of

successful entrepreneurs, supported by specific examples.

Assess how aspects of the entrepreneurial aspects personality reflect entrepreneurial motivation and mindset. [P6] LO4 Examine the different environments that foster or hinder entrepreneurship. Examine, using relevant examples, how background and experience can hinder or foster

entrepreneurship. [P7]

To achieve M4, you should analyse the link between entrepreneurial characteristics and the

influence of personal background and experience to specific successful entrepreneurs.

To achieve D4, you should critically evaluate how background and experience influences

entrepreneurs, both positively and negatively, by comparing and contrasting examples.

Assignment Brief – continued

Grading Criteria

Learning Outcome Pass Merit Distinctions

LO1 Explore and illustrate the range of venture types that might be considered entrepreneurial.

P1 Examine different

types of

entrepreneurial

ventures and explain

how they relate to the

typology of

entrepreneurship.

P2 Explore the similarities and differences between entrepreneurial ventures

M1: Investigate a diverse range of entrepreneurial ventures to demonstrate an understanding of entrepreneurship in both public and corporate sector.

D1: Critically examine the scope, development and growth of entrepreneurial ventures.

LO2 Assess the impact of small business on the economy.

P3 Interpret and

assess relevant data

and statistics to

illustrate how micro

and small business

impact on the

economy.

P4 Explain the importance of small businesses and business starts-ups to the growth of social economy

M2: Evaluate the

differences small,

medium and large

businesses make to

the economy,

applying relevant

data and statistics.

D2: Critically examine how

small businesses have an

impact on different levels of

the economy (local, regional

and national) and an

international context.

LO3 Determine and assess the key aspects of an entrepreneurial mindset.

P5 Determine the

characteristic traits

and skills of

successful

entrepreneurs that

differentiate them

from other business

managers.

P6 Assess how aspects of the entrepreneurial aspects personality reflect entrepreneurial motivation and mindset

M3: Explore and

examine different

lines of argument

relating to

entrepreneurial

characteristics.

D3: analyse the characteristic traits, skills and motivational drivers of successful entrepreneurs, supported by specific examples

LO4 Apply Human Resource Management practices in a work- related context

P7 Examine, using relevant examples, how background and experience can hinder or foster entrepreneurship.

M4: Analyse the link between entrepreneurial characteristics and the influence of personal background and experience to specific successful entrepreneurs

D4: Critically evaluate how background and experience influences entrepreneurs, both positively and negatively, by comparing and contrasting examples.

Assignment Brief – continued

Relevant Information Guide to student 1. Preparation guidelines of the Coursework Document

a. All coursework must be word processed. b. Document margins must not be more than 2.54 cm (1 inch) or less than 1.9cm (3/4 inch). c. The assignment should be in a formal business style using single spacing and font size 12. d. Standard and commonly used type face such as Arial should be used. e. All figures, graphs and tables must be numbered. f. Material taken from external sources must be properly referenced using the Harvard

referencing system. g. You should provide references using the Harvard referencing system. h. Do not use Wikipedia as a reference.

2. Plagiarism and Collusion

Any act of plagiarism or collusion will be seriously dealt with according to the College regulations. In this context the definitions and scope of plagiarism and collusion are presented below: Plagiarism is presenting somebody else’s work as your own. It includes copying information directly from the Web or books without referencing the material; submitting joint coursework as an individual effort. Collusion is copying another student’s coursework; stealing coursework from another student and submitting it as your own work. Suspected plagiarism or collusion will be investigated and if found to have occurred will be dealt with according to the College procedure (For details on Plagiarism & Collusion please see the Student Handbook).

3. Submission

a. Initial submission of coursework to the tutors is compulsory in each unit of the course. b. The student must check their assignments on ICON VLE with plagiarism software Turnitin to make

sure the similarity index for their assignment stays within the College approved level. A student can check the similarity index of their assignment three times in the Draft Assignment submission point located in the home page of the ICON VLE.

c. All Final coursework must be submitted to the Final submission point into the Unit (not to the Tutor). The student would be allowed to submit only once and that is the final submission.

d. Any computer files generated such as program code (software), graphic files that form part of the coursework must be submitted as an attachment to the assignment with all documentation.

e. Any portfolio for a Unit must be submitted as a hardcopy to examination office. f. The student must attach the tutor’s feedback from the First submission in between the cover page and

the answer in the case of Resubmission. 4. Good practice

a. Make backup of your work in different media (hard disk, memory stick, etc.) to avoid distress for loss or damage of your original copy.

5. Extension, Late Submission and Resubmission

a. If you need an extension for a valid reason, you must request one using an Exceptional Extenuating Circumstances (EEC) form available from the College examination office and ICON VLE. Please note that the tutors do not have the authority to extend the coursework deadlines and therefore do not ask them to award a coursework extension. The completed form must be accompanied by evidence such as a medical certificate in the event of you being sick, and should be submitted to the Examination Office.

b. Late submission will be accepted and marked according to the College procedure. It should be noted that late submission may not be graded for Merit and Distinction.

c. All late coursework must be submitted to the Late submission point into the unit (not to the Tutor) in the ICON VLE. A student is allowed to submit only once and that is also treated as the final submission.

d. Only one opportunity will be given for reassessment (resubmission) will be permitted and the assessment will be capped at Pass for the unit. In addition, no resubmission will be allowed

Assignment Brief – continued

in any component of the assessment for which a Pass grade or higher has been achieved. e. Repeat Units – A student who has failed to achieve a Pass in both Final/Late submission

and in the Resubmission must retake the unit with full attendance and payment of the unit fee. The overall unit grade for a successfully completed repeat unit is capped at Pass for that unit. Units can only be repeated once.

6. Submission deadlines Online to the ICON College VLE

Final Submission date: 11-16 June 2018 Late Submission date: 18-23 June 2018

Glossary:

Analyse: Identify separate factors, say how they are related and how each one contribute to the topic. Assess: to determine the importance, size and value of something. Or give careful consideration to all the factors or events that apply or identify which are the most important or relevant. Critically evaluate: Point out differences which are particularly significant.

Evaluate: review the information then bring it together to form a conclusion. Give evidence of each of your views or statement. Explain: Set out in detail the meaning of something, with reasons. More difficult than describe or list; it can help to give an example to show what you mean. Start by introducing the topic then give the ‘how’ and ‘why’ OR provide details and give reasons and/or evidence to clearly support the argument you are making. Explore: Inquire into or research about any factors pertinent to a particular issue. Examine: When you evaluate you look at the arguments for and against an issue. Identify: Point out or choose the right one/ give a list of main features. Illustrate: Include examples or a diagram to show what you mean. Determine: Ascertain or establish exactly by research.

VT-F4/Entrepreneurship and Small Business Management/Module Booklet/Unit 9 ESBM SoW - Feb 18.pdf

Page 1 of 3

ICON College of Technology and Management Pearson BTEC HND in Business (RQF)

Unit 9: Entrepreneurship and Small Business Management Scheme of Work

Session: February 2018

This unit is aimed at achieving the following learning outcomes: LO1 Explore and illustrate the range of venture types that might be considered entrepreneurial

LO2 Assess the impact of small businesses on the economy LO3 Determine and assess the key aspects of an entrepreneurial mindset LO4 Examine the different environments that foster or hinder entrepreneurship

Programme Title TNA67 Pearson BTEC in Business

Unit number and Title Unit 9 Entrepreneurship and Small Business Management

Unit Type Optional Unit Level Level 4 15 Credit

Sessions Indicative Contents Session Activities

Week 1: LO1: Explore and

illustrate the range of venture

types that might be considered

entrepreneurial

Lecture 1: Introduction

Unit learning outcome, Syllabus, and

Assignment briefing, Assessment ,

Reading, Academic Skill, citation and

referencing

Providing course work

overview

Week 2 LO1

Lecture 2: Scoping and

defining entrepreneurship

What is entrepreneurship? Defining

entrepreneurship, entrepreneurial activity

and enterprise.

The differences between serial

entrepreneurs, intrapreneurs and owner

managers.

Brainstorm definitions of the

terms entrepreneur and

entrepreneurship

Week 3: LO1

Lecture 3: The typology of

entrepreneurship and social

enterprise

Lifestyle and growth firms.

Entrepreneurship in a corporate or public

sector context. Roles and characteristics of

micro, small and medium-sized

organisations.

Understanding social enterprise, social

entrepreneurs and the growth of the social

economy.

Discussion activity –

the meaning of social

enterprise and

entrepreneurship and

the key differences vs

entrepreneurship.

Week 4: LO2: Assess the

impact of small business on

the economy

Lecture 4: Where

entrepreneurship ideas come

from

Definitions of creativity and innovation

The main sources of generating business

and entrepreneurial ideas

How businesses protect intellectual

property rights

Discussion activity – the value

and importance of encouraging

small business growth within

the economy.

Formative Feedback

Brief tutor-led overview of

assessment requirements

Academic writing

Week 5: LO2

Lecture 5: The role and

importance of small firms and

international aspects of

entrepreneurship

The number and type of small firms and

their contribution to the economy at

national, regional and local level.

Factors to consider: size, turnover, profit,

rate of growth, innovation, sustainability

and adaptability.

Group activity – compare

and contrast the size,

turnover, growth and

sustainability of case study

organisations.

Week 6: LO2

Lecture 6: International

aspects of entrepreneurship

How international differences impact upon

business start-up. Group activity –

discuss and highlight

Page 2 of 3

International vs domestic entrepreneurship.

The benefits of international

entrepreneurship.

Entrepreneurial entry into new business and

barriers.

Factors that support international

entrepreneurship.

different strategies used

to enter into new

business.

Academic writing

Week 7: LO3: Determine and

assess the key aspects of an

entrepreneurial mindset

Lecture 7: Entrepreneurial

characteristics and mindset

Research on personal characteristics of

entrepreneurs and small business owners

Different arguments relating to

characteristics of entrepreneurs such as are

they born or made?

Can the characteristics be learnt and

adapted by anyone?

Debate activity – split students

into groups ‘for’ and ‘against’

and examine the research

provided. Questions debated:

are entrepreneurs born or

made? (Nature vs nurture).

Can entrepreneurship be

taught?

Week 8: LO3

Lecture 8: Skills set of the

entrepreneur and personal

entrepreneurial tendency

The types of skills that typify entrepreneurs

and how these skills differentiate from

other organisation managers.

Entrepreneurial characteristics and

situational factors in a personal context,

including family upbringing, lifestyle,

cultural differences and personal motivation

and drivers.

Groups explore

different entrepreneurs

and identify shared

personal common

traits.

Groups to present findings and

discuss.

Business Show Olympia 2017

Visit – 16 November

Week 9: LO4:

Examine the different

environments that foster or

hinder entrepreneurs

Lecture 9: The factors that

influence the decision to start

business

The range of factors that influence the

choice to start-up a business, including

personal background and education,

national culture, economic circumstances

and character traits.

In groups, students identify

key factors that contribute to

making a business either

successful or a failure.

Formative Feedback

Brief tutor-led overview of

assessment requirements

Academic writing

Week10: LO4

Lecture 10: The risks and

rewards of business start-up

The potential rewards of business start-up.

The risks and uncertainties of business

start-up and how they can be mitigated.

Pair work - strategies to

mitigate risk when setting up

a business.

Week 11: Assignment

Workshop Review student progress on

assignment writing.

Brief tutor-led overview of

assessment requirements.

Open question and answer

activity to address general

questions and concerns.

Review of academic

requirements and submission

format.

Individual student queries and

questions.

Week 12 Reserve class to cover any missing class Formative Feedback

Week 13 Study Week

Week 14 Final Submission Final Draft submission

Page 3 of 3

Burns, P. (2011), Entrepreneurship and Small Business. 3rd Ed. Basingstoke: Palgrave MacMillan.

https://secure3.ehaus.co.uk/macmillanhe/resources/sample-chapters/9781137430359_sample.pdf

https://he.palgrave.com/resources/sample-chapters/9781137430359_sample.pdf Burns, T. and Sinfield, S (2016), Essential Study Skills: The Complete Guide to Success at University, Los Angeles, SAGE

Carter, S. and Jones-Evans, D. (2012), Enterprise and Small Business: Principles, Practice and Policy,

London: Pearson.

Down, S. (2010), Enterprise, Entrepreneurship and Small Business. London: Sage.

Griffiths, A. and Wall, S. (2011), Economics for Business and Management. 3rd Ed. Harlow: Pearson. Swales, J. M and Feak, C, B. (2012), Academic Writing for Graduate Students, Ann Abor, The University of Michigan

Websites

The Institute for Small Business and Entrepreneurship (ISBE) website: www.isbe.org.uk Quizes Entrepreneurship And Innovation https://www.proprofs.com/quiz-school/story.php?title=ODQ4MzEyRO6E https://www.bizmove.com/other/quiz.htm Journals: Harvard Business Review (available in ICON Library) Economist (available in ICON Library

Journal of Small Business Management, Oxford: Wiley-Blackwell.

(http://onlinelibrary.wiley.com/journal/10.1111/ (ISSN) 1540-627X) News Papers The Financial Times Business http://www.ft.com/home/uk Evening Standard Business http://www.standard.co.uk/business/ CITY A.M. Business http://www.cityam.com/ Pearson Resources: Student Portal: HN Global Please access HN Global for additional resources support and reading for this unit. For further guidance and support on presentation skills please refer to the Study Skills Unit on HN Global. Link to: https://www.highernationals.com/

https://secure3.ehaus.co.uk/macmillanhe/resources/sample-chapters/9781137430359_sample.pdf

https://he.palgrave.com/resources/sample-chapters/9781137430359_sample.pdf

https://www.proprofs.com/quiz-school/story.php?title=ODQ4MzEyRO6E

https://www.bizmove.com/other/quiz.htm

http://onlinelibrary.wiley.com/journal/10.1111/

http://www.ft.com/home/uk

http://www.standard.co.uk/business/

http://www.cityam.com/

https://www.highernationals.com/

VT-F4/Entrepreneurship and Small Business Management/Support/Academic Writing 2.pdf

Academic writing skills

Writing, referencing & using electronic resources

“Care in the choice of one’s words is the respect that the mind

pays

to the instrument of its own being”

Agenda

• Writing

– What is academic writing

• Referencing

– Books

– Articles

– Others

• Electronic resources

Academic writing

• What is it all about?

Writing

• Academic writing is Formal

– No exaggeration (Not: extremely important)

– Impersonal (no use of “I am”)

– Direct to the meaning

– No final judgment!! Always allow for arguing and

accepting other opinions!!

WHAT DOES FORMAL WRITING

LOOK LIKE?

• Focus on the issue, not the writer Keeping

your writing objective and impersonal can make

it more convincing.

– It will be argued that the benefits of sales

promotion outweigh the disadvantages.

– I will argue in this assignment that ...

Choose words with precise

meanings

• Avoid words with vague meanings

– Compare:

• The writer looks at the issue

– with

• The writer examines the issue.

• The second option is more formal.

– Formal choices:

• He states … maintains … argues

– Informal choices:

• He says … talks about …

Add some style

• Writing is a very logical exercise, adding

style to it will enhance clearness and

power of convincing…

– Phrases for transition

– Phrases for emphasis

– Phrases for counterpoint

Phrases for transition

• Regarding

• Admittedly

• Consequently

• As a result

• Ultimately

• According to

• For this reason

Phrases for emphasis

• Moreover

• In fact

• Additionally

• For example

• In point of fact

• As a matter of fact

• Indeed

Phrases for counterpoint

• Conversely

• On the other hand

• However

• Nevertheless

• Notwithstanding

• Nonetheless

• Yet

• Despite

• Although

• Instead

Referencing

• What does referencing mean?

• Why should I include references in my

work?

• How do I reference my work?

What does referencing mean?

• When writing an academic piece of work

you need to acknowledge any ideas,

information or quotations which are the

work of other people. This is known as

referencing or citing.

Why should I include references

in my work?

• You should include references in order to:

– acknowledge the work of others

– provide evidence of your own research

– illustrate a particular point

– support an argument or theory

– allow others to locate the resources you have used

• And most importantly:

– avoid accusations of plagiarism

How do I reference my work?

• Your references should be consistent and

follow the same format. Various systems

have been devised for citing references,

but most Schools use the Harvard system

Referencing while writing

• References will be cited in your work in

two places: -

– 1) Where a source is referred to in the text

(Citation)

– 2) In a list (the Bibliography/List of references)

at the end of the assignment.

Citing references in the text

• Citing the author in the text

• Whenever a reference to a source is

made, its author's surname and the year

of publication are inserted in the text as

in the following examples...

Citing references in the text Cont.

– Dogs were the first animals to be

domesticated (Sheldrake, 1999).

• If the author's name occurs naturally in the

sentence the year is given in brackets .>>

– Sheldrake (1999) asserts that dogs were the

first animals to be domesticated.

Using direct quotes

• If you quote directly from a source you must

insert the author’s name, date of publication

and the page number of the quotation.

– ‘The domestication of dogs long predated the

domestication of other animals.’ (Sheldrake, 1999,

p.5).

• The page number should be given at the end of

the quote, in separate brackets if necessary, as

in the example below.

– Sheldrake (1999) asserts that the ‘domestication of

dogs long predated that of other animals.’ (p.15).

Citing works by more than one

author

• If your source has two authors you should

include both names in the text.

– Anderson and Poole (1998) note that a

‘narrow line often separates plagiarism from

good scholarship.’ (p.16).

Citing works by three or more authors

• If there are three or more authors you should

include the first named author and then add ‘et

al.’ in italics followed by a full stop. This is an

abbreviation of ‘et alia’ which means ‘and others’

in Latin.

– In the United States revenue from computer games

now exceeds that of movies (Kline et al., 2003).

Citing works by the same author written

in the same year

• If you cite two or more works written in the same year by the same author, then you must differentiate between them in both the text and your List of references by listing them as a,b,c etc.

– Natural selection can cause rapid adaptive changes in insect populations (Ayala, 1965a) and various laboratory experiments have been conducted to assess this theory (Ayala, 1965b).

Citing secondary sources

• When citing secondary sources (i.e. an author refers to a work you have not read) cite the secondary source, but include the name of the author and date of publication of the original source in the text. Only the secondary source should be listed in your references. You should only cite secondary sources if you are unable to read the original source yourself.

– Sheff (1993) notes that Nintendo invested heavily in advertising (cited in Kline et al.,2003, p.118).

Writing a Bibliography or List of

references

• The List of references appears at the end of

your work and gives the full details of everything

that you have cited in the text in alphabetical

order by the author’s surname

Printed books

• Printed books should be referenced using the following format and punctuation.

– Author/editor’s surname and initials.,

– (Year of publication).

– Title of book: including subtitles. (in italics or underlined)

– Edition. (if applicable)

– Place of publication: (followed by a colon)

– Name of publisher.

• Reference to a book with one author

– Sheldrake, R., (1999). Dogs that know when

their owners are coming home: and other

unexplained powers of animals. London:

Arrow Books.

• Reference to a book with two authors

– Anderson, J. and Poole, M., (1998).

Assignment and thesis writing. 3rd ed.

Chichester: John Wiley & Sons.

Print journals and newspapers

• Print journals should be referenced using the following format and punctuation. – Author's surname, initials., (or Newspaper title where

there is no author,)

– (Year of publication).

– Title of article.

– Name of journal. (in italics or underlined),

– Date of publication (if applicable e.g. 18 June)

– Volume number (in bold) (if applicable)

– (Part/issue number), (if applicable)

– Page numbers.

Example

• Britton, A., (2006). How much and how

often should we drink? British Medical

Journal. 332 (7552), 1224-1225.

• Britton, A., (2006). How much and how

often should we drink? British Medical

Journal. Vol. 332, No. 7552, pp.1224-1225

E-journal article accessed via

website on the open Internet

• Britton, A., (2006). How much and how often

should we drink? British Medical Journal. 332

(7552), 1224-1225. [online] Available

from:http://bmj.bmjjournals.com/cgi/content/full/3

32/7552/1224 [Accessed 2 June 2006].

http://bmj.bmjjournals.com/cgi/content/full/332/7552/1224

Websites, web pages

• Websites, web pages and PDF documents downloaded from the Internet should be referenced using the following format and punctuation. – Author/editor’s surname, initials., or name of owning organization

e.g. University of London)

– (Year of publication).

– Title. (in italics or underlined)

– Edition. (if applicable, e.g. update 2 or version 4.1)

– [online]

– Place of publication: (if known)

– Name of publisher. (if known)

– Available from: <URL>

– [Accessed (enter date you viewed the website)].

References

– Holland, M., (2005). Citing references. [online] Poole:

Bournemouth University. Available from:

<http://www.bournemouth.ac.uk/academic_services/d

ocuments/Library/Citing_References.pdf> [Accessed

2 June 2006].

– University of Westminster, (2007). Harry Potter fans to

cast spell over Westminster. [online] London:

University of Westminster. Available from:

<http://www.wmin.ac.uk/page-14428> [Accessed 24

July 2007].

VT-F4/Entrepreneurship and Small Business Management/Support/Academic Writing Skills 1.pdf

Dr Marco Angelini,

UCL Transition Programme

With thanks to Dr Colleen McKenna for kind

permission in reproducing her material in this

presentation

Approaches to critical reading and writing

Outline for today

 Introduction

 Considering your writing practices

 Reading as part of writing

 Writing as part of thinking

 Planning

 Organising written work

 Looking at text

 Finding time to write

What type of writer are you?

The diver

The patchworker

The architect

The grand planner

Identifying your writing style

Previous writing experiences …

Reading as part of writing

Critical reading (and how it benefits your writing)

 Helps you determine what is and

what is not a robust piece of

research and writing in your field

 Helps you identify where existing

research has left a gap that your

work could fill

 Attention you pay to writing of others

helps you become more self-aware

of your own written work:

– Sufficient evidence to back up claims;

argumentation/reasoning; becoming

alert to your assumptions and how they

affect your claims

 Wallace and Wray, 2006

Critical reading?

How do you go about

reading an academic text

in your field?

Critical reading? Some possible approaches

How do you go about reading an

academic text?

 Use parts of the text: abstract,

contents, index, sub-headings,

graphs, tables, introduction and

conclusion

 Skim to get the gist of the argument

 Read with questions in mind

Critical reading? Some possible approaches

 Make notes/mind map/ use

highlighter

 Write a summary in your own words

 Write a brief critical response

 Keep note of bibliographic details

Critical reading/ critical writing

Handout – p. 12-13 Wallace and Wray

 As a critical reader, one evaluates

the attempts of others to

communicate with and convince

their target audience by means of

developing an argument;

 As a writer, one develops one's own

argument, making it as strong and

as clear as possible, so as to

communicate with and convince

one's target audience.

– Wallace and Wray, 2006

Free writing

 Way of using writing as a tool for

thinking

 Allows you to write without

constraints.

To do it –

Write continuously, in complete

sentences, anything that occurs to

you.

Free writing

Please write down EITHER

1. An idea / theme from your field

2. Use the topic:

‘what I enjoy about writing…’

Use a free writing technique to write

anything at all that occurs to you

about this topic.

This writing will not be shown to

anyone else.

Planning (Sharples)

 Plans should be flexible

 Through the writing process a deeper

understanding of topic is gained – thus,

planning is increasingly out of step as

writing develops:

– “The act of writing brings into being ideas

and intentions that the writer never had at

the start of the task or that could not be

expressed in any detail.”

Plans

 Free writing

 Notes/sketches

 Idea lists

– Ideas on post-it notes

 Mind map

 Skeleton paper with

sub-headings

 Outline

 Draft text

 Adapted from

Sharples, 1999

 What techniques do you use to

develop ideas in your writing

and/or signpost an argument?

Developing/sustaining argument

 ‘proving’ the thesis statement or

controlling argument

 Signposting argument (Giving the

reader cues; anticipating/referring

back)

 Using words which signal transition or

development – “However”,

“Nevertheless”, “Thus”, “Therefore”,

“Despite”

 Illustrating theoretical positions with

concrete examples

 Generalising from a particular set of

findings if possible

 Using subheadings

 Using/responding to counterarguments

and examples

 Anticipate next paragraph at end of

previous one

Signposting and making transitions

 Links between paragraphs – pick up point from the end of a paragraph at the start of next one.

 Conjunctions to express different kinds of meaning relations

– Temporal: when, while, after, before, then

– Causative: because, if, although, so that, therefore

– Adversative: however, alternatively, although, nevertheless, while

– Additive: and, or, similarly, incidentally

 Signposting through pronouns - this, these, those, that, they, it, them

 Adverbs: Firstly, secondly, etc

 Illustrative: For example, in illustration, that is to say,

Signalling conclusions

Citation

Examples of Citing

• The hip bone is confirmed to be connected to the thigh bone (Funny Bones, 1989).

• The cytoskeletal network acts like the strong bars within a scaffolding (Alberts et al., 1998)

• Slavic-Smith (2006) postulated three classifications for nucleoli in neurons

• It was shown in 2006 by Take That, that a successful comeback tour was possible [1].

Bibliographies

 Alberts, Bray, Johnson, Lewis,

Raff, Roberts & Walter. Essential

Cell Biology, 1st Edition, Garland,

1998

 Dickson, B (2002) Molecular

Mechanisms of Axon Guidance.

Science 298 1959-1964

 [1] www.bbc.co.uk/news

Writing tips

 Write a sentence for each paragraph you want

to write – you can then move them about easily

to form thread of argument

 Index tag the main points you want to use in

your references, so they can be found easily

while writing

 Write the introduction last

 Write the conclusion first

 Read what you have written aloud to see if it

sounds right

 Find best environment for you – when and

where do you work best

 Take a break before trying to do your final check

 Use a writing checklist

Making time for writing

 Write throughout the course

 Do free writing as frequently as

possible

 Snack and binge writing (Rowena

Murray)

 Writing groups

 Don’t wait until you feel ‘ready’ to

write…

Writing for learning

 Read regularly in the field. Find writers whose work you admire and study what and how they do things.

 View writing as part of a process rather than a product

 Find models of good writing in your discipline – analyse it; ask what works and what doesn’t; consider writing style; vocabulary; techniques – metaphor; explanation; signposting

 Reflect on your own writing practices

 Keep a notebook or learning journal

 Explore free writing

To sum up…

1. Asked ‘what type of writer are

you’? What are your writing

practices?

2. What are your approaches to

reading? How might you link

reading and writing?

3. Free writing as a means of

generating ideas

4. Thought about structure of the

essay at the paragraph level and

the overall level

5. Tried to relate these ideas back

to the outline.

Reference

Academic Writing Skills

Presentation - UCL https://www.ucl.ac.uk/transition/study-

skills.../Academic_Writing_Skills_11.pptx

https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0ahUKEwiluJHzxJHXAhVBBBoKHRQjCzoQFggmMAA&url=https%3A%2F%2Fwww.ucl.ac.uk%2Ftransition%2Fstudy-skills-resources%2FAcademic_Writing_Skills_11.pptx&usg=AOvVaw3tPjWzxu-gowAkd1JhDCUx

VT-F4/Entrepreneurship and Small Business Management/Support/ESBM - Lecture 1.pdf

Lecture 1: Introduction of the Unit

Prepared by: Dr Gilbert Zvobgo

ICTM

 Aim of Session: To introduce the Unit’s content and the Unit

assessment

 1. Ground Rules

 2. Going over the Assignment Brief, including the assessment

criteria of the Unit

 3. Going over the Scheme of Work so that students see how

they could allocate their time wisely.

 4. Going over the Unit Specification so that students have an

overview of the syllabus (also available on ICON VLE).

 5. Library visit to help students check available books in their

Unit and to suggest those they want the College to purchase.

 6. Ask students to register with HN Global at:

Pearson Resources: Student Portal: HN Global

https://www.highernationals.com/

 7. Help students understand the importance of academic

skills, academic writing, and referencing (citation and

references).

VT-F4/Entrepreneurship and Small Business Management/Support/ESBM - Lecture 10.pdf

LO4: Examine the different environments that foster or hinder

entrepreneurs

Lecture 10: The risks and rewards of business start-up

Prepared by: Dr Gilbert Zvobgo

ICTM

ENTREPRENEURSHIP AND SMALL

BUSINESS MANAGEMENT

ESBM

By the end of the session should be able to understand:

The potential rewards of business start-up

The risks and uncertainties of business start-up and how they can be mitigated.

ESBM

You are your own boss (Independence)

 If you start up your own business, the only person you have to

answer to is yourself.

 Freedom to do things your way and implement your own plans.

 Freedom from supervision and the rules of bureaucratic

organisations

 Accommodating a desired lifestyle

 Achieving financial independence

 Enjoying creative freedom

ESBM

You get to do what you’re interested in

 You choose what kind of firm you start up, and where.

 Providing that you have done your research properly and there

is a gap in the market, you can turn a hobby or interest into a

profitable enterprise.

ESBM GAP IN THE MARKET

DEFINITION BENEFITS

Business produces a

product or identifies a

service which is not yet

available on the market

for consumers to

purchase.

 Charger higher price

for product/service –

less competition.

 Increased sales – less

competition.

 More customers –

selling unique

product/service.

ESMB BUSINESS SECTORS

PRIMARY SECTOR

Made up of organisations in first stage of production.

Extract raw materials. Land is used to grow items.

SECONDARY SECTOR

Made up of organisations in the second stage of

production. Primary sector resources are used to

manufacture products.

TERTIARY SECTOR

Made up of organisations that sell products and provide

services.

http://www.google.co.uk/url?sa=i&source=images&cd=&cad=rja&uact=8&docid=5RTPyt7AWWusdM&tbnid=yc5b47YgLxUKGM&ved=0CAgQjRw&url=http%3A%2F%2Fwww.clker.com%2Fclipart-1773.html&ei=deQYU4fWEuLo7Aa0wYGwCQ&psig=AFQjCNEnWu8JZI6n3i0Js_mVkOIfs9lDDQ&ust=1394226677526855

ESMB CHANGING TRENDS

PRIMARY SECTOR

Numbers employed

has decreased Less natural resources to extract. Land

taken for housing/business developments.

SECONDARY SECTOR

Numbers employed

has decreased

Cheaper to manufacture abroad. More

machinery/robotics used in production

process.

TERTIARY SECTOR

Numbers employed

has increased More demand for products and services.

ESBM

It can be very profitable

 Entrepreneurs can exploit a great idea and make a lot of

money

 Although the start-up process can be tough, with long hours

and little money not uncommon, if you run your business well,

the rewards can be huge.

ESBM

You can have a second career

 Getting the best of both worlds - If you do not want giving up a

regular income, you can always get the best of both worlds and

stay as an employee while running your own firm.

 Profitable Option - Although juggling the two can be tricky,

having a successful sideline should be a very profitable option

 Reduced risk - If you keep your existing job while building your

business, you’ll retain a guaranteed income – and reduce the

risks associated with starting a business.

ESBM

You can have a second career

 New skills - Rather than viewing your existing job as a

distraction from your new venture, you can use your salaried

role to hone skills which will help you in your start-up

 Creativity - When you’re balancing two jobs, you have to think

outside the box to maximise time and money

 Positive thinking - Because you have the safety net of the

salaried job, you’ll know you’re starting the business because

you want to, not because you have to

https://startups.co.uk/10-reasons-to-start-a-business-while-working/

ESBM

The big dream really can become reality

 It is possible to make it really big – For example, the late Anita Roddick, who

became a Dame thanks due to her entrepreneurial achievements.

ESMB

Risks

 Financial risk. The financial resources needed to start and

grow a business can be extensive. There might be times,

especially in the first few years, when the business is not

generating enough cash for you to live on.

 Stress. As a business owner, you are the business. There are

so many things to worry about — competition, employees,

bills, equipment breakdowns, etc.. As the owner, you’re also

responsible for the well-being of your employees.

ESMB Risks

Time commitment.

 People often start businesses so that they will have more time to spend with their families

 Running a business is extremely time consuming. Theoretically, you have the freedom to take time off, but in reality, you may not be able to get away

 You will probably have less free time than you would have working for someone else

 A forty-hour workweek is a myth

 Vacations will be difficult to take and will often be interrupted.

 The difficulty of getting away from the job has been compounded by cell phones, iPhones, Internet-connected laptops and iPads, and many small business owners have come to regret that they are always reachable.

ESMB

Risks

Undesirable duties

 Responsible for either doing or overseeing just about

everything that needs to be done

 You can get bogged down in detail work that you don’t enjoy

 As a business owner, you’ll probably have to perform some

unpleasant tasks, like firing people.

ESMB

Risks

Entrepreneurs may have to advertise to build a brand name.

 To pay for ad campaigns, they may have to reinvest profits,

accept equity partners, or personally guarantee debt.

 To build depth in their organizations, entrepreneurs may have

to trust inexperienced employees to make crucial decisions.

 Furthermore, many years may pass before any payoff

materializes—if it materializes at all.

 Talented people usually avoid companies that offer no stock

options and only limited opportunities for personal growth, so

the entrepreneur’s long hours may never end.

Bhide (1996)

ESBM

Why Businesses Fail

 Bad business idea. Like any idea, a business idea can be

flawed, either in the conception or in the execution.

 Cash problems. Too many new businesses are underfunded.

The owner borrows enough money to set up the business but

does not have enough extra cash to operate during the start-up

phase, when very little money is coming in but a lot is going

out.

 Managerial inexperience or incompetence. Many new business

owners have no experience in running a business; many have

limited management skills – managing people; attracting and

keeping talented employees, ability to plan ahead

ESBM

Why Businesses Fail

 Lack of customer focus.

 A major advantage of a small business is the ability to provide special attention to

customers

 But some small businesses fail to seize this advantage.

 Inability to handle growth

 When a company grows, the owner’s role changes – they may need to delegate

work to others and build a business structure that can handle the increase in

volume.

 Some owners do not make the transition and find themselves overwhelmed

 Things do not get done, customers become unhappy, and expansion actually

damages the company.

Increasing the Chance of Start-up Success

ESMB

6-18

ESMB REDUCING RISK OF BUSINESS FAILURE

Write a business plan

Choose a limited company

Save rather than borrow

Carry out market research

Start a franchise

Get advise

Find a partner

Help with organisation. Help

monitor/evaluation business success.

Limited liability – only lose what you invest

if business fails.

Reduces debt and amount of interest paid

on loans.

Able to identify gap in market, customer

needs/wants and competition.

Established brand, support/training from

franchisor and marketing costs shared.

Get advise

Can provide advise, expertise and

finance.

ESBM FRANCHISE

A franchise occurs when a franchisor sells an existing

business idea to a franchisee. A franchisor is the seller of

the franchise. A franchisee is the buyer of the franchise.

ADVANTAGES DISADVANTAGES

Good chance of success – name already

established/well known.

Franchisee cannot make many decisions – must be

run according to the rule of the franchisor.

Advise and assistance (e.g. training, marketing) given

– franchisor will have experience.

Franchisee will never feel business is there own – has

been established by franchisor.

Reduced marketing costs - franchisor responsible for

market research, product development and promoting the

business

Costly way to run a business – fees, royalties (%

profits) and expensive stock must be paid for by the

franchisee.

Mr John Kay

(Franchisee)

I want to open a

McDonalds

franchise

McDonalds

(Franchisor)

McDonalds agrees to allow me to use

the company’s name and sell the

company’s products

I pay McDonalds £100,000 for the

Franchise

http://images.google.co.uk/imgres?imgurl=http://www.education.vic.gov.au/images/content/about/awards/vta/Mcdonalds_logo.gif&imgrefurl=http://www.education.vic.gov.au/about/events/vta/vtasponsors.htm&h=192&w=250&sz=7&tbnid=Z6zXtZB2jsOtrM:&tbnh=85&tbnw=111&prev=/images%3Fq%3Dmcdonalds%2Blogo%26um%3D1&start=3&sa=X&oi=images&ct=image&cd=3

ESBM Activities

In groups, students identify risks encountered by their

chosen small business organisations

Bhide, A. (1996), “The Questions Every Entrepreneur Must Answer”, Harvard Business Review, November-December Issue. [Online]. Available at: https://hbr.org/1996/11/the- questions-every-entrepreneur-must-answer (Accessed: 23/11/17)

Burns, P. (2011), Chapter 3, Entrepreneurship and Small Business. 3rd Ed. Basingstoke: Palgrave MacMillan.

Skripak, S. J. (2016), “Chapter 6: Entrepreneurship: Starting a Business”. [Online]. Available at:

https://vtechworks.lib.vt.edu/bitstream/handle/10919/70961/Chapter%206%20Entrepre neurship%20-%20Starting%20a%20Business.pdf?sequence=11&isAllowed=y (Accessed: 22/11/17)

Starting A Business - Hurworth School [Online]. Available at:

www.hurworthschool.org.uk/.../Unit%201%20-%20Starting%20a%20Business.pp (Accessed: 22/11/17)

The Startups Team (2017), “10 reasons to start a business. [Online]. Available at: https://startups.co.uk/10-reasons-to-start-a-business/ (Accessed: 23/11/17)

References

https://hbr.org/1996/11/the-questions-every-entrepreneur-must-answer

https://vtechworks.lib.vt.edu/bitstream/handle/10919/70961/Chapter 6 Entrepreneurship - Starting a Business.pdf?sequence=11&isAllowed=y

http://www.hurworthschool.org.uk/download/misc/Unit 1 - Starting a Business.ppt

http://www.hurworthschool.org.uk/.../Unit 1 - Starting a Business.pp

https://startups.co.uk/10-reasons-to-start-a-business/

VT-F4/Entrepreneurship and Small Business Management/Support/ESBM - Lecture 11.pdf

Assignment Workshop

Lecture 11: Review student progress on assignment writing.

Prepared by: Dr Gilbert Zvobgo

ICTM

ENTREPRENEURSHIP AND SMALL

BUSINESS MANAGEMENT

ESBM

Session Format

 Brief tutor-led overview of assessment requirements.

 Brief overview of submission requirements

 Draft Turnitin

 Header and Footer

 Assignment Cover

 Submission to the relevant class

 Open question and answer activity to address general

questions and concerns.

 Review of academic requirements and submission format.

 Individual student queries and questions.

ESBM

Brief tutor-led overview of assessment requirements

LO1 Explore and illustrate the range of venture types that might be

considered entrepreneurial.

 Examine different types of entrepreneurial ventures and explain how they

relate to the typology of entrepreneurship. [P1]

 To achieve M1, you should investigate a diverse range of entrepreneurial

ventures to demonstrate an understanding of entrepreneurship in both

public and corporate sector.

 To achieve D1 you should critically examine the scope, development and

growth of entrepreneurial ventures.

 Explore the similarities and differences between entrepreneurial ventures.

[P2]

ESBM

Brief tutor-led overview of assessment requirements

LO2 Assess the impact of small business on the economy.

 Interpret and assess relevant data and statistics to illustrate how micro

and small business impact on the economy [P3].

 To achieve M2, you should evaluate the differences small, medium and

large businesses make to the economy, applying relevant data and

statistics.

 To achieve D2, you should critically examine how small businesses have an

impact on different levels of the economy (local, regional and national) and

an international context.

 Explain the importance of small businesses and business starts-ups to the

growth of social economy. [P4].

ESBM

Brief tutor-led overview of assessment requirements

LO3 Determine and assess the key aspects of an entrepreneurial

mindset.

 Determine the characteristic traits and skills of successful entrepreneurs

that differentiate them from other business managers. [P5]

 To achieve M3, you should explore and examine different lines of argument

relating to entrepreneurial characteristics.

 To achieve D3, you should analyse the characteristic traits, skills and

motivational drivers of successful entrepreneurs, supported by specific

examples.

 Assess how aspects of the entrepreneurial aspects personality reflect

entrepreneurial motivation and mindset. [P6]

ESBM

Brief tutor-led overview of assessment requirements

LO4 Examine the different environments that foster or hinder

entrepreneurship.

 Examine, using relevant examples, how background and experience can

hinder or foster entrepreneurship. [P7]

 To achieve M4, you should analyse the link between entrepreneurial

characteristics and the influence of personal background and experience to

specific successful entrepreneurs.

 To achieve D4, you should critically evaluate how background and

experience influences entrepreneurs, both positively and negatively, by

comparing and contrasting examples.

ESBM

Brief overview of submission requirements

 Draft Turnitin

 Header and Footer

 Assignment Cover

 Submission to the relevant class

ESBM

Open question and answer activity to address general questions

and concerns.

ESBM

Review of academic requirements and submission format.

Preparation guidelines of the Coursework Document

 All coursework must be word processed.

 Document margins must not be more than 2.54 cm (1 inch) or less than

1.9cm (3/4 inch).

 The assignment should be in a formal business style using single spacing

and font size 12.

 Standard and commonly used type face such as Arial should be used.

 All figures, graphs and tables must be numbered.

 Material taken from external sources must be properly referenced using the

Harvard referencing system.

 You should provide references using the Harvard referencing system.

 Do not use Wikipedia as a reference.

ESBM

Review of academic requirements and submission format.

Submission

 The student must check their assignments on ICON VLE with plagiarism

software Turnitin to make sure the similarity index for their assignment

stays within the College approved level. A student can check the similarity

index of their assignment three times in the Draft Assignment submission

point located in the home page of the ICON VLE.

 All Final coursework must be submitted to the Final submission point into

the Unit (not to the Tutor). The student would be allowed to submit only

once and that is the final submission.

 Any computer files generated such as program code (software), graphic

files that form part of the coursework must be submitted as an attachment

to the assignment with all documentation.

 Any portfolio for a Unit must be submitted as a hardcopy to examination

office.

 The student must attach the tutor’s feedback from the First submission in

between the cover page and the answer in the case of Resubmission.

ESBM

Individual student queries and questions.

VT-F4/Entrepreneurship and Small Business Management/Support/ESBM - Lecture 2.pdf

Lecture 2: Scoping and Defining Entrepreneurship

Prepared by: Dr Gilbert Zvobgo

ICTM

ENTREPRENEURSHIP AND SMALL

BUSINESS MANAGEMENT

ESBM

 By the end of the session should be able to understand:

 What entrepreneurship is

What is special about small businesses

How one starts a new venture

 Resources needed to support entrepreneurship and business development

 The differences among social entrepreneurs, intrapreneurs and owner

managers

What is entrepreneurship?

Management - Chapter 6 3

 Entrepreneurship

 Strategic thinking and risk-taking behavior that results in the creation of new opportunities for individuals and/or organisations.

 Entrepreneurs

 Risk-taking individuals who take actions to pursue opportunities and situations others may fail to recognise or may view as problems or threats.

What is entrepreneurship?

Management - Chapter 6 4

 Entrepreneurs are …

 Founders of businesses that become large-scale enterprises.

 People who:

 Buy a local franchise outlet

 Open a small retail shop

 Operate a self-employed service business

 People who introduce a new product or operational change in an existing organisation.

What is entrepreneurship?

Management - Chapter 6 5

 Typical characteristics of entrepreneurs:

 Internal locus of control

 High energy level

 High need for achievement

 Tolerance for ambiguity

 Self-confidence

 Passion and action-orientation

 Self-reliance and desire for independence

 Flexibility

Figure 1: Personal traits and characteristics of entrepreneurs.

What is entrepreneurship?

Management - Chapter 6 7

Typical entrepreneurial backgrounds and experiences:  Parents were entrepreneurs or self-employed.

 Families encouraged responsibility, initiative, and independence.

 Have tried more than one business venture.

 Have relevant personal or career experience.

 Become entrepreneurs between 22 and 45 years of age.

 Have strong interests in creative production and enterprise control.

 Seek independence and sense of mastery.

What is entrepreneurship?

Management - Chapter 6 8

 Reasons for women becoming entrepreneurs:

 Being motivated by a new idea.

 Doing for themselves what they were already doing

for other employers.

 Seeking a pathway to opportunity.

What is entrepreneurship?

Management - Chapter 6 9

Common myths about entrepreneurs:

 Entrepreneurs are born, not made.

 Entrepreneurs are gamblers.

 Money is the key to entrepreneurial success.

 You have to be young to be an entrepreneur.

 You must have a degree in business to be an entrepreneur.

What is special about small businesses?

Management - Chapter 6 10

 Small businesses …

 Ones with 100 or fewer employees.

 Independently owned and operated.

 50 percent of the private labour force works in small

businesses.

 Are established by:

 Starting a new business.

 Buying an existing business.

 Buying and running a franchise.

What is special about small businesses?

Management - Chapter 6 11

 Entrepreneurship and the Internet …

 The Internet offers numerous entrepreneurial opportunities.

 Online buying and selling

 Dot-com businesses

 Businesses are limited only by personal creativity.

 Business-to-Business (B2B) ventures are possible.

What is special about small businesses?

Management - Chapter 6 12

 International business entrepreneurship …

 Provides strategic opportunities for small businesses.

 Creates exporting and importing opportunities.

 Supported through appropriate governmental and non-

governmental organisations.

What is special about small businesses?

Management - Chapter 6 13

 Family businesses …

 Owned and financially controlled by family

members.

 Largest percentage of businesses worldwide.

 Can provide an ideal business situation.

 Problems unique to family businesses:

 Family business feud

 Succession problem

What is special about small businesses?

Management - Chapter 6 14

 Reasons for small business failures:

 Lack of experience

 Lack of expertise

 Lack of strategy and strategic leadership

 Poor financial control

 Growing too fast

 Insufficient commitment

 Ethical failure

Figure 2 Eight reasons why many small businesses fail.

Management - Chapter 6 15

How does one start a new venture?

Management - Chapter 6 16

 Important issues in new venture creation:

 Does the entrepreneur have good ideas and the courage to give

them a chance?

 Is the entrepreneur prepared to meet and master the test of

strategy and competitive advantage?

 Can the entrepreneur identify a market niche that is being missed

by other established firms?

 Can the entrepreneur identify a new market that has not yet been

discovered by existing firms?

 Can the entrepreneur generate first-mover advantage by

exploiting a niche or entering a market before competitors?

How does one start a new venture?

Management - Chapter 6 17

 Questions that keep a new venture focused on its customers:

 Who is your customer?

 How will you reach key customer market segments?

 What determines customer choices to buy or not buy your

product/service?

 Why is your product/service a compelling choice for the

customer?

 How will you price your product/service for the customer?

 How much does it cost to make and deliver your

product/service?

 How much does it cost to attract a customer?

 How much does it cost to support and retain a customer?

Life cycle of entrepreneurial firms

Management - Chapter 6 18

 Life cycle of entrepreneurial firms

 Birth stage

 Breakthrough stage

 Maturity stage

 Each stage poses different managerial challenges

and requires different managerial competencies.

Figure 3 Stages in the life cycle of an entrepreneurial firm.

Management - Chapter 6 19

How does one start a new venture?

Management - Chapter 6 20

 Basic items that should be included in a business plan:

 Executive summary

 Industry analysis

 Company description

 Product and services description

 Market description

 Marketing strategy

 Operations description

 Staffing description

 Financial projection

 Capital needs

 Milestones

How does one start a new venture?

Management - Chapter 6 21

 Forms of legal ownership

 Sole proprietorship

 Partnership

 General partnership

 Limited partnership

 Limited liability partnership

 Corporation

 Limited liability corporation (LLC)

How does one start a new venture?

Management - Chapter 6 22

 Financing the new venture

 Sources of outside financing

 Debt financing

 Equity financing

 Equity financing alternatives

 Venture capitalists

 Initial public offerings

 Angel investors

What resources support entrepreneurship and

business development?

Management - Chapter 6 23

 Promoting entrepreneurship in large enterprises

 Intrapreneurship

 Skunkworks (small group of people who work on a project

in an unconventional way - to develop something quickly with

minimal management constraints)

 Business incubators (companies that help new and start-up

companies to develop by providing services such as management

training or office space).

 Small Business Development Centres

What resources support entrepreneurship and

business development?

Management - Chapter 6 24

 2. Entrepreneurs—Challenging the Unknown • Entrepreneurs • Recognize opportunities where others see chaos or confusion • Are aggressive catalysts for change within the marketplace • Challenge the unknown and continuously create the future

 3. Entrepreneurs versus Small Business Owners: A Distinction • Small Businesses Owners • Manage their businesses by expecting stable sales, profits, and growth • Entrepreneurs • Focus their efforts on innovation, profitability and sustainable growth

 4. Entrepreneurship: A Mindset • Entrepreneurship is more than the mere creation of business: • Seeking opportunities • Taking risks beyond security • Having the tenacity to push an idea through to reality • Entrepreneurship is an integrated concept that permeates an individual’s business in an innovative manner.

 5. The Evolution of Entrepreneurship • Entrepreneur is derived from the French entreprendre, meaning “to undertake.” • First coined by Richard Cantillon (1755) • The entrepreneur is one who undertakes to organize, manage, and assume the risks of a business. • Although no single definition of entrepreneur exists and no one profile can represent today’s entrepreneur, research is providing an increasingly sharper focus on the subject. In Malaysia, the term “usahawan” is used to mean entrepreneur.

https://image.slidesharecdn.com/unit1-140813052152-phpapp01/95/entrepreneurship-and-small-business-management-2-638.jpg?cb=1407907963

https://image.slidesharecdn.com/unit1-140813052152-phpapp01/95/entrepreneurship-and-small-business-management-3-638.jpg?cb=1407907963

https://image.slidesharecdn.com/unit1-140813052152-phpapp01/95/entrepreneurship-and-small-business-management-4-638.jpg?cb=1407907963

https://image.slidesharecdn.com/unit1-140813052152-phpapp01/95/entrepreneurship-and-small-business-management-5-638.jpg?cb=1407907963

What resources support entrepreneurship and

business development?

Management - Chapter 6 25

 Innovation • “Innovation is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth” • - Peter F. Drucker • Process of doing something new.

 23. Process of Innovation Commercial Application Implementat ion Resource Planning Analytical Planning Transformation of creative ideas into useful application

 24. Invention • Some new creations, which did not have any existence before. • Creation of new product, • Technology, • Theory, • Formula etc. Invention Development of new ideas Results in new knowledge creation Innovation The conversion of an idea or resources into real life application Results in new product, process or services

 Entrepreneurs versus Small Business Owners: A Distinction • Small Businesses

Owners • Manage their businesses by expecting stable sales, profits, and growth •

Entrepreneurs • Focus their efforts on innovation, profitability and sustainable

growth

https://image.slidesharecdn.com/unit1-140813052152-phpapp01/95/entrepreneurship-and-small-business-management-23-638.jpg?cb=1407907963

https://image.slidesharecdn.com/unit1-140813052152-phpapp01/95/entrepreneurship-and-small-business-management-24-638.jpg?cb=1407907963

References

Management - Chapter 6 26

Entrepreneurship and Small Business Management Dr. Rahul Pratap

Singh Kaurav https://www.slideshare.net/RahulKaurav/unit-

1-37945798

Reproduction or translation of this work beyond that permitted by Access

for further information should be addressed to the Permissions Department,

John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for

his or her own use only and not for distribution or resale. The author and the

publisher assume no responsibility for errors, omissions, or damages caused

by the use of these programs or from the use of the information contained

herein.

VT-F4/Entrepreneurship and Small Business Management/Support/ESBM - Lecture 3.pdf

LO1: Explore and illustrate the range of venture

types that might be considered entrepreneurial

Lecture 3: The typology of entrepreneurship and social

enterprise

Prepared by: Dr Gilbert Zvobgo

ICTM

ENTREPRENEURSHIP AND SMALL

BUSINESS MANAGEMENT

ESBM

 By the end of the session should be able to understand:

 What entrepreneurship is

What is special about small businesses

How one starts a new venture

Resources needed to support entrepreneurship and business

development

 The differences among social entrepreneurs, intrapreneurs and

owner managers

What is entrepreneurship?

Management - Chapter 6 3

 Deciding what your motivations are will direct

you toward what type of business fits you best.

 Types:

1. Lifestyle Venture

2. Smaller Profit Venture

3. High Growth Venture

What is entrepreneurship?

Management - Chapter 6 4

Lifestyle Firms

 Small company that provides its owner independence, autonomy, and control (exists to fund lifestyle of owner).

 Is often run out of household

 Provides flexibility (hours, meeting places, attire)

 Aligns your personal interests and hobbies with your desire to make a profit.

 Exists primarily to support the owners and usually has little growth opportunity.

 For the most part, these firms will expand capital primarily through debt financing

What is entrepreneurship?

Management - Chapter 6 5

Smaller Profit Venture

 Small company not concentrated on pushing the

envelope and growing inordinately large.

 Making millions of dollars not important.

 Content with making a decent living.

What is entrepreneurship?

Management - Chapter 6 6

High Growth Ventures

 Goal is maximum profit and growth.

 Concentrated on pushing envelope and growing as large as

possible.

 Focus on innovation

 Are typically much more attractive to investors than lifestyle

companies.

 Lifestyle businesses represent the majority of firms from a

quantity perspective - growth businesses generates not only

growth within the companies themselves, but also spawns

creation of other products and services as the overall

industry grows

Entrepreneurship: Corporate Intra-preneurs

Management - Chapter 6 7

 Intrapreneur = someone in an existing organisation who

turns new ideas into profitable realities.

 Not every employee has the ability to become a successful

intrapreneur. It takes well-developed strategic action,

teamwork and communication abilities.

 Top management must allow intrapreneurship to flourish in

the day-to-day operations of the business ( “skunkworks”)

 Skunkworks = Islands of intrapreneurial activity within an

organization.

 REMEMBER: On the island, formal rules and policies of

the organization often DO NOT apply.

Entrepreneurship: Corporate Intra-preneurs

Management - Chapter 6 8

Organisations that redirect themselves through innovation

have the following characteristics:

 Commitment from senior management

 Flexible organisation design

 Autonomy of the venture team

 Competent/Talented people with entrepreneurial attitudes

 Incentives and rewards for risk taking

 Appropriately designed control system

Entrepreneurship in a corporate or public sector context

Management - Chapter 6 9

Attributes of the public sector which serve as "innovation inhibitors.“

 Mission and purpose of the public sector imposed from outside

through political forces while mission of business private sector

originates from free market economic signals.

 Incentives common in the private sector such as profit sharing are not

available to employees in the public sector.

 Public sector is not profit-oriented as in the private sector. Businesses

failing to achieve their profit goals go bankrupt

 Public sector performance is influenced by employee work ethic,

professional competence, and the amount of politically provided

resources.

 While each business in the private sector is essentially free to

establish its own culture and management system, this is more

difficult with public service agencies

 The traditional rule-bound, complicated, and inflexible government

personnel system is not conducive to innovation in the public sector

(Tosterud,n.d)

Entrepreneurship in a corporate or public sector context

Management - Chapter 6 10

 Public institutions, like private companies desiring to Creating an

innovation culture in Corporate or Public Sector Context

 Finding and hiring workers who demonstrate entrepreneurial

behaviours.

 An entrepreneurial employee track – having an entrepreneurial

“training track”

 Monetary compensation – develop a compensation scheme which

provides a better "connect" between monetary rewards and job

performance

 Communicating the agency's mission and vision - the entrepreneurial

public employee should "buy into" the mission and vision and clearly

see their role in contributing to the accomplishment of that mission

and vision

 Obsolescence mentality - skills of workforce will become obsolete.

Dynamic" and challenging work environment requires a

comprehensive and easily accessible continuing education

programme

 A fun, creative, and safe place to work and take risks

The role of SEMs in the UK economy

England

 88% of all business enterprises in the UK are based

in England, with 33% concentrated in London and the

South East.

 London, however, has the smallest SME base in the

UK, accounting for just 45% of employment.

 The South West has the highest SME base in

England, accounting for just over 70% of employment.

(Statistical Press Release URN 04/402, Office for

National Statistics, 2004)

The role of SEMs in the UK economy

Wales

 Wales has the second highest SME base in the UK

(over 70%).

 The majority (94%) of the estimated 170,000 business

enterprises are micro enterprises, employing 31% of

all employees.

 The majority of Welsh SME businesses are in the

services sector (including retail, hospitality, transport,

and financial and business services) and in the

construction industry.

(Size Analysis of Welsh Business SDR 69/2004, Office

for National Statistics, 2004; Statistical Press Release

URN 04/402, Office for National Statistics, 2004)

The role of SEMs in the UK economy

Scotland

 SMEs provide 53% of all jobs and make up 99% of all

business enterprises.

 In 2004, the turnover of small and medium-sized

enterprises was over £70million.

 The highest numbers of Scottish SMEs are engaged

in the financial and business services sector.

(Scottish Economic Statistics, Scottish Executive/ONS

IDBR, 2005)

The role of SEMs in the UK economy

Northern Ireland

 Northern Ireland has the highest SME base in the UK,

accounting for nearly 80% of employment.

 The majority of businesses enterprises are micros, which

account for 50% of all businesses.

 Small businesses account for 9.5% of all businesses and

9% of employment.

(Statistical Press Release URN 04/402, Office for National

Statistics, 2004)

Social entrepreneur

 An entrepreneur working in an enterprise with a social purpose

(a social enterprise)

 Businesses for social purposes. They come in many forms but

what they all have in common is that they trade to tackle social

problems, improve communities and people’s life changes or

environmental problems.

 Reducing landfill

 Employment for vulnerable groups

 Working with young people

 Working with people with disabilities

 Working in a particular community

 Social enterprises often need grants and investment

Definition of social entrepreneurs

Social enterprise criteria

Must have a clear social or environmental

mission set out in their governing documents

Must generate the majority of their income

through trade

Must reinvest the majority of their profit

Must be autonomous of the state;

Must be majority controlled in the interests of the

social mission

Must be accountable and transparent

Conflicts within social enterprise

 Commercial vs social objectives

 Democratic accountability

 Nature of social objectives

How difficult is it to run your own business &

maintain strong social & ethical values?

The Entertainer

Meeting the needs of today through profit without

prejudicing the future

Dimensions of sustainability :

 Economic

 Technological

 Social

 Environmental

 Value

 Learning

Sustainable entrepreneurship

What resources support entrepreneurship and

business development?

Management - Chapter 6 20

Promoting entrepreneurship in large enterprises

 Intrapreneurship

 Skunkworks

Business incubators

Small Business Development Centers

The Five C’s of the Entrepreneurship

Ecosystem

The Business

Owner

Capital Financial

Resources

Capability

Entrepreneur and Owner Skillset

Connection

Resource & Relationship

Network

Culture

The local communities’

perception and support of

entrepreneurship

Climate

Regulatory, Economic

Development & Policy

Environment

These must be coordinated and grown through a systematic collaborative system of providers.

References

Management - Chapter 6 22

Anderson Center for Entrepreneurship & Innovation (n.d) “Growth vs.

Lifestyle Businesses”. Online. Available at:

http://andersoncei.utk.edu/competitions/undergraduate-business-plan-

competition/growth-lifestyle-businesses.asp (Accessed 7/10/17)

British Council Social “Enterprise in the UK: Developing a thriving social

enterprise sector”. [Online]. Available

at:https://www.britishcouncil.org/sites/default/files/social_enterprise_in_th

e_uk_final_web_spreads.pdf

Tosterud,R. J. (n.d), “Entrepreneurship and the Public Sector”. [Online].

Available at:

http://www.jgbm.org/page/15%20%20Robert%20J.%20Tosterud.pdf

(Accessed 8/10/17)

http://andersoncei.utk.edu/competitions/undergraduate-business-plan-competition/growth-lifestyle-businesses.asp

http://www.jgbm.org/page/15 Robert J. Tosterud.pdf

VT-F4/Entrepreneurship and Small Business Management/Support/ESBM - Lecture 4.pdf

LO2: Assess the impact of small business on the

economy: Where entrepreneurship ideas come from

Lecture 4: Where entrepreneurial ideas come

Prepared by: Dr Gilbert Zvobgo

ICTM

ENTREPRENEURSHIP AND SMALL

BUSINESS MANAGEMENT

ESBM

By the end of the session should be able to understand:

 The differences between creativity and innovation

 The main sources of generating business and entrepreneurial ideas

 How businesses protect intellectual property rights

STRUGGLER

COPIERSTAGNATOR

Creativity/

Innovation

Opportunity perception/ Entrepreneurship

High

Low High

INNOVATOR

Low

Creativity & entrepreneurship

 Belief that there is only one solution

 Tendency to be practical & logical

 Tendency to think too narrowly & with too much focus, to

accept the ‘rules-of-the-game’ & the status quo & not to

question the premise on which a problem is based (can

you think ‘outside the box’?)

Blocks to innovative thinking

Creativity

Can you think outside the box?

 Belief that there is only one solution

 Tendency to be practical & logical

 Tendency to think too narrowly & with too much focus, to

accept the ‘rules-of-the-game’ & the status quo & not to

question the premise on which a problem is based (can

you think ‘outside the box’?)

 Reluctance to accept uncertainty & ambiguity

 Unwillingness to appear foolish by suggesting

unconventional approaches or ideas

 Unwillingness to take risks in looking at different

approaches or ideas

 Lack of belief that you can be creative

Blocks to innovative thinking

Abstraction: Ability to

abstract from ideas Connection: Ability to find

connections between apparently

unconnected things

Perspective:

Ability to shift

perspective on a

situation

Curiosity: Desire to change

things others see as the

norm Boldness: Confidence to

push boundaries beyond

accepted conventions

Paradox:

Ability to work with

contradictory

statements

Complexity:

Ability to

manipulate

large quantities

of information

Persistence: Drive to find

better solutions when good

ones already exist

You: 69.48Typical: 62.48

www.testmycreativity.com

AULIVE creativity test

http://www.testmycreativity.com/

‘[Good ideas] come from crowds, from networks… We

have this clichéd idea of the lone genius having the

eureka moment ... in fact … there is this quiet

collaborative process that goes on, either in people

building on other people’s ideas, but also in borrowing

ideas, or tools or approaches to problems … The ultimate

idea comes from this remixing of various different

components … for the most part it’s a slower & more

networked process’

Connectivity

1. Networking - finding &

testing ideas

2. Observing others -

particularly potential

customers

3. Questioning common

wisdom – asking why? &

why not?

4. Experimenting - trying

things out

Dyer et al., 2009

Discovery skills

5. Associating

seemingly

unrelated

things -

connectivity

IN N

O V

A T

IO N

1. What are the barriers to experimentation?

2. How do you apply the principle to a start-up?

Google

Curiosity Connectivity

Creativity & innovation

Networking:

Exposure to diverse influences, ideas & people

Observing Experimenting

Associating

Questioning

Discovery skills

Incubation

What are the barriers to developing

discovery skills?

Great Ormond Street Hospital

Radically

new market

Radical

product/service

innovation

Existing

market

Incremental

product/service

innovation

Existing

product/service

Incrementally

new market

Disruptive

innovation

Incremental

innovation

Copy-cat Market

expansion

Market

paradigm

shift

New to the

world

industries

Start-up typologies

 Developments in technology

 Improvements in design or functionality – doing

things better

 Improvements in efficiency – doing things cheaper

 New combinations of marketing mix – e.g. ways of

getting things to markets

Incremental innovation

 New inventions & technologies

 New business models

 New markets

 Sea changes in market sentiment or behaviour

(e.g. CSR)

 Changes in laws or regulations (e.g. Health &

Safety)

 Unthinkable events arising from both the known &

unknown factors that are difficult or impossible to

plan for

Radical innovation

Generate new ideas: Do not always accept the

‘dominant logic’ of how to do things – market

conventions

Challenging conventions

 Sectoral conventions

 Performance conventions

 Customer conventions

Challenging market conventions

 Generate new ideas: Do not always accept the ‘dominant logic’ of

how to do things – market conventions

 Prototype development: Explore alternative business models that

might add value for customers

 Storytelling: Be able to articulate the concept behind the

product/service and how it creates value for customers

 Customer insights: Develop a deep understanding of customer

needs, even if they are not always derived directly from the customers

themselves

 Scenario development: Building on customer insights & future

development in the competitive environment

 Visual thinking: Draw or sketch out the business model & use Post-it

notes to explain it

Challenging conventions

How difficult is it to change the way you

think about a product or market?

Swatch

 The unexpected

 Incongruity

 Inadequacy in underlying processes

 Changes in industry or market structure

 Demographic changes

 Changes in perception, mood & meaning

 New knowledge

Opportunity - symptoms of change

Drucker, 1985

 Brainstorming

 PESTEL analysis

 Futures thinking

 Mind maps

Political

Economic

Social

Technological

Economic

Legal

Techniques for exploring change

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=XQid2vPAC945zM&tbnid=SCNxIxxciJCszM:&ved=0CAUQjRw&url=http://www.mindtools.com/pages/article/newISS_01.htm&ei=kpRJUcH5HKmw0QWc2YCYBw&bvm=bv.44011176,d.d2k&psig=AFQjCNHrK4E51nvYeEgMEBzqHbkI5sZxeQ&ust=1363862873679942

Brainstorm changes using PESTEL analysis

Develop a vision of the future after that change using futures thinking

Brainstorm commercial opportunities coming out of identified change

Develop & refine opportunity using mind maps

Business idea

Spotting an opportunity out of change

Exploring existing products

Can you think inside the box?

Subtraction Subtracting product

features not valued by some market segments

Division Dividing out

the functions of a product

Multiplication Duplicating some product feature or

characteristic

Task unification

Bringing together

multiple tasks into one product

Attribute dependency

Correlating two or more apparently unrelated

attributes

 Thinking inside the box

 Analogy

 Attribute analysis

Exploring existing products

List attributes of product/service

Brainstorm how these attributes can be improved

Develop & refine opportunity using mind maps

Business idea

Spotting an opportunity out of inadequate existing products

 Thinking inside the box

 Analogy

 Attribute analysis

 Gap analysis

 Perceptual mapping

 Non-metric mapping

 Repertory grid

Exploring existing products

List attributes of product/service

Brainstorm the dimensions onto which these attributes might be mapped

Identify the gaps in the mapping

Business idea

Spotting an opportunity through gap analysis

Create opportunity

Product/market innovation

Incremental Radical

Spot opportunity  Change: Technology, law &

regulation, market &

industry structures,

demographics, culture,

moods & fashions

 Product deficiencies

 Unmet demand

 Product/market innovation

Market need

Business ideas

Butter Stick

Teleport

Practicality

http://www.google.co.uk/url?sa=i&rct=j&q=teleporte&source=images&cd=&cad=rja&docid=_bY7uwLexIoBWM&tbnid=6Joj-6rq1_C3eM:&ved=0CAUQjRw&url=http://jovemnerd.ig.com.br/especiais/filmes/tudo-o-que-voce-sempre-quis-saber-sobre-star-trek/&ei=1BKmUbDGAeS40QXrioGwCg&bvm=bv.47008514,d.d2k&psig=AFQjCNE8ySu3USGSxylMUFRLEqaP7ckXPw&ust=1369924682353734

1. Analyse opportunities, internally & externally.

Innovate for NOW - timing is everything

2. Innovation is conceptual & perceptual, so look

at financial implications & analyse whether it

meets the opportunity

3. Keep innovation simple - KISS!

4. Start small, take an incremental approach

5. Think long-term - aim at market leadership &

dominate the competition as soon as possible

Peter Drucker

Innovation

1. Identify market need/gap

2. No or few competitors

3. Growing market

4. Identify customers and a viable business model

5. Low funding requirements

6. Sustainable

7. High profit margins

8. Effective communications strategy

9. Not easily copied

10. Identifiable risks that can be monitored and mitigated

11. Low fixed costs

12. Controllable

13. Management skills that can be leveraged

14. Scalable

15. Financeable

15 characteristics of a good business idea

What is Intellectual Property?

Intellectual Property (IP) is a means of protecting the

results of innovation and creative activity

• IP rights are negative rights.

• IP rights are territorial.

• Intangible assets which can be bought/sold/licensed.

Intellectual Property – an overview

• Patents

• Trade marks

• Designs

• Copyright

• Know-how

• How can I protect my own IP?

• How can I avoid infringing the rights of others?

Why protect IP?

 Stop others using what you’ve created (brand, product

or process) without your permission

• Exclusivity can demand higher sales prices

• Generate income by licensing

• Attractive to investors

• Possible to arrange for IP valuation and borrowing

against IP rights

IP in Practice

Patents

Trademarks

Designs

Know-how

Patents  A right protecting an invention

 The deal – a patent affords a territorial privilege or

monopoly for a limited period – in exchange for

letting the world use your invention after monopoly

expires

 Maximum duration of 20 years in most countries

Trade Marks “A badge of origin”

Anything which can be represented graphically e.g. Words (including

personal names), colours, slogan, logo, packaging, product shape,

holograms, smells, sounds…

But – hard to protect descriptive or generic marks and, for example,

invented words

e.g. COCA COLA, LEGO, KODAK etc have broader protection than

more descriptive

Words

• Territorial - a registration in one country or region does not

automatically give owner rights in another

• Once registered protection can be renewed indefinitely!

Trade Marks

https://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&docid=PenEGuWa5_36lM&tbnid=uB_M11pZBW8q_M:&ved=0CAcQjRw&url=https%3A%2F%2Fwww.apple.com%2Fretail%2Fsummitmall%2F&ei=fwA9VNWEEqXB7Abw2oG4BQ&bvm=bv.77161500,d.ZGU&psig=AFQjCNFteloN8lnXF0iUHdvSJJVGzTHb5g&ust=1413370730289509

How to apply for registration

file

application

examination

publication registration

Registration process in the UK takes ~ 4 months

Registration process in EU take ~ 6 months

file international

applications within 6

months

Designs

Protect the visual appearance of a product

e.g. lines, contours, colours, shape, texture or materials of product or its ornamentation

Registered and unregistered (lasts for a shorter period and hurdle to

catch infringers may be higher for unregistered designs)

Can cover whole or part of a product

Protects against competitor selling a product that is visually the same

Criteria  Your design needs to:

 Be new (therefore searching is important for this and to prevent infringing)

 Not be offensive

 Not make use of protected emblems or flags (e.g. the Olympic rings or Royal Emblems)

 Not be an invention or how a product works – if so this would require a patent instead

Registered designs

Requires formal registration with the relevant national (or European) office

Must be filed within 12 months of public disclosure

Once registered protection can be renewed every 5 years, up to a total of 25 years

(in the UK and in E.U.)

Protects against competitor selling a product that “does not produce a different overall

impression on the informed user”

How to apply for registration

file

application

examination

registration &

publication

Registration process in the UK takes ~ 1-3 months

file international

applications within 6

months

literary, and musical

works…irrespective of quality” – no registration is required but records

showing creation and ownership are important

• Often described as “the expression of an idea” – e.g.

Pictures/photographs, films

Books, articles, guides, instructions

Sheet music, lyrics

Software source code, graphical user interface etc.

 Arises automatically, no need to register and can last up

to 70 years after

 death of creator

 Need to show who, when and how created and prove

 ownership!

 Infringement = unauthorised reproduction of whole or

“substantial part” of

 the work in question

 Have to show copying has taken place – so if created

independently may

 not be infringement

 Be careful when copying things from the internet!

IP Ownership Trade Marks – The Applicant is the owner.

Patents – Inventor owns the IP, unless the invention was made as

part of his/her job, in which case his/her employer will own the

invention.

Designs – The designer is the owner, unless the design was made as

part of his/her job, in which case his/her employer will own the

invention. A commissioned design is owned by the designer and not

the commissioner (unless a contract states otherwise)

in the course of employment.

Points to Consider

1. Where do you need IP – consider markets, competitors,

manufacture

2. What do you need to protect – an invention, features of

appearance, your brand

3. Who is the owner?

4. Is your IP new?

5. Check that you do not infringe the rights of others

6. Keep records

7. Keep confidential until filed!

8. Keep IP considerations in mind as part of commercial

strategy and day to day practice

9. Ask questions about IP as early as possible

References

Management - Chapter 6 47

Burns, P. (2011), Entrepreneurship and Small Business. 3rd Ed.

Basingstoke: Palgrave MacMillan.

Wood, A & Carney, L (n.d) “How to protect your Intellectual Property”

[Online] Available at:

https://birmingham.instructure.com/courses/14378/files/2838209/downlo

ad?wrap=1

https://birmingham.instructure.com/courses/14378/files/2838209/download?wrap=1

VT-F4/Entrepreneurship and Small Business Management/Support/ESBM - Lecture 5.pdf

LO2: Assess the impact of small business on the

economy: Where entrepreneurship ideas come from

Lecture 5: The contribution of small firms to the economy at

local, regional and national levels

Prepared by: Dr Gilbert Zvobgo

ICTM

ENTREPRENEURSHIP AND SMALL

BUSINESS MANAGEMENT

ESBM

By the end of the session should be able to understand:

 The importance of SMEs in economic development

 The challenges faced by SMEs

 Accelerate economic growth through the growth of their output

contributions to gross domestic product (GDP).

 Source for most new jobs account for 60%-70% of employment in most

countries.

 As larger firms downsize and outsource more functions, weight of

SMEs in economy is increasing.

 Productivity growth – and consequently economic growth –strongly

influenced by the competition inherent in birth and death, entry and exit

of smaller firms.

Contribution of SMEs to the Economy

 Source of innovation in the economy - almost 90 per cent of the

businesses engaging in innovative activity are small businesses

 Reduce poverty through employment creation and income generation

effects of their generated output growth.

 SMEs are an important source of export revenues in some developing

economies.

Contribution of SMEs to the Economy

Busines

s 1000s

Employment

1000s

Turnover

£ billions

Business

Employment

Turnover

SMEs (0-

250)

5,490 15,734 1,825 99.9% 60% 47%

Micro (0-

5,254 8,513 718 96% 32% 19%

Small

(10-49)

204 3,970 561 4% 15% 15%

Medium

(50-249)

33 3,251 546 1% 12% 14%

Large

(250+)

7 10,470 2,036 0.1% 40% 53%

Business by Size – UK 2016

Source: Rhodes (2016)

 There were 5.4 million SMEs in the UK in 2016, which was

over 99% of all businesses.

 Micro-businesses - 5.3 million microbusinesses in the UK

in 2016, accounting for 96% of all businesses, only

accounts for 32% of employment and 19% of turnover.

 Large businesses, with more than 250 employees,

accounted for 0.1% of businesses but 40% of employment

and 53% of turnover

Business by Size – UK 2016

 Most SME jobs are in the and employment in OECD

countries service sector, which now accounts for two thirds

of economic activity

 Wholesale and retail trade, the hotel and restaurant

business, communications and business services, and

construction.

 Manufacturing firms in many OECD countries

 Technology-intensive industries such as information and

communications technology (ICT) and biotechnology

Sectors in which SMEs are found

Regional Variations

Research study by Urwin and Buscha (2012):  Merseyside and Wales - micro-businesses are even more important

than elsewhere in the UK as a route to employment for the unemployed and nonparticipants, when compared to larger firms

 Employment in smaller firms to be significantly more important in

areas such as the rest of Yorkshire and Humberside; East Anglia; the South West; the rest of the West Midlands; Wales; Strathclyde; the rest of Scotland and Northern Ireland.

 In areas such as London and the West Midlands, employment in

larger firms significantly more important than in SMEs

 There has been significant falls in the number of businesses, employment and turnover in Scotland since 2008 (Scottish Trades Union Congress, 2012)

London’s Business Landscape

 At the start of 2012, London had 805,085 SMEs (0-249 employees).  SMEs make up 99.8% of all London’s private sector businesses.

 Employment in SMEs represents 49.8% of all London employment

(2.3 million).

 SMEs make up 47.7% of business turnover (excluding financial & insurance industry), equal to £430 billion.

London’s Business Landscape

https://www.london.gov.uk/moderngov/documents/s22201/SMEs% 20in%20Londons%20Economy.pdf

Challenges of SMEs  An important policy priority in developing countries is to reform the

policies that divide the informal and formal sectors, so as to enable the

poor to participate in markets and to engage in higher value added

business activities

 Eliminating factors that discourage informal enterprises from entering

the formal SME sector would also bring about gains in economic

terms

 To tap into the potential of SMEs for development and poverty

reduction, the government, development partners and SMEs

themselves need to address a number of challenges:

• The creation of new and innovative firms (to improve technology

and thus improve efficiency and technology)

• SMEs have to become more competitive and productive at their

home base (by willing to invest)

Challenges of SMEs  Size – Becomes a competitive disadvantage

• Difficulties in recruiting qualified staff and skilled workers are also

considered a major barrier to the fast growth of small business.

 Turnover – Limited and may affect growth of the SME,

 Profit – Maybe used to fund the lifestyle of the owners thereby restring

growth

 Rate of growth

• Slow due to competition

• Poor financial support

 Sustainability - Customer-Focused Growth Strategies

 Adaptability

• Ability to experiment

• Identify and address the uncertainties.

• Having a flexible organisational structure

• Ability to learn - organisations should seize technological and

market opportunities creatively in order to grow

Lessons for SMEs  Peace and stability is a key requirement for the development of SMEs

and for attracting foreign investment.

 SME success depends on the ability of governments to implement

sound macroeconomic policies, the capability of stakeholders to

develop conducive microeconomic business environments

 Dialogue and partnerships between the stakeholders is essential

(public sector, private sector and civil society)

 Investments in physical infrastructure and business services and the

implementation capacity of policy makers, local level administrators

and support structures determine success and integration of SMEs

into local, national, regional and global markets

 Enhancing women’s ability to participate in SME development should

be taken into account at every stage and level

References

Management - Chapter 6 14

Burns, P. (2011), Entrepreneurship and Small Business. 3rd Ed. Basingstoke: Palgrave MacMillan.

Malthouse, K (n.d), “SMEs in London’s economy”. [Online]. Available at:

https://www.london.gov.uk/moderngov/documents/s22201/SMEs%20in%20Londons%20Economy.pdf

OECD (2000), “Small and Medium-sized Enterprises: Local Strength, Global Reach”.

http://www.oecd.org/cfe/leed/1918307.pdf

OECD (2004), Promoting entrepreneurship and innovative SMEs in a global economy: Towards a more

responsible and inclusive globalisation”. [Online ]. Available at:

http://www.oecd.org/cfe/smes/31919278.pdf

Rhodes, C (2016), “Business statistics”, Briefing Paper Number 06152, 23 November, p1-15.

Urwin, P and Buscha, F (2012), “Back to Work The role of small businesses in employment and

enterprise”. [Online]. Available at:

http://www.fsb.org.uk/LegacySitePath/policy/assets/publications/fsb_2012_back_%20to_work.pdf

Scottish Trades Union Congress (2012), “The economic and employment benefits of the Small Business

Bonus Scheme”. [Online]. Available at:

http://www.stuc.org.uk/files/Document%20download/STUC%20-%20SBBS%20final%2024.1.12.pdf

http://www.oecd.org/cfe/leed/1918307.pdf

http://www.fsb.org.uk/LegacySitePath/policy/assets/publications/fsb_2012_back_ to_work.pdf

VT-F4/Entrepreneurship and Small Business Management/Support/ESBM - Lecture 6.pdf

LO2: Assess the impact of small business on the

economy: Where entrepreneurship ideas come from

Lecture 6: International aspects of entrepreneurship

Prepared by: Dr Gilbert Zvobgo

ICTM

ENTREPRENEURSHIP AND SMALL

BUSINESS MANAGEMENT

ESBM

By the end of the session should be able to understand:

 The differences between international and domestic entrepreneurship

 The benefits of international entrepreneurship

 How international differences impact upon business start-up

 Barriers of entrepreneurial entry into new business

 Factors that support international entrepreneurship

 International entrepreneurship - process of an entrepreneur conducting

business activities across national boundaries - activities necessary for

ascertaining and satisfying the needs and wants of target consumers

take place in more than one country

 International entrepreneurship competes in industries with higher

levels of international competition.

 Domestic entrepreneurship put emphasis on a production expansion

strategy - focusing on limited geographical markets and maintaining

excess capacity

 International business has become increasingly important to firms of all

sizes.

 A successful entrepreneur must be able to:

 Fully understand the difference between domestic and international

business.

 Respond accordingly thereby successfully “going global.”

International and domestic entrepreneurship

The Nature of International Entrepreneurship

 International entrepreneurship - process of an entrepreneur conducting

business activities across national boundaries.

 The activities necessary for ascertaining and satisfying the needs

and wants of target consumers take place in more than one

country.

 Example of Global Entrepreneurship…. Tech industry are strong

example of successful global entrepreneurship: Microsoft, Apple,

Google and yahoo all evolved from small start-ups with limited funding

into massive multinational corporations.

 Rapid growth of these companies is that the demand for these

technology- is universal in developed nations.

 Entrepreneurial innovative strategies:

 Inventing (Apple)

 Imitating (Samsung)

 Adapting (Nokia)

Political and legal environment : politics and laws play a critical role in

international business as well as domestic business. Be aware of political

and legal environment in the domestic as well as international market

Economic system : Need to understand economic conditions with in

country, but at international level he should be having information about

economic system of countries he running business which includes

currency rate, phase of business cycle, etc.

Cultural sensitivity : Understand cultural issues persisting in home

country and at international level he has to understand and manage

cultural diversity of customers as well as employees in company.

Technological environment : There are technological variations

persisting in various countries depending on time of implementation,

upgrade of technology, etc. which has to be analysed by entrepreneur

and accordingly plan in business operation

Kumar (2013)

Differences between international and domestic

entrepreneurship

• Profits

• Competitive pressures

• Unique product(s) or service(s)

• Excess production capacity

• Declining home-country sales

• Unique market opportunity

• Economies of scale

• Technological advantage

• Tax benefits

The benefits of international entrepreneurship

The Importance of International

Business to the Firm

 International business has become increasingly important to firms

of all sizes.

 A successful entrepreneur must be able to:

 Fully understand the difference between domestic and international

business.

 Respond accordingly thereby successfully “going global.”

International versus Domestic

Entrepreneurship

 Economics

 In a domestic business strategy, the entire country is organized under a single economic system and has the same currency.

 Creating a business strategy for a multicountry area means dealing with differences in:

 Levels of economic development.

 Currency valuations.

 Government regulations.

 Banking, venture capital, marketing, and distribution systems.

 Stage of Economic Development

 Certain factors significantly impact a firm’s ability to

successfully engage in international business such as:

 Fundamental infrastructures.

 Banking facilities and systems.

 Educational systems.

 Legal system.

 Business ethics and norms.

International versus Domestic Entrepreneurship

 A country’s legal system regulates:

 Its business practices.

 The manner in which business transactions are

executed.

 The rights and obligations involved in any business

transaction between parties.

 Critical areas for every entrepreneur:

 Property rights.

 Contract law.

 Product safety.

 Product liability.

International versus Domestic Entrepreneurship

 Language

One of the biggest problems for the

entrepreneur is finding a translator.

Significant problems can occur with careless

translation.

Care should be taken to hire a translator whose

native tongue is the target language and whose

expertise matches that of the original authors.

International versus Domestic Entrepreneurship

Figure 1 - Various Aspects of Culture

Figure 5.1

Technological Environment

 The variation and availability of technology are often

surprising, particularly to an entrepreneur from a

developed country.

 New products in a country are created based on the

conditions and infrastructure operant in that country.

Opportunity Recognition and the

Opportunity Assessment Plan

 The key to successful domestic and international

entrepreneurship is to develop an idea that has a

market with a need for the product or service idea

conceived.

 Opportunity assessment is often best accomplished

by developing an opportunity assessment plan.

 An opportunity assessment plan is not a business

plan.

Opportunity Recognition and the

Opportunity Assessment Plan

 An opportunity assessment plan has four sections:

 The first section develops the idea, analyzes

competitive products and companies, and identifies

the unique selling propositions.

 The second section focuses on the market—its

size, trends, characteristics, and growth rate.

 The third section focuses on the entrepreneur’s and

management team’s skills and experience.

 The final section develops a time line indicating the

steps to successfully launch the venture.

 International Entrepreneurship (Risks) Unstable foreign currencies

 Inefficient markets

 Insufficient infrastructures to support businesses

 Limitations on market size and growth

 Attitude of entrepreneur : when an entrepreneur has negative mindset

that foreign market is unknown to him and he might find it difficult to set

up his business in new country will prove to be a major barrier for

international trade.

 Lack of information : as entrepreneur is new entrant in international

market he is unaware about the market conditions in host country and

taste and preference of customers which may lead to issues in terms

of acceptance and locating product in market.

Barriers of entrepreneurial entry into new business

 Lack of network influences : network with established business

companies makes it easy for the entrepreneur in new market – lack of

contacts in foreign country makes it difficult for entrepreneur to get

required permission to establishing business in country.

 Financing problems : as international business involves huge risk

financial institutions may be reluctant in terms of providing required

finance to entrepreneurs.

 Tariff barriers : Duty levied by the government on imports. This raises the

price of imported goods making them less attractive to consumers and

protects makers of comparable domestic products and services.

 Non tariff barriers : Obstacles to imports other than tariffs such as testing,

certification, or bureaucratic hurdles that have effect of restricting

imports. Administrative measures imposed by domestic government to

discriminate against foreign goods to protect home goods.

Barriers of entrepreneurial entry into new business

 Technical barriers : Refers to before a country’s goods enters into

foreign market it has to go through certain test for authentication. E.g.,

food products from others will be tested for checking bacteria which

may prove to be a major barrier to home country exporting product.

 Political barrier : Unstable political scenario in a country, such as

kidnappings, bombings, violent against business and employees

 Human resource : presence of labour unions, hostile management

unions relations, strike, increase coat of labour in foreign country may

prove it difficult for entrepreneur to establish business in foreign

market.

 Cultural barriers : as entrepreneur is new entrant in host country he

may not be aware about language, education, tradition, religion, values

of citizens which will make it difficult for the entrepreneur to understand

mindset, taste and preference of customer in market (Krishnan, 2012)

Barriers of entrepreneurial entry into new business

 Language

 Economy and type of economic system

 Political and Legal environment

 Labeling requirements, advertising claims, ingredients, packaging, types

of legal ownership, pricing decisions (if Value-Added-Tax)

 Culture

 How open is the culture to entrepreneurship?

 Perceptions of local entrepreneurs

 How similar/different the culture is from your own

 Technological Environment

 Local competitors

 Opportunity perception

 Entrepreneurs motivation for expanding international

 Proximity to customers (physical and psychological closeness)

 Trade Agreements (regional and free trade)

 How long does it take to actually form/create a business

Factors that support international entrepreneurship

 Key elements favoring global start-ups

- Dispersed human resources

- International sources of venture capital

- The existence of a global demand

- The lack of a geographically protected market

- The necessity of worldwide sales to support the venture

- The potential to avoid later resistance to internationalisation

Factors that support international entrepreneurship

Available Distribution Systems  Factors to be considered in determining the distribution

system for a country:

 Overall sales potential.

 Amount and type of competition.

 Cost of the product.

 Geographical size and density.

 Investment policies.

 Exchange rates and controls.

 Level of political risk.

 Overall marketing plan.

Foreign Market Selection

 One good market selection model employs a five-step

approach:

 Develop appropriate indicators.

 Collect data and convert into comparable indicators.

 Establish an appropriate weight for each indicator.

 Analyze the data.

 Select the appropriate market from the market

rankings.

Entrepreneurial Entry Strategies  Exporting

 Indirect exporting.

 Direct exporting.

 Foreign Direct Investment - opening an office in a foreign country

 Licensing - Obtaining the right to exploit technologies by paying royalties

to external partners. Examples : Facebook integration in Iphone 5 ,

Google maps in Iphone 4S.

 Joint Venture Joint Venture : Establishing a JV(a new company) with

other partners to commercialise technologies. Example : Starting a JV

company in a new country to develop market expertise of that country

Examples : Social entrepreneur can contact a designing firm in Country A

and co-create products for developing world markets or social problems

Entrepreneurial Partnering

 Foreign entrepreneurs know the country and culture.

 They can facilitate business transactions and

update the entrepreneur on business, economic,

and political conditions.

 Good partners share the entrepreneur’s vision, are

unlikely to exploit the partnership, and can help the

entrepreneur achieve his or her goals.

References

Burns, P. (2011), Entrepreneurship and Small Business. 3rd Ed. Basingstoke: Palgrave

MacMillan.

Cullen (2007) Chapter 7, “Small Business as Multinational Companies: Overcoming

Barriers and Finding Opportunities”. [Online]. Available at:

www.cengage.com/resource_uploads/downloads/1285094948_381799.ppt

Hisrich, R., Peters, M. and Shepherd, D. (2010) “Chapter 5 Identifying and Analyzing

Domestic and International Opportunities, in Entrepreneurship”, McGraw-Hill/Irwin.

[Online]. Available at: www1.se.cuhk.edu.hk/~seem3600/lecture/Chap005.ppt

Kumar A. (2013) “International entrepreneurship”. [Online]. Available at:

https://www.slideshare.net/ajeetkr1991/international-entrepreneurship-27892779

(Accessed: 24/10/17)

Krishnan, R. A. (2012), “International entrepreneurship”. [Online]. Available at:

https://www.slideshare.net/ialwaysthinkprettythings/international-entrepreneurship-

13536119 (Accessed: 24/10/17)

Management - Chapter 6 25

https://www.slideshare.net/ajeetkr1991/international-entrepreneurship-27892779

https://www.slideshare.net/ialwaysthinkprettythings/international-entrepreneurship-13536119

VT-F4/Entrepreneurship and Small Business Management/Support/ESBM - Lecture 7.pdf

LO3: Assess the impact of small business on the

economy: Where entrepreneurship ideas come from

Lecture 7: Entrepreneurship characteristics and mindset

Prepared by: Dr Gilbert Zvobgo

ICTM

ENTREPRENEURSHIP AND SMALL

BUSINESS MANAGEMENT

ESBM

By the end of the session should be able to understand:

 Characteristics of personal characteristics of entrepreneurs

and small business owners

 The arguments relating to characteristics of entrepreneurs

such as are they born or made

 Whether characteristics of entrepreneurs can be learnt and

adapted by anyone

Attributes: traits that make up personality, which define who you are as

a person (e.g., loyalty, commitment, honesty and integrity, enthusiasm,

reliability, self-esteem, sense of humour, motivation, adaptability)

Skills: abilities and aptitudes, strengths and capabilities (e.g.,

communication, team work, problem-solving, initiative and enterprise,

self-management, planning and organising)

Characteristics/Qualities: feature that helps to distinguish a person or

thing; distinctive (e.g., commitment, goal-oriented, risk-taker, positive)

Mindset: most common characteristics associated with successful

entrepreneurs as well as the elements associated with the “dark side” of

entrepreneurship.

Entrepreneur: Person whose goal is to create or capitalize on new

economic opportunities through innovation

Entrepreneurship: Process through which entrepreneurs create and

grow enterprises

Terminology used to describe entrepreneurs

The UK's 13 most inspirational rags-to-riches

entrepreneurs

http://www.telegraph.co.uk/business/2017/07/11/uks-13-inspirational-

rags-to-riches-entrepreneurs/

Examples of UK entrepreneurship

http://www.telegraph.co.uk/business/2017/07/11/uks-13-inspirational-rags-to-riches-entrepreneurs/

Are entrepreneurs Born or Made?

 This myth is based on the mistaken belief that some people are

genetically predisposed to be entrepreneurs.

 The consensus of many studies is that no one is “born” to be

an entrepreneur; everyone has the potential to become one.

 Whether someone does or doesn’t become an entrepreneur, is a

function of the environment, life experiences, and personal

choices.

Key Personal Attributes

Entrepreneurs are Made, Not Born!

 Many of these key attributes are developed early in life, with the family environment playing an important role

 Entrepreneurs tend to have had self employed parents who tend to support and encourage independence, achievement, and responsibility

 Firstborns tend to have more entrepreneurial attributes because they receive more attention, have to forge their own way, thus creating higher self-confidence

Key Personal Attributes

1-7

Common Myths About Entrepreneurs

Although no one is “born” to be an entrepreneur, there are common

traits and characteristics of successful entrepreneurs

• Achievement motivated

• Alert to opportunities

• Creative

• Decisive

• Energetic

• Has a strong work ethic

• Is a moderate risk taker

• Is a networker

• Lengthy attention span

• Optimistic disposition

• Persuasive

• Promoter

• Resource

assembler/leverager

• Self-confident

• Self-starter

• Tenacious

• Tolerant of ambiguity

• Visionary

Personal characteristics of successful

entrepreneurs

 Creative

 Goal-oriented

 Independent

 Inquisitive

 Persistent

 Responsible

 Risk taker

 Self-confident

Skills needed by successful

entrepreneurs

 Basic business skills

 Communication skills

 Decision-making skills

 Human relations skills

 Math skills

 Problem-solving skills

 Technical skills

Need for Achievement

 A person’s desire either for excellence or to succeed in

competitive situations

 High achievers take responsibility for attaining their

goals, set moderately difficult goals, and want immediate

feedback on their performance

 Success is measured in terms of what those efforts have

accomplished

 McClelland’s research

Key Personal Attributes

Self-Confidence

 Because of the high risks involved in running an

entrepreneurial organization, having an “upbeat” and

self-confident attitude is essential

 A successful track record leads to improved self-

confidence and self-esteem

 Self-confidence enables that person to be optimistic in

representing the firm to employees and customers alike

Key Personal Attributes

Self-Sacrifice

 Essential

 Nothing worth having is free

 Success has a high price, and entrepreneurs have to be

willing to sacrifice certain things

Key Personal Attributes

Technical Proficiency

 Many entrepreneurs demonstrate strong technical

skills, typically bringing some related experience

to their business ventures

 For example, successful car dealers usually have

lots of technical knowledge about selling and

servicing automobiles before opening their

dealerships

 Especially important in the computer industry

 NOT ALWAYS NECESSARY

Key Personal Attributes

Inner Drive to Succeed Entrepreneurs are driven to succeed and expand their business. They see the bigger picture and are often very ambitious. Entrepreneurs set massive goals for themselves and stay committed to achieving them regardless of the obstacles that get in the way.

Key Personal Attributes

Strong Belief in themselves

Successful entrepreneurs have a healthy opinion of themselves and often have a strong and assertive personality. They are focused and determined to achieve their goals and believe completely in their ability to achieve them. Their self optimism can often been seen by others as flamboyance or arrogance but entrepreneurs are just too focused to spend too much time thinking about un-constructive criticism.

Key Personal Attributes

Openness to Change

If something is not working for them they simply change. Entrepreneurs know the importance of keeping on top of their industry and the only way to being number one is to evolve and change with the times. They're up to date with the latest technology or service techniques and are always ready to change if they see a new opportunity arise.

Key Personal Attributes

Competitive by Nature

Successful entrepreneurs thrive on competition. The only way to reach their goals and live up to their self imposed high standards is to compete with other successful businesses.

Key Personal Attributes

Highly Motivated and Energetic

Entrepreneurs are always on the move, full of

energy and highly motivated. They are driven to

succeed and have an abundance of self motivation.

The high standards and ambition of many

entrepreneurs demand that they have to be

motivated!

Key Personal Attributes

Accepting of Constructive Criticism and

Rejection

Innovative entrepreneurs are often at the forefront

of their industry so they hear the words "it can't be

done" quite a bit. They readjust their path if the

criticism is constructive and useful to their overall

plan, otherwise they will simply disregard the

comments as pessimism. Also, the best

entrepreneurs know that rejection and obstacles

are a part of any leading business and they deal

with them appropriately.

Key Personal Attributes

 Novice Entrepreneur - Has no prior business

ownership experiences as a business founder,

inheritor, or purchaser

 Habitual Entrepreneur - Has prior business

ownership experience

 Nascent Entrepreneur

 In the process of starting a new business

Can be either a novice or a habitual

entrepreneur

Types of Entrepreneurs

Entrepreneur & Small Business

Development

Components of Success

Networks, Mentoring and

Coaching Training & Technical Assistance

Youth Entrepreneurship Access to Capital

Supportive Environment

Access to Capital

 Investment is a “given”

for success

 Different sources fit

different needs

 Regional approach may

have new opportunities

Supportive Environment  Human, financial, and physical infrastructure

 Supportive climate that engages and celebrates

entrepreneurs

 Positive citizen and community attitudes

 Open and creative community leadership that

encourages and nurtures emerging leaders

How Nurturing is Your Region?

Conception Implementation Marketing

• Idea generation

• Project planning

• Development

• Prototype creation

• Testing

Business

Process

Regional

Capacity

• R&D centers

• Universities

• Industrial parks

• Education

• Technical

assistance

Three Phases of Innovation

Source: Tawari, Buse and Herstatt, 2007

Entrepreneur Networks

Informal gatherings of

entrepreneurs to share

experiences and information

 Facilitate, but don’t lead

 Networks should be “by

and for” entrepreneurs

Mentoring and Coaching

Connecting

entrepreneurs with the

right people at the right

time

Training & Technical Assistance

National

 Small Business Administration

 Small Business Development Centers

State/Local

 State/Local Economic Development Agencies

 Business Incubators/Accelerators

 Microbusiness Development Organizations

University

 Small Business Colleges

 ‘Cashing in on Business’

Youth Entrepreneurship

 Why it is important?

 Filling the pipeline with potential

businesses

 Creating a culture that values self-

employment

 Fostering innovation

 What can be done?

 In-school programs

 After-school programs

 4-H, Girl Scouts/Boy Scouts, etc.

Student Enterpreneurship  Partnership: Significant link between HEI experience and

business success as well as the subject studied and type of business started (HEFCE 2015)

 EDOs: Entrepreneurial Development Officers

 Co-curricular: Experiment with discipline specific approaches

 Embedded: Reinforce the Goldman Sachs Foundation (GSF) by introducing entrepreneurial context to exiting modules

 Explicit: Co-development of new modules to address enterprise, innovation and entrepreneurship in subject context

 Cross-Faculty: Providing access to centrally delivered modules

 Educator Events: Supporting the professional development of staff engaging with the agenda

 Serial Entrepreneur

Has sold or closed an original business and

establishes another new business

Continues the cycle of selling/closing and

establishing

 Portfolio Entrepreneur

Retains an original business and builds a

portfolio of additional businesses

Through inheriting, establishing, and

purchasing the businesses

Types of Entrepreneurs

Defining Social Entrepreneurship

Notable theories of Entrepreneurship define it in ways that

sit comfortably with SE

Example:

The creation of the Big Issue by John Bird demonstrates:

1.The character traits mentioned by Knight (1921), Kirzner (1979) and

Meredith and Neck (1982);

2.The opportunity focus mentioned by Schumpeter (1942) and

Timmons and Spinelli (20107)

Kraus (2014) highlights a key challenge facing SE is to

distinguish it from other types of commercial and charitable

activity.

•Enterprise Concepts and Issues © Goodfellow

Publishers 2016

When does Entrepreneurship Become Social

Entrepreneurship?

SE’s their organisations and defining characteristics

SE Firm Social Purpose/social need Social value created

John Bird The Big

Issue

Homelessness and social

exclusion

Economic and social

benefits to homeless people

Tim Smit Eden

Project

Sustainability and

environmental

conservation/education

Local wealth, employment

and educational outcomes

Jamie Oliver Fifteen Youth unemployment Economic and social

advantage, jobs and

awareness of youth issues

Mohammed

Yunus

Grameen

Bank

Alleviation of poverty

through affordable credit

Economic wealth stability,

social advantage

The difference best demonstrated through the goals and

achievements of SE’s

•Enterprise Concepts and Issues © Goodfellow

Publishers 2016

Activity 1: Which four personal characteristic reflects that

successful entrepreneurs are curious about things that

may affect their business and are not afraid to ask

questions?

Please refer to Personal characteristics of

successful entrepreneurs (Slide No 8)

Activity 2: Which four personal characteristic

reflects that successful entrepreneurs work until

the job is done?

Please refer to Personal characteristics of

successful entrepreneurs (Slide No 8)

Activity 3: Which four personal characteristic reflects that

successful entrepreneurs are constantly looking for new

ways to solve problems?

Please refer to Personal characteristics of

successful entrepreneurs (Slide No 8)

Activity 4: Which four personal characteristic reflects that

successful entrepreneurs want to make their own

decisions, set their own schedules, and can work without

supervision?

Please refer to Personal characteristics of

successful entrepreneurs (Slide No 8)

Activity 5: Which four personal characteristic reflects that

successful entrepreneurs develop a plan of action and

make decisions to help achieve that plan?

Please refer to Personal characteristics of

successful entrepreneurs (Slide No 8)

Barringer and Ireland (2015) Introduction to enterprenuership. [Online].

Available at: Introduction to Entrepreneurship - Pearson Higher Education

wps.prenhall.com/wps/media/objects/7767/7954391/PowerPoints/barring

er01.ppt

Burns, P. (2011), Entrepreneurship and Small Business. 3rd Ed.

Basingstoke: Palgrave MacMillan.

Chapter 5 Social Entrepreneurship.ppt - Goodfellow Publishers

https://www.goodfellowpublishers.com/.../fileEnt%20&%20Con%20Iss%2

0Chapter%...

Exploring Entrepreneurship in Your Region

srdc.msstate.edu/.../entrepreneurism/Entrepreneurship%20Presenation%

20for%20Flip...

Millett, C. M and Nettles, M. T (2009) The Goldman Sachs Foundation

Developing High-Potential Youth Program: A Return On Investment Study

for U.S. Programs http://files.eric.ed.gov/fulltext/ED509388.pdf

References

http://wps.prenhall.com/wps/media/objects/7767/7954391/PowerPoints/barringer01.ppt

https://www.goodfellowpublishers.com/free_files/fileEnt & Con Iss Chapter 5 Social Entrepreneurship.ppt

https://www.goodfellowpublishers.com/.../fileEnt & Con Iss Chapter%

http://files.eric.ed.gov/fulltext/ED509388.pdf

VT-F4/Entrepreneurship and Small Business Management/Support/ESBM - Lecture 8.pdf

LO3: Assess the impact of small business on the

economy: Where entrepreneurship ideas come from

Lecture 8: Skills set of the entrepreneur and personal

entrepreneurial tendency

Prepared by: Dr Gilbert Zvobgo

ICTM

ENTREPRENEURSHIP AND SMALL

BUSINESS MANAGEMENT

ESBM

By the end of the session should be able to understand:

 The types of skills that typify entrepreneurs and how these skills differentiate

from other organisation managers.

 The types of entrepreneurial characteristics and situational factors in a

personal context, including family upbringing, lifestyle, cultural differences

and personal motivation and drivers

Skills: abilities and aptitudes, strengths and capabilities (e.g.,

communication, team work, problem-solving, initiative and enterprise,

self-management, planning and organising) (These can be acquired

through learning)

Characteristics/Qualities: feature that helps to distinguish a person or

thing; distinctive (e.g., commitment, goal-oriented, risk-taker, positive)

NB: Personal characteristics and attitudes can often be hard or

impossible to change

Terminology used to describe entrepreneurs

Personal characteristics of successful

entrepreneurs (See Lecture 7)

 Creative

 Goal-oriented

 Independent

 Inquisitive

 Persistent

 Responsible

 Risk taker

 Self-confident

 Need for Achievement

 Self-Confidence

 Self-Sacrifice

 Technical Proficiency

 Inner Drive to Succeed

 Strong Belief in themselves

 Self-Confidence

 Competitive by Nature

 Inner Drive to Succeed

 Accepting of Constructive Criticism and Rejection

Key Personal Attributes (See Lecture 7)

 Unlike personal characteristics and attitudes—which can

often be hard or impossible to change—entrepreneurs can

acquire skills if they are willing to learn them

 Can also hire people to work for them who have the

needed skills

Skills that typify entrepreneurs

 Basic business skills

 Communication skills

 Decision-making skills

 Human relations skills

 Math skills

 Problem-solving skills

 Technical skills

Ability to Plan:

 Must be able to develop plans to meet goals in a variety of

areas, including finance, marketing, production, sales and

personnel (hiring and maintaining productive and satisfied

employees)

Skills that typify entrepreneurs

Basic Management Skills:

 The entrepreneur must be able to manage every

component of a business

 Even if entrepreneurs hire managers to attend to daily

details, they must understand if their business has the right

resources and if those resources are being used

effectively.

 They must ensure that all the positions in their business

are occupied by effective people

Skills that typify entrepreneurs

Communication Skills:

 Should be able to explain, discuss, sell and market their

good or service. It is important to be able to interact

effectively with your business team

 Need to be able to express themselves clearly both

verbally and in writing

 Should have strong reading comprehension skills to

understand contracts and other forms of written business

communication

Skills that typify entrepreneurs

1. Networking - finding &

testing ideas

2. Observing others -

particularly potential

customers

3. Questioning common

wisdom – asking why? &

why not?

4. Experimenting - trying

things out

Discovery skills

5. Associating

seemingly

unrelated

things -

connectivity

IN N

O V

A T

IO N

Curiosity Connectivity

Creativity & innovation

Networking:

Exposure to diverse influences, ideas & people

Observing Experimenting

Associating

Questioning

Discovery skills

Incubati on

Interpersonal Skills:

 Entrepreneurs constantly interact with people, including

customers and clients, employees, financial lenders,

investors, lawyers and accountants, to name a few. The

ability to establish and maintain positive relationships is

crucial to the success of the entrepreneur’s business

venture.

Skills that typify entrepreneurs

Leadership skills:

 Ability to develop a vision for the company and to inspire

the company employees to pursue that vision as a team

 The expression “people would rather be led than

managed” applies especially well to an entrepreneurial

venture

Skills that typify entrepreneurs

Marketing Skills:

 Business’s success or failure is very dependent on whether

the business reaches the market (its potential customers),

 Proper marketing is key to business success.

 Good marketing skills—that result in people wanting to buy

your good or service—are critical for entrepreneurial

success

 Ask questions & listen

 Be clear about how the product solves a ‘problem’ & be

able to demonstrate features

 Back up claims with evidence

 Handle objections

Skills that typify entrepreneurs

Personal Effectiveness:

 In order to handle the pressures of their busy lifestyles,

entrepreneurs must have the ability to manage time well

and to take care of personal business efficiently

 Because first impressions are so important, entrepreneurs

must also pay attention to such things as personal

appearance and telephone skills.

 Additionally, entrepreneurs benefit a great deal by being

aware of their own strengths and weaknesses

Skills that typify entrepreneurs

Team building skills:

 Because entrepreneurs usually assemble a team of skilled

people who help them achieve business success, they

must be able to effectively develop and manage the team

Skills that typify entrepreneurs

Unemployment:

 General effects of unemployment on new firm formation are not

conclusive - are two sets of factors involved: opportunity or pull factors

and necessity or push factors

 In times of favourable market conditions and high demand, individuals

(employed or unemployed) are attracted (or pulled) towards starting a

business because they can identify business and market opportunities

 Conversely, at times of high unemployment and depressed market

conditions, individuals may be pushed into starting a business because

it offers higher utility than unemployment or trying to find a job

 As a result, the impact of unemployment on starting a business is not

clear from analyses of general employment conditions and new firm

formations

Kennedy et al. (2003)

Situational factors and entrepreneurial development

Home and family commitments :

 Difficulties of balancing the demands of home and family have been

examined in relation to the careers of women.

 Women executives have been found to start their own business, move

to part-time work, or stay at home in order to cope with the competing

demands of family and work

 Being married is related to self-employment of women and women with

young children are more likely to seek self-employment

 Major reason given by women for starting a business is the greater

flexibility afforded to combine domestic demands and employment

opportunities

 For men becoming self-employed not been related to their parental

status

Kennedy, et al (2003)

Situational factors and entrepreneurial development

Access to information:

 Is an important element for the intention to establish a new business

(Gulruh et al, 2010).

 Having access to business information is the availability of information

in the environment about establishing a new venture and how to run a

business.

 Access to finance is the ability of the individual to find financial support

to establish a business since most of the investors and banks are not

willing to make investments in new ventures.

 Availability of capital is regarded as one of the common obstacles to

establish a new business by potential entrepreneurs (Gulruh et al,

2010).

 General economic climate is the availability of entrepreneurial

opportunities and risks associated with them.

Akanbi and Onyema (2011)

Situational factors and entrepreneurial development

Personal Factors (or traits, as covered in Lecture 7):

External /Situational Factors

 Cultural phenomenon

 Education

 Experience

 Family background

Situational factors and entrepreneurial development

Culture and entrepreneurial development

 Cultural factors have been discussed with regard to seeking

opportunities, valuing entrepreneurial traits, capability beliefs, taking

responsibility and entrepreneurial fear or risk aversion (Stephan, 2009).

 Seeking opportunities relates to “perceiving the possibility to create a

new business or significantly change or improve an existing business”

 Entrepreneurship provides freedom and autonomy - entrepreneurs

tailor their business activities to explicitly reflect their religious

teachings and practices (Valliere, 2007).

 Religious influence on societies affects entrepreneurship in a direct or

indirect manner and it impacts on the entrepreneurs positively by

moulding their minds to embrace entrepreneurship

Situational factors and entrepreneurial development

Family background and entrepreneurial development

Values and behaviour patterns exhibited within the family are key in

creating and nurturing support for potential entrepreneurs

The family is regarded as a focused unit within which entrepreneurial

traits are spread and encouraged especially by the young members in the

midst of the elderly ones

The traits imbibed from elementary life of an individual are carried on

and eventually they end up influencing what the person becomes in

future

People raised by parents who are entrepreneurs are very much likely

going to inherit some values from the parents and probably could become

entrepreneurs someday Abdullahi and Zainol (2016)

Situational factors and entrepreneurial development

Entrepreneurial education and entrepreneurial development

 Has been recognized as one of the most important factors that can

help young people to understand and to encourage an attitude towards

entrepreneurial initiative

 An increase of the level of entrepreneurial spirit, that is a very

important part of economic development, can be achieved through

education

 Education, and specially university one, can be used as a way to

increase and encourage entrepreneurial spirit of students.

Situational factors and entrepreneurial development

Family background and entrepreneurial development

The family develops the entrepreneurial character

The home atmosphere and values of an entrepreneurial family can

provide a great deal of nurturing and support for development of

entrepreneurial personality or character

Family background is a strong influence on individual values and

character and therefore serves as a strong source of influence whether

he would be an entrepreneur or not

Certain traits established and supported early in life will lead eventually to

entrepreneurial emergence and success

Akhter and Sumi (2014)

Situational factors and entrepreneurial development

Activities

 Groups explore different entrepreneurs and identify shared

personal common traits.

 Groups to present findings and discuss.

 Business Show Olympia 2017 Visit – 16 November

Abdullahi, A.I. and Zainol, F.A. (2016), “The Impact of Socio-cultural Business Environment

on Entrepreneurial Intention: A Conceptual Approach”. []. Available at:

http://hrmars.com/hrmars_papers/The_Impact_of_Socio-

cultural_Business_Environment_on_Entrepreneurial_Intention_A_Conceptual_Approach.pd

f (Accessed: 3/11/17).

Akanbi, Paul and Onyema .E. O (20111), “An Examination of the Influence of Some

Selected Situational Factors on Entrepreneurial Intentions in Nigeria”. [Online]. Available at:

file:///C:/Users/gilbert/Downloads/1864-2077-1-SM.pdf (Accessed: 2/11/17)

Akhter and Sumi (2014), “Socio-Cultural Factors Influencing Entrepreneurial Activities: A

Study on Bangladesh”. [Online]. Available at: http://iosrjournals.org/iosr-jbm/papers/Vol16-

issue9/Version-2/A016920110.pdf (Accessed: 3/11/17).

Burns, P. (2011), Entrepreneurship and Small Business. 3rd Ed. Basingstoke: Palgrave

MacMillan.

Chapter 3 Entrepreneurs: Key Characteristics and Skills

http://www.cefe.illinois.edu/tools/Making%20A%20Job/MAJ_Student%20Guide%20Sample.

pdf

Kennedy, J.; Drennan, J.; Renfrow, P and Watson, B. (2003) “Situational Factors and

Entrepreneurial Intentions”. [Online]. Available at:

https://www.researchgate.net/publication/43464881_Situational_Factors_and_Entrepreneuri

al_Intentions (Accessed: 2/11/17)

References

http://hrmars.com/hrmars_papers/The_Impact_of_Socio-cultural_Business_Environment_on_Entrepreneurial_Intention_A_Conceptual_Approach.pdf

file:///C:/Users/gilbert/Downloads/1864-2077-1-SM.pdf

http://iosrjournals.org/iosr-jbm/papers/Vol16-issue9/Version-2/A016920110.pdf

http://www.cefe.illinois.edu/tools/Making A Job/MAJ_Student Guide Sample.pdf

https://www.researchgate.net/publication/43464881_Situational_Factors_and_Entrepreneurial_Intentions

VT-F4/Entrepreneurship and Small Business Management/Support/ESBM - Lecture 9.pdf

LO4: Examine the different environments that foster or hinder

entrepreneurs

Lecture 9: The factors that influence the decision to start

business

Prepared by: Dr Gilbert Zvobgo

ICTM

ENTREPRENEURSHIP AND SMALL

BUSINESS MANAGEMENT

ESBM

By the end of the session should be able to understand:

The range of factors that influence the choice to start-up a

business, including personal background and education, national

culture, economic circumstances and character traits:

 Start-up Capital

 Entrepreneurial Character

 Influence on our Character Traits

 Situational Factors

 Culture and Sub-culture

 Personal Character Traits

 Situational Factors

 Economic Environment

 Social Environment

 Education and Technical Know-how

Financial capital

Social capital

Human capital

Start-up capital

Social Capital Capital - 4

• Social capital refers to “networks together with shared

norms, values and understanding that facilitate

cooperation within or among groups.” [OECD 2001]

SC capital is defined as “institutions, relationships, attitudes

and values that govern interactions among people and

contribute to economic and social development” (Grootaert &

van Bestelaer, World Bank 2002).

Social Capital

Social capital is a special type of capital resulting from

investments in building relations, institutions and networks

that produce collaborative attitudes, shared norms and

values, mutual understanding and trust – critical factors for

cooperation with other types of capital and thus contributing

to sustainable development.

Social Capital

Social Capital Focuses on:

 Who knows Whom (Social Networks)

 The Character of these Networks

 The Strength of our Ties

 Levels of Trust

 Levels of Reciprocity

Social Capital

Goal of Social Capital:

 Raising Social Capital to improve one’s standing in a community (e.g. using bridging capital to increase awareness of disability access issues in a community)

 Targeted at Specific Problem-Solving (e.g. using bonding capital to connect a job seeker with someone with similar career goals)

Entrepreneurial character

Internal locus of control

Need for achievement

Need for independence

Creativity, innovation & opportunism

Acceptance of measured risk &

uncertainty

Drive & determination

VT-F4/Innovation and Commercialisation/Module Booklet/Harvard Referencing.pdf

@ICTM PAGE 1 OF 9

ICON COLLEGE OF TECHNOLOGY AND MANAGEMENT

Harvard Referencing and Citation Guidelines

Referencing:

points or numbering)

PRINTED/PUBLISHED SOURCES

Book: by one Author

@ICTM PAGE 2 OF 9

Reference List: Barker, R., Kirk, J. and Munday, R.J. (1988) Narrative analysis. 3rd ed. Bloomington: Indiana University Press. In text reference for the above examples:

Book: Translated Author (surname), Initials. (Year) Title of book. Translated from (language) by (name of translator) Place of publication: Publisher.

Canetti, E. (2001) The voices of Marrakesh: a record of a visit. Translated from German by J.A.Underwood. San Francisco: Arion.

Multiple Books by same Author published in the same year Author (surname), Initals.(Year a/b/c) Title of book. Place: Publisher.

Soros (1966a) mentioned in his …………… According to Soros (1966b) modern literature……….

@ICTM PAGE 3 OF 9

Chapter of edited book or Secondary reference for Book and Journal

When an author refers to another author’s work and the primary source is not available

References List:

N.B. You are advised that secondary referencing should be avoided wherever possible and you should always try to find the original work

Journal Articles

Boughton, J.M. (2002) The Bretton Woods proposal: an in-depth look. Political Science Quarterly, 42(6), pp.564-78.

Foreign Journal

Author (surname), initials. (Year) Title of article [square brackets] Journal title Edition Page number Language of translation (round brackets) References List:

Caballero, D. (2003) [Policing without borders] Cambi16. 1(668) pg. 24 (in Spanish)

Report

Author (surname), initials. (Year) Title of report (underline or italicise) Publisher Report code and number (in brackets) References List:

Dearing, R. (1996) Review of qualifications for 16 – 19 year olds: quality and rigour in A Level examinations. London: SCAA Publications (COM/96/467)

@ICTM PAGE 4 OF 9

Annual Report:

Corporate author, Year of publication. Full title of annual report (if available), Place of Publication: Publisher.

Hounsome, I. W. (2001) Factors affecting the design and performance of flexible ducts in trench reinstatements. Unpublished Ph.D. thesis. Napier University.

Newspaper

Article with author

Author (surname), initials. (Year) Article Title (underline or italicise) Name of Newspaper Date (day, month, year) Page number References List:

Ward, L. (2004) Diploma plan to reward lower and higher abilities. The Guardian.18th February, p.4.

Article without an author

Title of publication Year of publication (in brackets) Title of article (underline or italicise) Day and Month Page number References List:

The Guardian (2004) HSBC CEO has come down at last. 23rd November, p. 10.

@ICTM PAGE 5 OF 9

ELECTRONIC SOURCES

Electronic Book (e-book)

Author (surname), initials. (Year) Title of book (underline or italicise) Name of e-book supplier [Online] Available at: URL (Date accessed) References List:

Articles in Electronic Journal

Haliday, J. (2004) 'Ford dealers test custom cable ads', Advertising age,75 (42), pg. 6. Proquest [Online]. Available at: http://proquest.umi.com/ (Accessed: 23 November 2004).

Article in Internet Journal Database

Lloyd, J. (2001) Blessed are the pure in heart: globalisation. New Statesman, 23 April [Online]. Available at: http://www.findarticles.com/p/articles(Accessed: 23 November 2004).

Online Material in the Internet without Date

Author (surname), initials. (Year) Title of article (underline or italicise) [Online], issue [Online] Available at: URL of web page (Date accessed).

References List:

Lloyd, J. (No Date) Blessed are the pure in heart: globalisation [Online]. Available at: http://www.findarticles.com/p/articles (Accessed: 23 November 2004).

Online Material from Internet without Author’s Name

Name of the Organisation, (Year) Title of article (underline or italicise) [Online] Available at: URL of web page (Date accessed).

References List: Marks & Spencer (2010) Marks and Spencer’s Corporate Strategy [Online]. Available at: http://www.m&s.co.uk/corporate/ (Accessed: 23 November 2004)

@ICTM PAGE 6 OF 9

Images from the Internet

Author (surname), initials. (Year) Title of image (underline or italicise) [Online image] Available at: URL (Date accessed) References List:

Marshall, J. (2000) Cathedral clock. [Online image]. Available at: http://www.westminstercathedral.org.uk/art/art_cathclock.html (Accessed 23 November 2004).

OTHER SOURCES

References List:

Sanders, B. and William, B. (2001) Java in 2 semesters. (version 2) [computer programme] Microsoft Inc. New York.

Atlas

As for books, using the title page to find the information

References List: The times atlas of the world (2004) London: Times Books.

Video / Film Title of programme/film (underline or italicise) Year of distribution (in brackets) Director [Videocassette] Place of distribution: distribution company

References List All about Eve (1977) Directed by Joseph Mankiewiez [Film]. United States: Twentieth Century Fox.

@ICTM PAGE 7 OF 9

Television programme Title of programme (underline or italicise) Year of publication (in brackets) Name of channel Date of transmission (day/month/time)

References List

Coronation Street (2004) ITV1, 25 November. 19.00hrs.

Audiocassette/CD/DVD

Author (if available, if not use title first) Year of publication (in brackets) Title of recording (underline or italicise) [Audiocassette] Place of publication: publisher. References List

Buenos: world Spanish (1995) [Audiocassette or CD or DVD]. London: BBC Books.

QUOTATIONS AND CITING INSIDE THE TEXT

You can incorporate references and quotations in a number of ways. The following examples use the Harvard Referencing.

Short quotations of a sentence or two are enclosed with quotation marks (“…”) and included in the main text.

Short Quotation

In this example, you are making a direct quote. Up to two lines can be included in the body of the text and must include the page number.

Smith (2003, p. 11) states that “Harvard referencing has to be done accurately”

@ICTM PAGE 8 OF 9

Longer Quotation

This should be indented in a separate paragraph. If part of the quotation is omitted, then this can be indicated by three dots.

Citations (inside the text)  If the originator’s name occurs naturally in the sentence, the year of publication

should follow in brackets. Example Smith (2003) found that…or, In a recent study Smith (2003) argued that…

 If the author’s name would not naturally be included in the sentence add the author’s

name and year of publication in brackets i.e. Example

Management theories have become much more diverse (Anderson, 1996)

 For publications by two authors: Example

In a recent study (Smith & Jones, 2003) it was argued that…

 If you are referring to a particular page or section of a work and the author’s name

would naturally be included in the sentence the date and page numbers follow in brackets i.e.

Example

In a recent study Smith (1996, p.26) argued that….

@ICTM PAGE 9 OF 9

 If the author’s name will not normally be included in the sentence all information is given in brackets i.e.

Example

In a recent study (Smith, 1996, p.26) it was argued that…

 In cases where the name of the author cannot be identified, the item should be referred to by title:

Example

Figures in a recent survey (Tourism trends, 2003. p. 12) showed that…

 In cases where the date of an item cannot be identified, the item should be cited:

Example

The earliest report (Smith, no date, p. 231) showed that…

 If the author and date are unknown:

Example

 When you refer to a corporate publication e.g. a company report, use the Company

Name: Example

A survey (Tourism trends, no date) showed that…

The recession affected………..(Hanson Trust plc, 1990)

VT-F4/Innovation and Commercialisation/Module Booklet/Unit 8 Inn Commerce SoW - Feb 18.pdf

Page 1 of 3

ICON College of Technology and Management Pearson BTEC HND in Business (RQF)

Unit 8: Innovation and Commercialisation Schedule of Work

Session: February 2018 This unit is aimed at achieving the following learning outcomes:

LO1 Explain the context for innovation and determine the difference between invention and innovation.

LO2 Explain the different types of innovation.

LO3 Discuss the process required to commercialise innovation.

LO4 Evaluate the range of methods for protecting ideas and understand their advantages and disadvantages.

Programme Title TNA67 Pearson BTEC in Business

Unit number and Title Unit 8 Innovation and Commercialisation

Unit Type Optional

Unit Level Level 5 15 Credit

Sessions Indicative Contents Session Activities

Week1:

LO1

Lecture 1

Unit learning outcome, Syllabus, and Assignment

briefing, Assessment, Reading, Academic Skill, citation

and referencing.

Providing course

work overview

Week 2 LO1

Lecture 2

Definition of innovation and commercialisation,

Challenges created for small businesses.

Definition of invention and how invention is created.

Turning invention into innovation and sources of

innovation.

Lecturing and

group discussion.

(Group

discussion:

Innovation and

entrepreneurship)

Week3:

LO1

Lecture 3

Creating a structure and culture of innovation.

Difference between invention and innovation.

Developing innovation vision and leadership,

entrepreneurial teams and innovation networks.

Activity

Lecture

Seminar on

developing

innovation vision

and leadership

Week 4

LO2

Lecture 4

The use of innovation funnel to manage new

solution/idea development.

Overview of different types of innovation with a focus

on disruptive and incremental innovation and exploring

pros and cons of each approach

(Group discussion

on different types

of innovation.)

Week5:

LO2

Lecture 5

The 4 Ps and innovation space strategy.

The development of frugal innovation in response to

necessity vs market driven innovation.

(Mini exercise)

Formative

Feedback

Brief tutor-led

overview of

assessment

requirements

Academic writing

Week6

LO3

Lecture 6

Adopting the New Product Development (NPD) and

commercialisation funnel to drive new products to

market.

Building the innovation business case, in market testing

and iteration routes to market and market launch

Seminar on NPD

Page 2 of 3

Week7

LO3:

Lecture 7

The impact of advanced technology and information

management on research, testing and development

methods.

Consideration of big data and cognitive systems to

predict behaviours and future trends, social media and

constructing multimedia platforms for promotion and

distribution.

Workshop and

seminar

Formative

Feedback

Brief tutor-led

overview of

assessment

requirements

Academic writing

Week8

LO3

Lecture 8

The reasons why an organization would want to access

funding (e.g. product development, marketing) and the

different types of funding sources available.

Considering of resources a small business may require

to commercialise their offering (e.g. office space etc.)

Activity on

source of funding.

Week 9

LO3

Lecture 9

The definition of intellectual property (IP).

Exploiting knowledge and intellectual property rights.

Overview of key IP tools including copyrights,

trademarks, design rights and patents.

Activities on IP

tools

Week10

LO4

Lecture 10

The role of branding in protecting the innovation and

the limitations of IP in an international context.

The implications of growth of open source and open

innovation platforms upon IP.

Formative

Feedback

Brief tutor-led

overview of

assessment

requirements

Academic writing

Week 11

LO4

Session 11

Reserve class to cover any missing class or

Presentations.

Week 12 Session 12 Revision Formative

Feedback

Week 13 Session 13 Study Week

Week 14 Final Submission Final Draft

submission

Page 3 of 3

Pearson Edexcel Standard Verifier (EE): Cheran Stevens Standard Verifier (EE): Visit Date: TBA Recommended Reading

Text Books:

Bailey, S. (2011), Academic Writing – A Handbook for International Students, London, Routledge

Bessant, J, and Tidd, J. (2015), Innovation and Entrepreneurship. 3 rd

Ed. Oxford: Willey.

Burns, T. and Sinfield, S (2016), Essential Study Skills: The Complete Guide to Success at University, Los

Angeles, SAGE.

Drucker, P. (2006), Innovation and Entrepreneurship. London: Harper Business.

Matthews, C and Brueggemann, R. (2015), Innovation and Entrepreneurship: A Competency Framework.

London: Routledge.

Trott, P. (2012), Innovation Management and New Product Development, Harlow: Pearson.

Valikangas, L and Gibbert, M. (2015), Strategic Innovation: The Definitive Guide to Outlier Strategies

London: Pearson FT Press.

Journal Articles:

The 4Ps of Innovation

https://hbr.org/2010/06/the-4ps-of-innovation

Journals:

Journal of Small Business Management. Oxford: Wiley-Blackwell.

(http://onlinelibrary.wiley.com/journal/10.1111/ (ISSN) 1540-627X)

Websites

The Institute for Small Business and Entrepreneurship (ISBE)

www.isbe.org.uk

Pearson Resources:

Student Portal: HN Global

Please access HN Global for additional resources support and reading for this unit. For further guidance and

support on presentation skills please refer to the Study Skills Unit on HN Global. Link to:

https://www.highernationals.com/

https://hbr.org/2010/06/the-4ps-of-innovation

http://onlinelibrary.wiley.com/journal/10.1111/

http://www.isbe.org.uk/

https://www.highernationals.com/

VT-F4/Innovation and Commercialisation/Module Booklet/Unit 8 Innov and Commerce Assignment Brief Feb 2018 NN.pdf

ICON COLLEGE OF TECHNOLOGY AND MANAGEMENT Pearson BTEC HND in Business

Unit 8: Innovation and Commercialization (RQF) Assignment Brief

Session: February 2018

Programme title TNA67 Pearson BTEC HND in Business (RQF)

Unit number and title Unit 8 Innovation and Commercialization

Unit Type Optional

Unit Level and Credit Value

Level 5 15 Credit

Assessor (s) Prof Zakir Hossain, Dr Uzo Anozie, Mr Harish Jyawali

Issue Date 3 March 2018

Final assignment submission deadline

11-16 June 2018

Late submission deadline

18 June – 23 June 2018

Resubmission deadline TBA

Feedback

In-class feedback will be available from draft submissions on a task-by- task basis as a formative assessment as well as summative feedback in the form of initial submission.

Final feedback will be available within 2 weeks of the assignment submission date.

General Guidelines

 The work you submit must be in your own words. If you use a quote or an illustration from somewhere you must give the source.

 Include a list of references at the end of your document. You must give all your sources of information.

 Make sure your work is clearly presented and that you use correct grammar.

 Wherever possible use a word processor and its “spell-checker”.

Internal verifier Prof Nurun Nabi

Signature (IV of the brief) *

[email protected] Date 1/3/18

Assignment Brief – continued

ICON College of Technology and Management Pearson BTEC HND in Business (RQF)

Unit 9: Innovation and Commercialization Session: February 2018

Coursework Recommended Word limit: 2,000–2,500

Case Study: Healthy Drinks When Mr Daniel Green, the founder of Healthy Juice, started the company two years ago he could not have foreseen the rapid early stage growth that took place. He launched the company with one drink (a healthy milkshake) into the UK market and achieved a dramatic rise in sales in his first year due to the innovative formula and distribution capability. However, as the company enters its third year of trading there has been a significant decrease in sales as a number of competitors have entered the market. Mr Green thinks the answer is to create an innovative new range of drinks, juice or smoothie but does not want to move away from juice. You have been hired as an innovation consultant to evaluate the situation and present recommendations on how the company should move forward. You should answer the following four tasks in a business report format to be presented to Mr Green. The business report will address the following: 1. Explanation of the difference between invention and innovation. 2. The value and importance of innovation to organisations and how this can be embedded within the organisational leadership and culture. 3. The different forms of innovation and the four directions of change an organisation can take. Explain the 4Ps of innovation and how this supports capability and management of innovation. Advise Mr Green which form of innovation he should engage in. 4. Discuss the approaches that Mr Green can take to process innovative ideas, including the innovation funnel and frugal innovation. 5. Explain the steps Mr Green should go through to derive a new and innovative drink.

Assignment Brief – continued

What you must do The following tasks are required to be carried out: LO1 Explain the context for innovation and determine the difference between invention and innovation. Explain innovation and determine its importance to organizations in comparison with invention. [P1]

Explain how organisational vision, leadership, culture and teamwork can shape innovation and commercialisation. [P2] To achieve M1 you should analyse different sources of innovation, and how organisations can foster and develop an environment and culture of innovation.

LO2 Explain the different types of innovation.

Explain the 4Ps of innovation and explain the use of the innovation funnel to examine and shape innovative ideas. [P3].

Explain developments in frugal innovation and provide examples of how it is used in an organisational context. [P4].

To achieve M2, you should analyse and apply the innovation funnel in organisational context of Mr Green’s healthy drinks. To achieve M3, you should evaluate the role of frugal innovation in organisational context of Mr Green’s healthy drinks.

To achieve D1 you should critically analyse how innovation is developed, embedded and measured in an organisational context of Mr Green’s healthy drinks.

LO3 Discuss the process required to commercialise innovation. Explain the importance of the commercial funnel and the application of new product development (NPD) processing for commercialisation of innovation. [P5] Build an innovation business case for an organisation, including ways to access funding. . [P6]

To achieve M4, you should build a detailed innovation business case which includes how to measure its overall effectiveness using appropriate techniques available to test, iterate and improve.

LO4 Evaluate the range of methods for protecting ideas and understand their advantages and disadvantages.

Evaluate the different tools that Mr Green can use to develop, retain and protect knowledge and intellectual property. [P7]

To achieve M5, you should present supported evidence-based evaluation of these different tools in the context of the wider business environment

Assignment Brief – continued

To achieve D2, you should critically evaluate the nature of innovation and the context in which it is developed, providing evidence-based judgements on how Mr Green can overcome challenges to develop successful innovations.

Grading Criteria

Learning Outcome Pass Merit Distinctions

LO1 Explain the context for innovation and determine the difference between invention and innovation.

P1 Explain innovation and determine its importance to organisations in comparison with invention. P2 Explain how organisational vision, leadership, culture and teamwork can shape innovation and commercialisation.

M1: Analyse different sources of innovation, and how organisations can foster and develop an environment and culture of innovation.

D1: Critically analyse how innovation is developed, embedded and measured in an organisational context.

LO2 Explain the different types of innovation.

P3 Explain the 4Ps of innovation and explain the use of the innovation funnel to examine and shape innovative ideas. P4 Explain developments in frugal innovation and provide examples of how it is used in an organisational context.

M2 Analyse and apply the innovation funnel in an organisational context. M3 Evaluate the role of frugal innovation in an organisational context.

LO3 Discuss the process required to commercialise innovation

P5 Explain the importance of the commercial funnel and the application of new product development (NPD) processing for commercialisation of innovation. P6 Build an innovation business case for an organisation, including ways to access funding.

M4 Build a detailed innovation business case which includes how to measure its overall effectiveness using appropriate techniques available to test, iterate and improve.

D2 Critically evaluate the nature of innovation and the context in which it is developed, providing evidence-based judgements on how organisations can overcome challenges to develop successful innovations.

LO4 Evaluate the range of methods for protecting ideas and understand their advantages and disadvantages.

P7 Evaluate the different tools that organisations can use to develop, retain and protect knowledge and intellectual property..

M5 Present supported evidence-based evaluation of these different tools in the context of the wider business environment. entrepreneurs

Relevant Information Guide to student 1. Preparation guidelines of the Coursework Document

a. All coursework must be word processed.

Assignment Brief – continued

b. Document margins must not be more than 2.54 cm (1 inch) or less than 1.9cm (3/4 inch). c. The assignment should be in a formal business style using single spacing and font size 12. d. Standard and commonly used type face such as Arial should be used. e. All figures, graphs and tables must be numbered. f. Material taken from external sources must be properly referenced using the Harvard

referencing system. g. You should provide references using the Harvard referencing system. h. Do not use Wikipedia as a reference.

2. Plagiarism and Collusion

3. Submission

a. Initial submission of coursework to the tutors is compulsory in each unit of the course. b. The student must check their assignments on ICON VLE with plagiarism software Turnitin to make

c. All Final coursework must be submitted to the Final submission point into the Unit (not to the Tutor). The student would be allowed to submit only once and that is the final submission.

d. Any computer files generated such as program code (software), graphic files that form part of the coursework must be submitted as an attachment to the assignment with all documentation.

e. Any portfolio for a Unit must be submitted as a hardcopy to examination office. f. The student must attach the tutor’s feedback from the First submission in between the cover page and

the answer in the case of Resubmission. 4. Good practice

a. Make backup of your work in different media (hard disk, memory stick, etc.) to avoid distress for loss or damage of your original copy.

5. Extension, Late Submission and Resubmission

b. Late submission will be accepted and marked according to the College procedure. It should be noted that late submission may not be graded for Merit and Distinction.

d. Only one opportunity will be given for reassessment (resubmission) will be permitted and the assessment will be capped at Pass for the unit. In addition, no resubmission will be allowed in any component of the assessment for which a Pass grade or higher has been achieved.

e. Repeat Units – A student who has failed to achieve a Pass in both Final/Late submission and in the Resubmission must retake the unit the full attendance and payment of the unit fee. The overall unit grade for a successfully completed repeat unit is capped at Pass for that unit. Units can only be repeated once.

Assignment Brief – continued

6. Submission deadlines Online to the ICON College VLE

Final Submission date: 11-16 June 2018 Late Submission date: 18-23 June 2018

Glossary:

VT-F4/Innovation and Commercialisation/Support/Academic Writing 2.pdf

Academic writing skills

Writing, referencing & using electronic resources

“Care in the choice of one’s words is the respect that the mind

pays

to the instrument of its own being”

Agenda

• Writing

– What is academic writing

• Referencing

– Books

– Articles

– Others

• Electronic resources

Academic writing

• What is it all about?

Writing

• Academic writing is Formal

– No exaggeration (Not: extremely important)

– Impersonal (no use of “I am”)

– Direct to the meaning

– No final judgment!! Always allow for arguing and

accepting other opinions!!

WHAT DOES FORMAL WRITING

LOOK LIKE?

• Focus on the issue, not the writer Keeping

your writing objective and impersonal can make

it more convincing.

– It will be argued that the benefits of sales

promotion outweigh the disadvantages.

– I will argue in this assignment that ...

Choose words with precise

meanings

• Avoid words with vague meanings

– Compare:

• The writer looks at the issue

– with

• The writer examines the issue.

• The second option is more formal.

– Formal choices:

• He states … maintains … argues

– Informal choices:

• He says … talks about …

Add some style

• Writing is a very logical exercise, adding

style to it will enhance clearness and

power of convincing…

– Phrases for transition

– Phrases for emphasis

– Phrases for counterpoint

Phrases for transition

• Regarding

• Admittedly

• Consequently

• As a result

• Ultimately

• According to

• For this reason

Phrases for emphasis

• Moreover

• In fact

• Additionally

• For example

• In point of fact

• As a matter of fact

• Indeed

Phrases for counterpoint

• Conversely

• On the other hand

• However

• Nevertheless

• Notwithstanding

• Nonetheless

• Yet

• Despite

• Although

• Instead

Referencing

• What does referencing mean?

• Why should I include references in my

work?

• How do I reference my work?

What does referencing mean?

• When writing an academic piece of work

you need to acknowledge any ideas,

information or quotations which are the

work of other people. This is known as

referencing or citing.

Why should I include references

in my work?

• You should include references in order to:

– acknowledge the work of others

– provide evidence of your own research

– illustrate a particular point

– support an argument or theory

– allow others to locate the resources you have used

• And most importantly:

– avoid accusations of plagiarism

How do I reference my work?

• Your references should be consistent and

follow the same format. Various systems

have been devised for citing references,

but most Schools use the Harvard system

Referencing while writing

• References will be cited in your work in

two places: -

– 1) Where a source is referred to in the text

(Citation)

– 2) In a list (the Bibliography/List of references)

at the end of the assignment.

Citing references in the text

• Citing the author in the text

• Whenever a reference to a source is

made, its author's surname and the year

of publication are inserted in the text as

in the following examples...

Citing references in the text Cont.

– Dogs were the first animals to be

domesticated (Sheldrake, 1999).

• If the author's name occurs naturally in the

sentence the year is given in brackets .>>

– Sheldrake (1999) asserts that dogs were the

first animals to be domesticated.

Using direct quotes

• If you quote directly from a source you must

insert the author’s name, date of publication

and the page number of the quotation.

– ‘The domestication of dogs long predated the

domestication of other animals.’ (Sheldrake, 1999,

p.5).

• The page number should be given at the end of

the quote, in separate brackets if necessary, as

in the example below.

– Sheldrake (1999) asserts that the ‘domestication of

dogs long predated that of other animals.’ (p.15).

Citing works by more than one

author

• If your source has two authors you should

include both names in the text.

– Anderson and Poole (1998) note that a

‘narrow line often separates plagiarism from

good scholarship.’ (p.16).

Citing works by three or more authors

• If there are three or more authors you should

include the first named author and then add ‘et

al.’ in italics followed by a full stop. This is an

abbreviation of ‘et alia’ which means ‘and others’

in Latin.

– In the United States revenue from computer games

now exceeds that of movies (Kline et al., 2003).

Citing works by the same author written

in the same year

• If you cite two or more works written in the same year by the same author, then you must differentiate between them in both the text and your List of references by listing them as a,b,c etc.

– Natural selection can cause rapid adaptive changes in insect populations (Ayala, 1965a) and various laboratory experiments have been conducted to assess this theory (Ayala, 1965b).

Citing secondary sources

– Sheff (1993) notes that Nintendo invested heavily in advertising (cited in Kline et al.,2003, p.118).

Writing a Bibliography or List of

references

• The List of references appears at the end of

your work and gives the full details of everything

that you have cited in the text in alphabetical

order by the author’s surname

Printed books

• Printed books should be referenced using the following format and punctuation.

– Author/editor’s surname and initials.,

– (Year of publication).

– Title of book: including subtitles. (in italics or underlined)

– Edition. (if applicable)

– Place of publication: (followed by a colon)

– Name of publisher.

• Reference to a book with one author

– Sheldrake, R., (1999). Dogs that know when

their owners are coming home: and other

unexplained powers of animals. London:

Arrow Books.

• Reference to a book with two authors

– Anderson, J. and Poole, M., (1998).

Assignment and thesis writing. 3rd ed.

Chichester: John Wiley & Sons.

Print journals and newspapers

• Print journals should be referenced using the following format and punctuation. – Author's surname, initials., (or Newspaper title where

there is no author,)

– (Year of publication).

– Title of article.

– Name of journal. (in italics or underlined),

– Date of publication (if applicable e.g. 18 June)

– Volume number (in bold) (if applicable)

– (Part/issue number), (if applicable)

– Page numbers.

Example

• Britton, A., (2006). How much and how

often should we drink? British Medical

Journal. 332 (7552), 1224-1225.

• Britton, A., (2006). How much and how

often should we drink? British Medical

Journal. Vol. 332, No. 7552, pp.1224-1225

E-journal article accessed via

website on the open Internet

• Britton, A., (2006). How much and how often

should we drink? British Medical Journal. 332

(7552), 1224-1225. [online] Available

from:http://bmj.bmjjournals.com/cgi/content/full/3

32/7552/1224 [Accessed 2 June 2006].

http://bmj.bmjjournals.com/cgi/content/full/332/7552/1224

Websites, web pages

e.g. University of London)

– (Year of publication).

– Title. (in italics or underlined)

– Edition. (if applicable, e.g. update 2 or version 4.1)

– [online]

– Place of publication: (if known)

– Name of publisher. (if known)

– Available from: <URL>

– [Accessed (enter date you viewed the website)].

References

– Holland, M., (2005). Citing references. [online] Poole:

Bournemouth University. Available from:

<http://www.bournemouth.ac.uk/academic_services/d

ocuments/Library/Citing_References.pdf> [Accessed

2 June 2006].

– University of Westminster, (2007). Harry Potter fans to

cast spell over Westminster. [online] London:

University of Westminster. Available from:

<http://www.wmin.ac.uk/page-14428> [Accessed 24

July 2007].

VT-F4/Innovation and Commercialisation/Support/Academic Writing Skills 1.pdf

Dr Marco Angelini,

UCL Transition Programme

With thanks to Dr Colleen McKenna for kind

permission in reproducing her material in this

presentation

Approaches to critical reading and writing

Outline for today

 Introduction

 Considering your writing practices

 Reading as part of writing

 Writing as part of thinking

 Planning

 Organising written work

 Looking at text

 Finding time to write

What type of writer are you?

The diver

The patchworker

The architect

The grand planner

Identifying your writing style

Previous writing experiences …

Reading as part of writing

Critical reading (and how it benefits your writing)

 Helps you determine what is and

what is not a robust piece of

research and writing in your field

 Helps you identify where existing

research has left a gap that your

work could fill

 Attention you pay to writing of others

helps you become more self-aware

of your own written work:

– Sufficient evidence to back up claims;

argumentation/reasoning; becoming

alert to your assumptions and how they

affect your claims

 Wallace and Wray, 2006

Critical reading?

How do you go about

reading an academic text

in your field?

Critical reading? Some possible approaches

How do you go about reading an

academic text?

 Use parts of the text: abstract,

contents, index, sub-headings,

graphs, tables, introduction and

conclusion

 Skim to get the gist of the argument

 Read with questions in mind

Critical reading? Some possible approaches

 Make notes/mind map/ use

highlighter

 Write a summary in your own words

 Write a brief critical response

 Keep note of bibliographic details

Critical reading/ critical writing

Handout – p. 12-13 Wallace and Wray

 As a critical reader, one evaluates

the attempts of others to

communicate with and convince

their target audience by means of

developing an argument;

 As a writer, one develops one's own

argument, making it as strong and

as clear as possible, so as to

communicate with and convince

one's target audience.

– Wallace and Wray, 2006

Free writing

 Way of using writing as a tool for

thinking

 Allows you to write without

constraints.

To do it –

Write continuously, in complete

sentences, anything that occurs to

you.

Free writing

Please write down EITHER

1. An idea / theme from your field

2. Use the topic:

‘what I enjoy about writing…’

Use a free writing technique to write

anything at all that occurs to you

about this topic.

This writing will not be shown to

anyone else.

Planning (Sharples)

 Plans should be flexible

 Through the writing process a deeper

understanding of topic is gained – thus,

planning is increasingly out of step as

writing develops:

– “The act of writing brings into being ideas

and intentions that the writer never had at

the start of the task or that could not be

expressed in any detail.”

Plans

 Free writing

 Notes/sketches

 Idea lists

– Ideas on post-it notes

 Mind map

 Skeleton paper with

sub-headings

 Outline

 Draft text

 Adapted from

Sharples, 1999

 What techniques do you use to

develop ideas in your writing

and/or signpost an argument?

Developing/sustaining argument

 ‘proving’ the thesis statement or

controlling argument

 Signposting argument (Giving the

reader cues; anticipating/referring

back)

 Using words which signal transition or

development – “However”,

“Nevertheless”, “Thus”, “Therefore”,

“Despite”

 Illustrating theoretical positions with

concrete examples

 Generalising from a particular set of

findings if possible

 Using subheadings

 Using/responding to counterarguments

and examples

 Anticipate next paragraph at end of

previous one

Signposting and making transitions

 Links between paragraphs – pick up point from the end of a paragraph at the start of next one.

 Conjunctions to express different kinds of meaning relations

– Temporal: when, while, after, before, then

– Causative: because, if, although, so that, therefore

– Adversative: however, alternatively, although, nevertheless, while

– Additive: and, or, similarly, incidentally

 Signposting through pronouns - this, these, those, that, they, it, them

 Adverbs: Firstly, secondly, etc

 Illustrative: For example, in illustration, that is to say,

Signalling conclusions

Citation

Examples of Citing

• The hip bone is confirmed to be connected to the thigh bone (Funny Bones, 1989).

• The cytoskeletal network acts like the strong bars within a scaffolding (Alberts et al., 1998)

• Slavic-Smith (2006) postulated three classifications for nucleoli in neurons

• It was shown in 2006 by Take That, that a successful comeback tour was possible [1].

Bibliographies

 Alberts, Bray, Johnson, Lewis,

Raff, Roberts & Walter. Essential

Cell Biology, 1st Edition, Garland,

1998

 Dickson, B (2002) Molecular

Mechanisms of Axon Guidance.

Science 298 1959-1964

 [1] www.bbc.co.uk/news

Writing tips

 Write a sentence for each paragraph you want

to write – you can then move them about easily

to form thread of argument

 Index tag the main points you want to use in

your references, so they can be found easily

while writing

 Write the introduction last

 Write the conclusion first

 Read what you have written aloud to see if it

sounds right

 Find best environment for you – when and

where do you work best

 Take a break before trying to do your final check

 Use a writing checklist

Making time for writing

 Write throughout the course

 Do free writing as frequently as

possible

 Snack and binge writing (Rowena

Murray)

 Writing groups

 Don’t wait until you feel ‘ready’ to

write…

Writing for learning

 Read regularly in the field. Find writers whose work you admire and study what and how they do things.

 View writing as part of a process rather than a product

 Find models of good writing in your discipline – analyse it; ask what works and what doesn’t; consider writing style; vocabulary; techniques – metaphor; explanation; signposting

 Reflect on your own writing practices

 Keep a notebook or learning journal

 Explore free writing

To sum up…

1. Asked ‘what type of writer are

you’? What are your writing

practices?

2. What are your approaches to

reading? How might you link

reading and writing?

3. Free writing as a means of

generating ideas

4. Thought about structure of the

essay at the paragraph level and

the overall level

5. Tried to relate these ideas back

to the outline.

Reference

Academic Writing Skills

Presentation - UCL https://www.ucl.ac.uk/transition/study-

skills.../Academic_Writing_Skills_11.pptx

VT-F4/Innovation and Commercialisation/Support/Innovation and Commercialisation - Lecture 1 Introduction.pdf

Lecture 1: Introduction of the Unit

Prepared by: Dr Gilbert Zvobgo

ICTM

 Aim of Session: To introduce the Unit’s content and the Unit

assessment

 1. Ground Rules

 2. Going over the Assignment Brief, including the assessment

criteria of the Unit

 3. Going over the Scheme of Work so that students see how

they could allocate their time wisely.

 4. Going over the Unit Specification so that students have an

overview of the syllabus (also available on ICON VLE).

 5. Library visit to help students check available books in their

Unit and to suggest those they want the College to purchase.

 6. Ask students to register with HN Global at:

Pearson Resources: Student Portal: HN Global (RQF)

https://www.highernationals.com/

 7. Help students understand the importance of academic

skills, academic writing, and referencing (citation and

references).

VT-F4/Innovation and Commercialisation/Support/Lecture 10 Innov and Commerce.pdf

Page 1

Innovation and Commercialization

Lecture 10 LO 4: Evaluation of methods for protecting intellectual property.

Intellectual Property

Page 2

By the end of the Session Objectives You will be able to:

• Understand the definition of IP.

• Understand how to protect IP

• Understand the patent, copy right, trade

marks etc.

• Understand the use of IP.

Definition of intellectual property

• Intellectual Property Rights are exclusive legal rights over

creations of the mind. They give the owner rights from

which to exploit their intellectual creation. They are

considered crucial to fostering innovation by providing a

financial incentive to stimulate creativity, whereby

businesses can reap the benefits from their inventions and

will be more willing to invest in research and development.

Page 3

Importance of IPR

• First, the progress and well-being of humanity rest on its capacity to

create and invent new works in the areas of technology and culture.

• Second, the legal protection of new creations encourages the

commitment of additional resources for further innovation.

• Third, the promotion and protection of intellectual property spurs

economic growth, creates new jobs and industries, and enhances the

quality and enjoyment of life.

• An efficient and equitable intellectual property system can help all

countries to realize intellectual property’s potential as a catalyst for

economic development and social and cultural well-being.

• The intellectual property system helps strike a balance between the

interests of innovators and the public interest, providing an

environment in which creativity and invention can flourish, for the

benefit of all.

How does the average person benefit?

• Intellectual property rights reward creativity and human

endeavor, which fuel the progress of humankind.

• Some examples: The multibillion dollar film, recording,

publishing and software industries – which bring pleasure to

millions of people worldwide – would not exist without

patent system, researchers and inventors would have little

incentive to continue producing better and more efficient

products for consumers. Consumers would have no means to

confidently buy products or services without reliable,

international trademark protection and enforcement

mechanisms to discourage counterfeiting and piracy

Page 4

What is a Patent?

• A patent is an exclusive right granted for an invention – a product

or process that provides a new way of doing something, or that

offers a new technical solution to a problem. A patent provides

patent owners with protection for their inventions. Protection is

granted for a limited period, generally 20 years

What kind of protection do patents offer?

• Patent protection means an invention cannot

be commercially made, used, distributed or

sold without the patent owner’s consent.

Patent rights are usually enforced in courts

that, in most systems, hold the authority to

stop patent infringement. Conversely, a

court can also declare a patent invalid upon

a successful challenge by a third party.

Page 5

What rights do patent owners have?

• A patent owner has the right to decide who may – or may

not – use the patented invention for the period during

which it is protected. Patent owners may give 5 permission

to, or license, other parties to use their inventions on

mutually agreed terms. Owners may also sell their

invention rights to someone else, who then becomes the

new owner of the patent. Once a patent expires, protection

ends and the invention enters the public domain. This is

also known as becoming off patent, meaning the owner no

longer holds exclusive rights to the invention, and it

becomes available for commercial exploitation by others.

What role do patents play in everyday life?

• Patented inventions have pervaded every aspect of human

life, from electric lighting (patents held by Edison and

Swan) and sewing machines (patents held by Howe and

Singer), to magnetic resonance imaging (MRI) (patents

held by Damadian) and the iPhone (patents held by Apple).

In return for patent protection, all patent owners are

obliged to publicly disclose information on their inventions

in order to enrich the total body of technical knowledge in

the world. This everincreasing body of public knowledge

promotes further creativity and innovation. Patents

therefore provide not only protection for their owners but

also valuable information and inspiration for future

generations of researchers and inventors.

Page 6

How is a patent granted?

• The first step in securing a patent is to file a patent

application. The application generally contains the title of

the invention, as well as an indication of its technical field.

It must include the background and a description of the

invention, in clear language and enough detail that an

individual with an average understanding of the field could

use or reproduce the invention. Such descriptions are

usually accompanied by visual materials – drawings, plans

or diagrams – that describe the invention in greater detail.

The application also contains various “claims”, that is,

information to help determine the extent of protection to be

granted by the patent.

What kinds of inventions can be protected?

• An invention must, in general, fulfill the following

conditions to be protected by a patent. It must be of

practical use; it must show an element of “novelty”,

meaning some new characteristic that is not part of the

body of existing knowledge in its particular technical field.

That body of existing knowledge is called “prior art”. The

invention must show an “inventive step” that could not be

deduced by a person with average knowledge of the

technical field. Its subject matter must be accepted as

“patentable” under law. In many countries, scientific

theories, mathematical methods, plant or animal varieties,

discoveries of natural substances, commercial methods or

methods of medical treatment (as opposed to medical

products) are not generally patentable.

Page 7

Who grants patents?

• Patents are granted by national patent offices or by

regional offices that carry out examination work for a

group of countries – for example, the European Patent

Office (EPO) and the African Intellectual Property

Organization (OAPI). Under such regional systems, an

applicant requests protection for an invention in one or

more countries, and each country decides whether to offer

patent protection within its borders. The WIPO-

administered Patent Cooperation Treaty (PCT) provides

for the filing of a single international patent application

that has the same effect as national applications filed in the

designated countries. An applicant seeking protection may

file one application and request protection in as many

signatory states as needed..

What is a trademark?

• A trademark is a distinctive sign that identifies certain

goods or services produced or provided by an individual or

a company. Its origin dates back to ancient times when

craftsmen reproduced their signatures, or “marks”, on their

artistic works or products of a functional or practical

nature. Over the years, these marks have evolved into

today’s system of trademark registration and protection.

The system helps consumers to identify and purchase a

product or service based on whether its specific

characteristics and quality – as indicated by its unique

trademark – meet their needs

Page 8

What do trademarks do?

• Trademark protection ensures that the owners of marks have the

exclusive right to use them to identify goods or services, or to

authorize others to use them in return for payment. The period of

protection varies, but a trademark can be renewed indefinitely

upon payment of the fees. Trademark protection is legally enforced

by courts that, have the authority to stop trademark infringement.

In a larger sense, trademarks promote initiative and enterprise

worldwide by rewarding their owners with recognition and

financial profit. Trademark protection also hinders the efforts of

unfair competitors, such as counterfeiters, to use similar distinctive

signs to market inferior or different products or services. The

system enables people with skill and enterprise to produce and

market goods and services in the fairest possible conditions,

thereby facilitating international trade.

What kinds of trademarks can be registered?

• Trademarks may be one or a combination of words, letters and

numerals. They may consist of drawings, symbols or signs, such as

the shape and packaging of goods. In some countries, non-traditional

marks may be registered for distinguishing features such as

holograms, motion, color and non-visible signs (sound, smell or

taste).

• Collective marks are owned by an association whose members use

them to indicate products with a certain level of quality and who

agree to adhere to specific requirements set by the association, e.g,

accountants, or architects. Certification marks are given for

compliance with defined standards They may be granted to anyone

who can certify that their products meet certain established standards.

Some examples “ISO 9000” quality standards and Ecolabels for

products with reduced environmental impact.

Page 9

How extensive is trademark protection?

• Almost all countries in the world register and protect

trademarks. Each national or regional office maintains a

information on all registrations and renewals, which

facilitates examination, search and potential opposition by

third parties. The effects of the registration are, however,

limited to the country (or, in the case of regional

registration, countries) concerned.

How extensive is trademark protection? (2)

• To avoid the need to register separate applications with

each national or regional office, World Intellectual

Property Organization (WIPO)administers an international

registration system for trademarks. The system is governed

by two treaties: the Madrid Agreement Concerning the

International Registration of Marks and the Madrid

Protocol. Persons with a link (be it through nationality,

domicile or establishment) to a country party to one or

both of these treaties may, on the basis of a registration or

application with the trademark office of that country (or

related region), obtain an international registration having

effect in some or all of the other countries of the Madrid

Union.

Page 10

What is an industrial design ?

• An industrial design refers to the ornamental or aesthetic

aspects of an article . A design msay consist of three-

dimensional features, such as the shape or surface of an

article, or two dimensional features, such as patterns or

colour.

• To be protected under most national laws, an industrial

design must be new or original and and non-functional.

This means that an industrial design is primarily of an

aesthetic nature, and any technical features of the article to

which it is applied are not protected by the design

registration. However those features could be protected by

patent.

Why protect industrial designs?

• Industrial designs are what make an article attractive and

appealing; hence, they add to the commercial value of a product

and increase its marketability. When an industrial design is

protected, the owner – the person or entity that has registered the

design – is assured an exclusive right and protection against

unauthorized copying or imitation of the design by third parties.

This helps to ensure a fair return on investment. An effective

system of protection also benefits consumers and the public at

large, by promoting fair competition and honest trade practices,

encouraging creativity and promoting more aesthetically pleasing

products. Protecting industrial designs helps to promote economic

development by encouraging creativity in the industrial and

manufacturing sectors, as well as in traditional arts and crafts.

Designs contribute to the expansion of commercial activity and the

export of national products.

Page 11

How can industrial designs be protected?

• In most countries, an industrial design must be registered

in order to be protected under industrial design law. As a

rule, to be registrable, the design must be “new” or

“original”. Generally, “new” means that no identical or

very similar design is known to have previously existed.

Once a design is registered, a registration certificate is

issued. Following that, the term of protection granted is

generally five years, with the possibility of further renewal,

in most cases for a period of up to 15 years.

• Under certain circumstances an industrial design may also

be protectable under unfair competition law, although the

conditions of protection and the rights and remedies

available can differ significantly.

What is A geographical indication?

• It is a sign used on goods that have a specific geographical

origin and possess qualities or a reputation due to that

place of origin. Most commonly, a geographical indication

consists of the name of the place of origin of the goods.

Agricultural products typically have qualities that derive

from their place of production and are influenced by

specific local geographical factors, such as climate and

soil. Whether a sign functions as a geographical indication

is a matter of national law and consumer perception.

Geographical indications may be used for a wide variety of

agricultural products, such as, for example, “Tuscany” for

olive oil produced in a specific area of Italy, or

“Roquefort” for cheese produced in that region of France

Page 12

Why do geographical indications need protection?

• Geographical indications are understood by consumers to

denote the origin and quality of products. Many of them

have acquired valuable reputations which, if not

adequately protected, may be misrepresented by

commercial operators. False use of geographical

indications by unauthorized parties, for example

“Darjeeling” for tea that was not grown in the tea gardens

of Darjeeling, is detrimental to consumers and legitimate

producers. The former are deceived into believing they are

buying a genuine product with specific qualities and

characteristics, and the latter are deprived of valuable

business and suffer damage to the established reputation of

their products.

What is the difference between a geographical indication and a trademark?

• A trademark is a sign used by a company to distinguish its

goods and services from those produced by others. It gives

its owner the right to prevent others from using the

trademark. A geographical indication guarantees to

consumers that a product was produced in a certain place

and has certain characteristics that are due to that place of

production. It may be used by all producers who make

products that share certain qualities in the place designated

by a geographical indication.

Page 13

How are geographical indications protected?

• Geographical indications are protected in accordance with

national laws and under a wide range of concepts, such as

laws against unfair competition, consumer protection laws,

laws for the protection of certification marks or special

laws for the protection of geographical indications or

appellations of origin. In essence, unauthorized parties may

not use geographical indications if such use is likely to

mislead the public as to the true origin of the product.

Applicable sanctions range from court injunctions

preventing unauthorized use to the payment of damages

and fines or, in serious cases, imprisonment.

What is WIPO’s role in the protection of geographical indications?

• WIPO administers a number of international

agreements that deal partly or entirely with

the protection of geographical indications

(in particular, the Paris Convention and the

Lisbon Agreement). WIPO meetings offer

Member States and other interested parties

the opportunity to explore new ways of

enhancing the international protection of

geographical indications.

Page 14

What are Copyright and Related Rights?

• Copyright laws grant authors, artists and other creators protection

for their literary and artistic creations, generally referred to as

“works”. A closely associated field is “related rights” or rights

related to copyright that encompass rights similar or identical to

those of copyright, although sometimes more limited and of shorter

duration. The beneficiaries of related rights are: performers (such

as actors and musicians) in their performances; producers of

phonograms (for example, compact discs) in their sound recordings;

and broadcasting organizations in their radio television programs.

• Works covered by copyright include, but are not limited to: novels,

poems, plays, reference works, newspapers, advertisements,

computer programs, databases, films, musical compositions,

choreography, paintings, drawings, photographs, sculpture,

architecture, maps and technical drawings

What rights do copyright and related rights provide?

• The creators of works protected by copyright, and their

heirs and successors (generally referred to as “right

holders”), have certain basic rights under copyright law.

They hold the exclusive right to use or authorize others to

use the work on agreed terms. The right holder(s) of a

work can authorize or prohibit: its reproduction in all

forms, including print form and sound recording; its public

performance and communication to the public; its

broadcasting; its translation into other languages; and its

adaptation, such as from a novel to a screenplay for a film.

Page 15

What are the benefits of protecting copyright and related rights?

• Copyright and related rights protection is an essential

component in fostering human creativity and innovation.

Giving authors, artists and creators incentives in the form

of recognition and fair economic reward increases their

activity and output and can also enhance the results. By

ensuring the existence and enforceability of rights,

individuals and companies can more easily invest in the

creation, development and global dissemination of their

works. This, in turn, helps to increase access to and

enhance the enjoyment of culture, knowledge and

entertainment the world over, and also stimulates

economic and social development.

VT-F4/Innovation and Commercialisation/Support/Lecture 11 Innov and Commerce.pdf

Page 1

Innovation and Commercialization

Lecture 10 LO 4: Evaluation of methods for protecting intellectual property.

End of the Session Objectives You will be able to:

• Understand the role of branding.

• Limitations of IP in international context

• Understand the open source and open

innovation platforms

Page 2

What is branding?

• A brand is the idea or image of a specific product or service

that consumers connect with, by identifying the name, logo,

slogan, or design of the company who owns the idea or image.

Branding is when that idea or image is marketed so that it is

recognizable by more and more people, and identified with a

certain service or product when there are many other

companies offering the same service or product. Advertising

professionals work on branding not only to build brand

recognition, but also to build good reputations and a set of

standards to which the company should strive to maintain or

surpass.

Importance of Branding

• creates consumer preference for the product/service behind the

brand.

• generates increased revenues and market share.

• increases the company’s market value

• helps the company survive temporary crises

• prevents new competitors from entering the market.

• increases profitability by commanding a higher price

• helps create a unique and differentiated company image

• increases existing distributor’s loyalty

• helps the company attract new distribution for its products.

• offers the company more negotiation power with its suppliers

• decreases employee turnover.

Page 3

The limitations of IP in international context

• Bilateralism and Institutionalism in the Regulation of

International Copyright: In the post-TRIPS (Trade-Related Aspects of Intellectual Property Rights) milieu, the regulatory landscape for

international copyright has been further complicated by the strong

emergence of bilateralism as a preferred mechanism by major countries

for strengthening copyright provisions in specific regions and, more

importantly, for advocating specific implementation models for

international obligations.

• A parallel development to the bilateralization trend is the increase in the

number of institutions responsible for the development of copyright laws

which, through its enforcement capacity, renders binding interpretations

of the TRIPS Agreement between disputing parties.

The limitations of IP in international context

• Sovereign Discretion and a Global Welfare Policy: In the

modern schema of international copyright lawmaking, no explicit

responsibility is devoted to an examination of the goals and

objectives of international copyright law as a prerequisite for

informed negotiation, or for a normative context against which the

desirability of particular rules might be measured.

• Limitations on copyrightable subject matter: what kind of materials should

be copyrightable and/or the appropriate scope of copyrightability

• Limitations on duration: Another general limitation to copyright would be the

limited duration of copyright protection.

• Limitations imposed by conditions of protection: One of the distinctive

characteristics is its insistence on the ability of authors to enjoy their rights

without any formalities (i.e., administrative requirements) being imposed

Page 4

The limitations of IP in international context

• Personal Use

• Educational Purposes

• Use for Criticism or Review:

• Reproduction

• Recordings

What is open innovation?

• Open innovation has been defined as “a paradigm wherein

firms can and should use external ideas, as well as internal

ideas, and internal and external paths to market, as they

look to advance their technology”. Open innovation is not

only about sourcing external knowledge (“outside-in”).

Companies also look for ways to generate additional

revenue from in-house innovations (“inside-out”),

especially when the technology has future potential but is

not part of the firm’s core strategy. Companies also

increasingly use venturing to find external partners for

commercialising innovations that are not used internally

(divestment, spin-out, spin-off).

Page 5

How does open innovation affect innovation?

• One of the most obvious benefits of open innovation is the

much larger base of ideas and technologies from which to

derive innovation and growth. Beyond that, companies also

recognise open innovation as a strategic tool to explore

new growth opportunities with less risk. Open technology

sourcing offers companies more flexibility and

responsiveness without necessarily implying huge costs.

Companies not only increase the speed of exploitation and

capture economic value through inward licensing or

spinning out unused ideas; they also create a sense of

urgency about internally available technologies (“use it or

lose it”) among internal groups.

Main benefits of open innovation

• the ability to leverage R&D developed outside

• extended reach & capability for new ideas & technologies

• the opportunity to refocus some internal resources on finding,

screening and managing implementation

• improved payback on internal R&D through sales or licensing of

otherwise unused intellectual property

• a greater sense of urgency for internal groups to act on ideas or

technology

• the ability to conduct strategic experiments with less risk and

fewer resources, in order to extend the core business and create

new sources of growth

• over time, the opportunity to create a more innovative culture from

the “outside in”, through continued exposure to and relationships

with external innovators.

Page 6

Disadvantages of Open innovation

• The extra costs of managing co-operation with external

partners, the lack of control, the adverse impact on

flexibility, the (over)dependence on external parties and

the potentially opportunistic behaviour of partners.

• The growth in the outsourcing of R&D and open

innovation also make the management of innovation more

complex, and may result in the loss of (some)

technological competencies and greater dependency on

external actors.

• The increased risk of leakage of proprietary knowledge

and involuntary spill overs means that unique knowledge

may be revealed to external partners that may later become

competitors, or may make better use of the results of the

venture or the know-how.

Implications of open innovation on innovation

• the internationalization of research, technology and

product development by firms

• an increased division of labor due to more outsourcing,

more inter-firm alliances and industry-university research

collaborations

• earlier integration of downstream uses and suppliers in the

innovation process to customize future products and

services

• greater commercialization potential of the newly created

technology and IP in the future

• the generation of spillover of proprietary knowledge via

either compensation (licensing) or without compensation

(open source models).

Page 7

How is IP related to open innovation?

• The link between IP and open innovation is

multidimensional, as it covers participation in R&D

consortia, strategic collaborations between firms in the

same sector, partnering with universities and public

research organizations, and much more. Depending on the

nature of collaboration, different jurisdictions have

different laws pertaining to joint ownership of IP. For

example, the 2003 CREATE Act of the United States

contains specific requirements for disclosure and deals

with joint ownership issues.

How is IP related to open innovation?

• Intellectual property rights facilitate knowledge exchange between

firms. They create “a platform for the transfer of knowledge

assets”. Patents are useful in licensing agreements between

collaborating parties, because their filing requires a detailed

explanation and codification of the underlying invention. They

assist the licensing parties in structuring the collaboration and

defining the parameters of individual contributions to the open

innovation project. In addition, firms can use IP rights as a signal

of innovative capabilities. This positive signal can play a role in

drawing attention from a potential partner for future collaborative

innovation, thereby fostering open innovation. Yet several studies

have shown that one of the biggest challenges of the open

innovation process is effective and strategic management of IP

Page 8

What policies relate to open innovation?

• financing of networks instead of individual companies

• opening up access to the national public research and innovation

infrastructure through cost sharing and reciprocity agreements but

also joint development and public/private partnerships

• balancing stronger competition with co-operation

• investing in human resources in S&T, and encouraging cross-

disciplinary, cross-functional, and entrepreneurial research and

innovation

• stimulating markets for technology, including through the provision

of adequate IP systems.

What are the benefits of protecting copyright and related rights?

• Copyright and related rights protection is an essential

component in fostering human creativity and innovation.

Giving authors, artists and creators incentives in the form

of recognition and fair economic reward increases their

activity and output and can also enhance the results. By

ensuring the existence and enforceability of rights,

individuals and companies can more easily invest in the

creation, development and global dissemination of their

works. This, in turn, helps to increase access to and

enhance the enjoyment of culture, knowledge and

entertainment the world over, and also stimulates

economic and social development.

VT-F4/Innovation and Commercialisation/Support/Lecture 2 Innov and Commerce.pdf

Innovation and Commercialization

Lecture I LO1: LO1: The context for innovation and determine the difference between invention and innovation.

P1: Explain innovation and determine its importance

End of the Session Objectives You will be able to:

• Understand innovation and invention

• Understand commercialization

• Understand differences between invention

and innovation.

• Understand how innovation is created and

the sources of innovation.

Defining Innovation

• All innovation begins with creative ideas . One definition for innovation is the successful implementation of creative ideas within an organization

• Innovation is the process that translates knowledge into economic growth and social well-being. It encompasses a series of scientific, technological, organizational, financial and commercial activities.

• It is the process whereby ideas for new (or improved) products, processes or services are developed and commercialized in the marketplace.

Commercialization

• Commercialization is the process by which a new

product or service is introduced into the general

market. The process of commercialization is

broken into phases, from the initial introduction of

the product through its mass production and

adoption. It takes into account the production,

distribution, marketing, sales and customer

support required to achieve commercial success.

http://www.investopedia.com/terms/m/mass-production.asp

Enabling Innovation

• Nurturing innovation is a process

• In the university context, the process is to transform intellectual resources (thoughts, ideas and insights) into intellectual assets

• Intellectual assets become intellectual property (“IP”) through legal protection.

• IP defines the value on which a company depends for successful commercialization.

Invention vs Innovation

Importance of innovation

• The word is full of problems that are hard to solve and

aren’t going away

• Adapting to Black Swan Events: are random and

unpredictable events that cannot be anticipated and require

us to find new ways of responding and adapting to them,

and their impact, when they happen.

• Taking advantage of the global entrepreneurship

movement

• Flowing with advances in technology

• Adapting to changing workplace dynamics and trends

• Responding to increasing customer expectations and

choices

• Maximizing globalization connectivity

Meaningful Uniqueness

Stimulus & Diversity

Drive Out Fear 1.0

Insight & Market Mining

Patent 1.0 - Tech

Mining

Future Mining

Create Sessions –

Spark Decks

Check Lists, Matrices & I Engineering

Create Sessions - Leadership

Lateral Thinking

Techniques

Triz

Problem Solving

Sessions

CREATE

COMMUNICATE

Customer & Problem

Benefit Promise

true Proof

Complete Ideas - Synergy

Ideas to Paper Free Writing

Clarity - Name and Headline

Advanced Benefit Promise

Secondary Proof

Patent 2.0 - Tech Translation & ®

Communication Translations

Proactive Selling

Meaningful vs. Mindless Marketing

COMMERCIALIZE

SYSTEMS

Innovation and Challenges for Small Business

•Cash flow: Healthy cash flow is a vital part of running a business. It

is, literally, the make or break for many business owners who need to

stay on top of their finances, especially cash flow, to ensure they can

operate successfully.

•Profitability: Beyond just a stable operating budget, the real reason

business owners create and progress their ventures is because

they want to create lasting wealth, driven by profit.

•Productivity: If profitability is about squeezing every cent out of a

dollar, then productivity is getting the most from every minute. With

every digital leap we take, we’re given new challenges to stay

effective, focussed and productive.

Innovation and Challenges for Small Business

• Connections: It’s no secret in the business world that it’s not

what you know, it’s who you know. As social creatures, we

like doing business with people we know and trust.

• Customers: Customers are the heart of a business. How can

we help small business owners attract, retain and maximise

their customers?

• Regulation: Nobody likes red tape. Least of all small

business owners with limited time and multiple aspects of a

business to take care of themselves.

• Processes: From hiring, on boarding, HR, running finances,

doing marketing, paying bills, and then actually doing

their real work – entrepreneurs and business owners are

stretched across many business functions themselves.

Innovation and Challenges for Small Business

• Marketing: Direct, social, online, offline. Marketing comes

in all shapes and colours. According to LinkedIn data,

social media marketing was the single highest in-demand

skill in Australia in 2015, closely followed by digital

media marketing. • Time: While time is infinite, the hours in a day are not. Of

course owners are stretched for time. Having more

time boils down to two steps: Identify the essential.

Eliminate the rest.

• R&D: Given the range of tasks above, it’s no wonder that

innovation – tomorrow’s problem – is often shifted to the

backburner.

How invention is created

Turning invention into innovation

• Disruption – A product, process or service needs to

radically disrupt the status quo of the nature. If the

invention is not interesting, nor does it have unique value

and cost differentiation, it’s just an incremental innovation,

at best. (Incremental innovation is fine, but uninteresting in

the context here. And, it is always a target to be

marginalized by true disruptive innovation.

• Business Model Structure – The invention stands a

greater chance for success if it has obvious and immediate

value to the buyer (B2B or B2C), and that is often a

function of a business model disruption. The price seems

lower, but the business model structure is such that it’s

easier to buy more, more often, and feel good about it.

Turning invention into innovation

• Business Model Infrastructure – Slightly different than the prior

element, this involves leveraging the business model

infrastructure available. Think of this as the shift from cash

registers to Point of Sale (POS) terminals. Or more recently, the

transition from credit cards to the virtual wallet. For most

industries (B2B or B2C), it’s the transition to online, not just for

retail, but in terms of any and all financial transactions and fair

exchange of fees.

• Adoption – The invention must have been lead with customer-

centric design thinking. Leading with marketing, especially in the

social era, is to surround the invention with marketing as strategy

– broad committed effort to gain customer interest, drive market

adoption and build industry velocity. The outcome

is adoption measured in terms of numbers of users and customers.

Turning invention into innovation

• Timing – all of these elements are subject to timing. As

products, services, customers and markets create an

ecosystem of opportunity; it requires that these elements

come together at a common time. They can be driven by

a marketing as strategy, approach. Apple does this well.

Others come together as industries anchored in legacy let

go of the past. Banking, moving toward the virtual wallet

is one example. The transition to SaaS and PaaS cloud

software for ERP, and other critical back-office systems, is

another.

Sources of Innovation

• The Unexpected.

• The Incongruity.

• Process Need.

• Industry and Market Structure Change.

• Demographics.

• Changes in Perception, Meaning, and

Mood.

• New Knowledge.

The Unexpected

• The market place is the number one area to

look for opportunities. A good manager

should be constantly studying the market. Is

a particular product or service in greater or

lesser demand than anticipated? Why? Is

there a way we can exploit this unexpected

success? What has to happen if we want to

convert this success into an opportunity?

The Incongruity

• There is a discrepancy between what is and

what should be. This is a key to developing

wildly successful businesses but it’s tricky.

One of the best places to look for

incongruity is in your own customers. Their

complaints and unmet wants are all the hints

you need.

Process Need

• Process need involves identifying your company’s process

weak spots and correcting or redesigning them. This is a

task oriented solution meaning that the source of

innovation comes from within your existing capabilities

and ways of doing business – not the market.

• An example might be a restaurant that identifies that

people wait too long for their entrees and so decides to hire

another chef to speed up creation times.

• Essentially your company will want to look for all weak

links and eliminate them

Industry and Market Structure Change

• Your industry and the market are in continual flux.

Regulations change and some product lines expand while

others shrink. Firms should continually be on the watch for

this.

• One example is deregulation. When a previously regulated

industry becomes open there is historical precedence for

companies that enter early to be very successful. Other

things to watch out for are the convergence of multiple

technologies and structural problems that occur from time

to time (often immediately following an industry boom).

Demographics

• We constantly see changes occur in populations, income

levels, human capital (education) and age ranges. Smart

firms are constantly paying attention to this.

• When it comes to the baby boomers businesses have been

following them constantly as they got older. At present

they are one of the largest as well as the most affluent

demographic groups with high levels of disposable

income.

• Combining demographic data with segmentation and

targeting is a powerful method of accurately meeting a

target market’s desires.

Changes in Perception, Meaning, and Mood

• Over time populations and people change. The way they

view life changes, where they take their meaning from, and

how they feel about things also is modified over time and

smart companies must pay attention to this in order to

capitalize (and avoid becoming forgotten, a relic of ages

past).

• Here are two really good examples. First is a principle

called “downaging” which refers to people who look at 50

as being 40. Industries have responded to this, most

notably in the cosmetic and personal care industry which

provides plenty of solutions to help these people look

younger. Full industries are creeping up that make people

feel younger. Have you spotted any lately?

VT-F4/Innovation and Commercialisation/Support/Lecture 3 Innov and Commerce.pdf

Innovation and Commercialization

Lecture 2 LO1: The context for innovation and determine the difference between invention and innovation.

P2: vision, leadership, culture and team

End of the Session Objectives You will be able to:

• Understand the structure and culture of

innovation

• Understand vision, leadership and team

• Understand the benefits of vision.

Creating a structure and culture of innovation

• Open Communication Between All Company Levels:

Organizing your company around open communication

works wonders. A framework in which every employee

feels that his or her voice is valued is key to getting your

staff involved. Open up lines of communication between

employees and top management by optimizing corporate

communication channels, holding company wide

events/brainstorming sessions, or by allowing employees

to submit ideas digitally through an employee submission

box. Perhaps teams or middle management can begin

weekly meetings with a brainstorming session, where a

prize is presented for the best new idea in the company.

Encouraging open innovation will keep all employees

involved and support employees in sharing their best ideas.

https://www.qmarkets.net/solutions/by-use-case/marketing-and-strategy/

Creating a structure and culture of innovation

• Create a Climate of Ideas: Innovation happens when people feel

their ideas are valued. Make it ok to brainstorm, to offer a germ of

an idea and to make mistakes. Without the fear of failure, your

employees will be free to come up with something really fresh and

new. Encourage executives and managers to utilize crowdsourcing

as a part of their toolbox for employee engagement. The first step

in getting people to innovate is to create a climate in your

companies where all ideas – the good, the bad and the ugly – are

celebrated. This attitude will cultivate new ideas and will also

foster a can-do, innovative attitude of continuous improvement.

Anita McGahan, in the article “5 Top Gurus Talk Innovation

Principles and Practices” says clearly: “A failed experiment is a

success when it reveals underlying market demand for a new

product or when it shows the true costs of a new process. An

experiment is a true failure when nothing is learned.”

http://www.cio.com/article/2441359/innovation/5-top-gurus-talk-innovation-principles-and-practices.html

Creating a structure and culture of innovation

• Project Promotion: In my experience helping leading

organizations across the globe to overcome their

innovation challenges, end-user engagement is often a

deciding factor. Some project managers will take a very

hands-off approach, expecting the initiative to achieve

instant success as soon as a solution is implemented. This

can sometimes work, but the companies who generate the

strongest results are those who take a serious approach to

marketing the project internally.

Creating a structure and culture of innovation

• Reward Innovation – Not Success: Provide incentives for

coming up with viable ideas. Make the act of creativity

itself the one that is lauded and rewarded in your company.

Let your employees know that when they think out of the

box you are listening and appreciating. Institute an

“Innovator of the Month” award, and occasionally choose

an employee for their level of activity/application rather

than their results. Organize contests for “Best New Idea”

that employees come up with in their free time, and remind

them that you appreciate their contribution to the process,

no matter how big or small.

Creating a structure and culture of innovation

• Build a Diverse Team: Although you ideally will look to

hire employees who share the passion and vision of your

company culture, bringing in individuals with a diverse set

of problem solving skills can catapult your process. Bring

professionals with diverse skill-sets and proficiencies

together in order to create an environment that breaks

traditional boundaries and can offer new solutions and

perspectives.

http://www.forbes.com/sites/theyec/2012/12/31/6-ideas-to-promote-innovation-in-your-workplace-this-year/#3c4293202a50

Creating a structure and culture of innovation

• Set Objectives and Track Progress: One of the most

critical elements of business innovation management is

setting clear goals. Brainstorming in a vacuum can end up

leading nowhere, and experiments without boundaries can

indeed be a drain of resources. Yes, you should let your

people run wild with ideas, but at the same time, provide a

clear structure. Your team came up with an idea for

disruptive innovation? Great! Create a framework in which

you can track progress and test your hypotheses, so you

don’t find yourself on costly tangents that don’t meet

market requirements. Although it may feel

counterintuitive, providing structure enables real creativity

and innovation.

https://www.qmarkets.net/

How to Develop a Vision for Innovation, leaders and teams members

• You cannot expect your team to be innovative if they do

not know the direction in which they are headed.

Innovation must have a purpose. It is up to the leader to set

the course and give a bearing for the future. This is set in

broad terms and is described as the mission, core purpose

or vision for the organization. Although each of these is

different, they share much in common and whichever you

choose, there should be one overarching statement which

defines the direction for the business and which people will

readily understand and remember.

How to Develop a Vision for Innovation, leaders and teams members

• As a leader you don’t want happy, comfortable people in

your team. You want passionate, energetic people who are

keen for the journey and ready to take on a challenge. Your

job is to communicate a destination and to persuade them it

is a target that they can believe in and a goal worth

reaching. You can then ask them how best to reach the

destination. Once you have established a vision that is

inspiring you can ask people to be creative and innovative

in moving towards it.

How to Develop a Vision for Innovation, leaders and teams members

• The vision or mission is the starting point for strategic

plans, objectives and metrics. The key performance

indicators of the business will measure how progress is

made in meeting the goals that flow from the vision.

Striving for the vision will always involve change. It is a

journey from where we are today to a better future. There

is a risk in making the changes necessary on this journey

but the leader has to persuade people that there is a bigger

risk in standing still.

• Vision must be desirable, challenging and believable.

Benefits of desirable vidion

• People share a common goal and have a sense of

embarking on a journey or adventure together. This means

they are more willing to accept the changes, challenges and

difficulties that any journey can entail.

• It means that more responsibility can be delegated. Staff

can be empowered and given more control over their work.

Because they know the goal and direction in which they

are headed, they can be trusted to steer their own raft and

to figure out the best way of getting there.

• People will be more creative and contribute more ideas if

they know that there are unsolved challenges that lie

ahead. They have bought into the adventure so they are

more ready to find routes over and around the obstacles on

the way.

VT-F4/Innovation and Commercialisation/Support/Lecture 4 Innov and Commerce.pdf

Page 1

Innovation and Commercialization

Lecture 3 LO2: Explain different types of innovation.

End of the Session Objectives You will be able to:

• Understand different types of innovation

• Understand the innovation process

• Understand the benefits of vision.

Page 2

Types of innovation

• Incremental innovation: Incremental

innovation seeks to improve the systems

that already exist, making them better,

faster cheaper.

Incremental innovation

Incremental innovation seeks to

improve the systems that already exist,

making them better, faster cheaper.

Page 3

Process innovation

Process innovation means the

implementation of a new or

significantly improved production or

delivery method.

Red ocean innovation

Red Oceans refer to the known market

space, i.e. all the industries in

existence today. In red oceans,

industry boundaries are defined and

accepted, and the competitive rules of

the game are known. Companies try to

outperform their rivals to grab a

greater share of existing demand

usually through marginal changes in

offering level and price. As the market

space gets crowded, prospects for

profits and growth are reduced.

Products become commodities, and

cutthroat competition turns the red

ocean bloody.

Page 4

Service innovation

Service Innovation can be defined as “a new or considerably changed

service concept, client interaction channel, service delivery system or

technological concept that individually, but most likely in combination,

leads to one or more (re)new(ed) service functions that are new to the

firm

Page 5

Business model innovation

Business Model Innovation (BMI) refers to the creation, or

reinvention, of a business itself. Whereas innovation is

more typically seen in the form of a new product or service

offering, a business model innovation results in an entirely

different type of company that competes not only on

the value proposition of its offerings, but aligns its profit

formula, resources and processes to enhance that value

proposition, capture new market segments and alienate

competitors

Page 6

Sustainable innovation

Eco-innovation is a term used to describe

products and processes that contribute

to sustainable development

Page 7

Frugal innovation

Frugal Innovation is about doing more with

less. Entrepreneurs and innovators in

emerging markets have to devise low cost

strategies to either tap or circumvent

institutional complexities and resource

limitations to innovate, develop and deliver

products and services to low income users

with little purchasing power

Page 8

Blue ocean innovation

Blue Oceans represent the unknown

market space, i.e. all the industries not

in existence today. Blue oceans are

defined by untapped market space,

demand creation, and the opportunity

for highly profitable growth. In blue

oceans, competition is irrelevant

because the rules of the game are not

set. Blue oceans can be created by

expanding existing industry

boundaries or by reconstructing

industry boundaries.

Page 9

Radical innovation

Radical innovations (sometime

referred to as

breakthrough, discontinuous or disrupti

ve innovations) provide something

new to the world that we live in by

uprooting industry conventions and by

significantly changing customer

expectations in a positive way.

Ultimately, they often end up replacing

existing methods / technologies.

Page 10

Open source innovation /

Crowdsourcing

In production and development, open

source is a philosophy or pragmatic

methodology that promotes free

redistribution and access to an end

product’s design and implementation

details

Page 11

Experience innovation

Companies that try to create holistic

experiences by emotionally engaging

their consumers.

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(Im)possible innovation

Page 13

Disruptive innovation

A disruptive innovation is

an innovation that helps create a

new market and value network, and

eventually goes on to disrupt an

existing market and value network

(over a few years or decades),

displacing an earlier technology.

Page 14

User led innovations

The user is king. It’s a phrase that’s

repeated over and over again as a

mantra: Companies must become

user-centric. But there’s a problem: It

doesn’t work. Here’s the truth: Great

brands lead users, not the other way

around

Page 15

Supply chain innovation

Supply chain innovation is about

applying best practices and

technological innovations to your own

supply chain in order to reduce such

cycle and wait times and other waste

(to use a Lean term) in your in-house

processes.

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Innovation Process

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VT-F4/Innovation and Commercialisation/Support/Lecture 5 Innov and Commerce.pdf

Page 1

Innovation and Commercialization

Lecture 4 LO2: Explain different types of innovation.

End of the Session Objectives You will be able to:

• Understand innovation funnel.

• Understand the incremental and disruptive

innovation process

• Understand the 4 Ps of innovation.

• Understand the frugal innovation.

Page 2

The innovation Funnel

• An innovation funnel is used to describe the steps

that take place in developing a process or product.

The purpose of all innovation is to create

processes or products that meet market needs in

manufacturable or economic forms. In the initial

stages of development, some ideas are collected

which go through a refinery system.

• After refining, a few ideas are left which the

company implements. The ideas that remain after

refining are combined to come up with a new

concept.

Model of the Development Funnel

Page 3

Developing an innovation funnel involves three major steps

• The first step focuses on the wide mouth of the funnel: The aim

of this stage is to collect as many ideas as possible. The more ideas

the company has, the greater the number of products that the co

can develop. You can gather information from competitors,

research, university connections, existing partners, or institutes.

Information can also come by evaluating the market and traveling

to the areas where your customers come from to absorb different

experiences and insights.

• For this stage to move fast, you need to have a clear perspective of

your objectives. As you receive the ideas, explore them and relate

them with your objective to get different points of alignment.

• Having a deep insight about your customers, markets, the

customer’s unmet needs and your ability to implement the ideas

will help you in connecting and exploring the points.

Developing an innovation funnel involves three major steps

• The narrowing segment of the funnel represents the second

step: The ideas that a company generates from the first step go

through screening. The process of screening involves matching the

ideas with the goals to see whether they are related. After this, you

should carry out an assessment of returns and risks to decide on

which ideas to select. It is also at this stage that you need to test the

product or service with actual customers.

• Resources are then allocated to the most promising and attractive

opportunities. Resources are scarce, so it is good to use them where

there will be greater return. However, ideas selected must be in line

with your company’s objective; they must be relevant and connect

to the company’s objectives. Besides, they must also position the

company to strategically carry out future projects.

Page 4

Developing an innovation funnel involves three major steps

• The third stage is the narrow segment of

a funnel: Here, the company ensures that

the ideas selected deliver on the company’s

objectives that were anticipated when the

company was begun. The new product or

service is then released or the market at this

stage.

Why Funnel Concept?

• The funnel concept is simple to adopt, and

that is why many organizations specializing

in different industries use it. However, it

does not explain what it takes to develop a

new product in the market. It also

discourages creativity as new ideas are

pruned so early before they are tested. The

model favors safe ideas and not creative

ideas.

Page 5

Incremental Innovation vs Disruptive Innovation

• Innovation specialists generally divide innovation scope into two

broad categories: Incremental and Disruptive. Incremental

innovation focuses oncost or feature improvements in existing

products or services. Disruptive innovation creates a dramatic

change that transforms existing markets or industries, or even

creates new ones, by introducing groundbreaking new products.

• Should a company put an emphasis on trying to generate one

‘magical’ idea which will revolutionize the business and generate

millions in new revenue streams? Or should they prioritize cost

savings and incremental innovations which will be much more

likely to bring in smaller profits? Both methods have their benefits

and drawbacks. Which one is right for your company depends a lot

on its specific circumstances. Here we will take a look at both

methods.

Incremental Innovation

• Incremental innovation focuses on continually making existing

products or services more competitive by focusing on reducing costs

and improving or adding features. Thanks to its low level of

uncertainty and risk it is by far the most popular form of innovation.

It’s hard to go wrong with incr innovation.

• A good example of incr innovation is Google Gmail, world’s most

popular email service. When first launched, Gmail had few features,

but did one thing very well. It delivered emails quickly, without lots

of confusing ads. As time passed, Google introduced many additional

features and improved its service, making it faster and better. Since

then, the company has successfully emulated this method numerous

times with their other products, from Google Maps to the Chrome

internet browser. Google rushes to get a simple product to market in

order to quickly stake out market share in emerging industries, then

gradually improves their offering, making it the best in the field.

Page 6

Dangers with incremental innovation

• But there are still dangers with incremental innovation –

especially if this is your only method. Take Kodak, for

example. Kodak led the photography industry for years

with incremental, yet steady improvements to traditional

film. When the disruptive innovation of digital imaging

was introduced, it revolutionized the way people captured,

stored and used images – making Kodak obsolete. Had the

company been willing to invest time and effort in more

disruptive innovations, perhaps it would have remained an

industry contender.

Disruptive Innovation- All or Nothing

• It explores new technologies and as such is characterized

by a high level of risk and uncertainty. Ironically,

disruptive innovation often depends on incremental

improvements, refinements modifications in

complementary technologies. Due to the high risk factor,

smaller companies or start-ups usually play important roles

in disruptive innovation. On the positive side, you

sometimes don’t need to compete for market share with

disruptive innovation, rather you branch off and create

your own market. And the eventual pay-off can often be

spectacular – much greater than with incremental

innovation.

Page 7

• Since it’s generally a complex, lengthy process, with big

ups and downs, the criteria used to evaluate a radical idea

should not be the same as those applied to incremental

innovations. Whereas incremental innovation will often

have a formal, phase-gate development model,

disruptive innovation usually requires an informal, flexible

model, especially in the early stages, due to the many

uncertainties. Viewing ideas associated with high

uncertainty from the perspective of mainstream business

and traditional routes either gives a false sense of security

or leads to prematurely rejecting good ideas. You can

switch to a more formal model in the later stages, after

these uncertainties have been minimized.

Disruptive Innovation- All or Nothing

Find Your Innovation Balance

• Whether you choose disruptive or incremental innovation

will depend on many factors – for example, the industry

you are operating in. The rate of technological change

differs greatly between one industry and another. Some

sectors are characterized by rapid change and

disruptive innovations, others by smaller, incremental

ones. But generally speaking, there is no need to put all

your eggs in one basket. At the end of the day, it’s best to

find a balance between the two approaches. Combine the

introduction of the occasional revolutionary product with

many small incremental improvements in existing

products. By having a comprehensive view of your

initiatives over time, you can avoid either overwhelming or

underwhelming the marketplace.

https://www.qmarkets.net/products/idea-management/features/

Page 8

Adopting the Right Innovation Technology to Support your Innovation Framework

• Idea Management platform is often configured to

tackle Business Process Improvement, allowing it to serve

as a framework for analyzing and improving the ongoing

nature of processes as part of organizations’ business

models. It can generate new policies and procedures,

helping to ensure that your business operations deliver

optimal results at a minimal cost, meeting the market’s

needs and expectations.

• With this platform, you design a tailored made process for

both incremental and disruptive innovation, optimizing

their effectiveness.

Designing and implementing effectively, business process improvement, can deliver significant benefits to

any organization

• Cost reduction

• Continuous Improvement (CIP)

• Greater strategic value

• More efficient resource utilization

• Higher quality products and services

• Improved customer satisfaction

• And more…

https://www.qmarkets.net/products/idea-management/features/

https://www.qmarkets.net/solutions/by-use-case/process-improvement/

https://www.qmarkets.net/cfo/

https://www.qmarkets.net/solutions/by-use-case/process-improvement/

https://www.qmarkets.net/solutions/by-use-case/marketing-and-strategy/

https://www.qmarkets.net/solutions/by-use-case/process-improvement/

https://www.qmarkets.net/solutions/by-use-case/marketing-and-strategy/

https://www.qmarkets.net/solutions/by-use-case/market-research/

Page 9

4 Ps of Innovation

• ‘Product innovation’ – changes in the things

(products/services) which an organisation offers

• ‘Process innovation’ – changes in the ways in

which products and services are created or

delivered

• ‘Position innovation’ – changes in the context in

which the products/services are framed and

communicated

• ‘Paradigm innovation’ – changes in the

underlying mental models which shape what the

organisation does

PRODUCT INNOVATION

• Perhaps the most commonly understood form of

innovation is that which introduces or improves

a product or service – a change in what is offered to end

users. The Bic ballpoint pen is an example of a product

innovation, which has also benefited from a range of

incremental innovations since its original invention. The

emblematic humanitarian product is food, which is the

dominant form of assistance. Different forms of food aid

might be seen as incremental innovations.

• There may also be innovative products which help to

achieve humanitarian goals. For example, the LifeStraw is

a portable water filter developed by Vestergaard-Frandsen

which enables individuals to drink clean water from almost

any source.

http://www.humanitarianinnovation.org/innovation/types#1

http://www.humanitarianinnovation.org/innovation/types#2

http://www.humanitarianinnovation.org/innovation/types#3

http://www.humanitarianinnovation.org/innovation/types#4

Page 10

PROCESS INNOVATION

• Innovations can also focus on processes through which

products are created or delivered. Because so many of the

products used in relief settings are initially developed for

non-relief contexts, a natural focus for humanitarian

innovation is to consider how an existing product might be

used in resource-poor or rapidly changing settings.

Examples of process innovations that have had a positive

effect on the humanitarian sector are the increasing

stockpiling of goods in strategic locations, or the use of

pre-made packs and kits.

POSITION INNOVATION

• The third focus of innovation involves re-positioning the

perception of an established product or process in a

specific context. Position-based innovations refer to

changes in how a specific product or process is perceived

symbolically and how they are used. For example, Levi-

Strauss jeans are a well-established global product line,

originally developed as manual workers’ clothing

materials, but then re-branded as a fashion item.

• In the humanitarian context, position innovations include

changes in the signals that are disseminated about a

humanitarian organisation and its work. This may relate to

the way in which aid is marketed and packaged for

potential donors.

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PARADIGM INNOVATION

• The final ‘P’ relates to innovation that defines or redefines

the dominant paradigms of an organisation or entire

sector. Paradigm-based innovations relate to the mental

models which shape what an organisation or business is

about. Henry Ford provides a pithy quote, when talking

about the development of the Model T motor car: ‘If I

asked people what they wanted, they would have asked for

a five-legged horse’.

4 Ps Model

Page 12

4 Ps and innovation space strategy

• Step 1 (Paradigm: How do we frame what we

do?): Use innovation to improve the way you do

business. The change could be radical, but bear in

mind that not all changes are always positive. Let

your imagination take you to all the possible

changes that can leverage your profit. That

includes changes in your business model, like, for

example, changing your published products from

print to online platforms.

4 Ps and innovation space strategy

• Step 2 (Product: What do you offer?): Ask

yourself and your team questions like, how can

you improve your product or service? How can

you make it more appealing and better than other

available products?

The suggestions can include ways to make your

product better, known as incremental change.

Another form of suggested innovation is making

your product completely different or radical

change.

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4 Ps and innovation space strategy

• Step 3 (Process: How do you create that offering?): This

doesn’t only include the preparation processes of your

product or service. Think of all the steps you take, such as

supplying, workflow, hiring people, and training. How can

this all be enhanced to increase your profit? What are the

latest trends to carry out those processes?

• Step 4 (Position: Where do we target the offering?):

• This area works on changing the context in which the

products/services are framed. How are they

communicated? How do people see you? Customers?

Employees? The Public? How can you make this image get

better?

4 Ps and innovation space strategy

• Step 5 (Analyze all your findings): Keep on asking

questions until you reach satisfying answers.

Write down your findings with all the information.

Review your analysis regularly; it might change a

little with the market growing. Always work on

bringing more innovation to your business and

remember, Albert Einstein saying, “If you always

do what you always did, you will always get what

you always got”.

Page 14

Frugal innovation

Frugal Innovation is about doing more with

less. Entrepreneurs and innovators in

emerging markets have to devise low cost

strategies to either tap or circumvent

institutional complexities and resource

limitations to innovate, develop and deliver

products and services to low income users

with little purchasing power

Page 15

Development of a Pattern System for Frugal Innovations

VT-F4/Innovation and Commercialisation/Support/Lecture 6 Innov and Commerce.pdf

Page 1

Innovation and Commercialization

Lecture 5 LO 3: Process required to commercialize innovation.

End of the Session Objectives You will be able to:

• Understand product development process.

• Understand the market strategy

development

• Understand the commercialization.

• Understand the importance of

commercialization.

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What is commercialization?

• Commercialization is the process by which a new

product or service is introduced into the general

market. Commercialization is broken into phases,

from the initial introduction of the product through

its mass production and adoption. It takes into

account the production, distribution, marketing,

sales and customer support required to achieve

commercial success. As a strategy,

commercialization requires that a business develop

a marketing plan, determine how the product will

be supplied to the market and anticipate barriers to

success.

Page 10

Importance of Commercialization

• Societal Importance

• Economic Growth

• Industry Partnerships

• Recruitment and Retention

• Entrepreneurship

Page 11

Tips for Planning a Flawless New Product Launch-Pre-Launch

• Research the space in-depth: problem that the product solves, understand the end user and their unique needs are.

• Focus on a single buyer persona.

• Write a mock press release.

• Build your messaging -- but don’t marry it.

• Share your messaging with everyone.

• Get involved in the beta.

• Change your messaging and find the best hook.

• Set ambitious goals.

• Take the time to get the market ready

• Build compelling creative assets.

• Assemble your go-to-market strategy.

Page 12

Tips for Planning a Flawless New Product Launch-Launch

• Choose the right channels: During the planning

phase you should have outlined the channels you

want to use to share your message

• Activate your sales team: Work with your sales

team to coordinate meetings and outreach the day

of the launch, or directly after.

• Make it an event: Even if your launch isn’t a live

event with speakers, you can still make it an

occasion.

Tips for Planning a Flawless New Product Launch-Post Launch

• Don’t lose your momentum: You’ll reach a lot of people

with your launch, but it often takes several touch points

before someone is convinced to start a trial or get a demo.

• Revisit your "go-to-market" doc for reporting: With all

the work that’s going into launch, you don’t want to have

to retroactively figure out what to report on. If you’ve done

a good job with your go-to-market doc, you should be able

to create a new slide and fill in your results with real

numbers.

• Shift your focus on retention: Now that you’ve

successfully launched a new product, shift your attention to

retention.

Page 13

Why Funnel Concept?

• The funnel concept is simple to adopt, and

that is why many organizations specializing

in different industries use it. However, it

does not explain what it takes to develop a

new product in the market. It also

discourages creativity as new ideas are

pruned so early before they are tested. The

model favors safe ideas and not creative

ideas.

VT-F4/Innovation and Commercialisation/Support/Lecture 7 Innov and Commerce.pdf

Page 1

Innovation and Commercialization

Lecture 6 LO 3: Process required to commercialize innovation.

End of the Session Objectives You will be able to:

• Understand a business plan.

• Understand appropriate forecasting method

• Understand risk and uncertainty.

Page 2

Building the Innovative Business Case

• One of the toughest aspects within

Innovation is making the Business Case.

Much of the information is imperfect, the

returns are often fuzzy and unclear in the

early stages and the doubters line up ready

to block and deter new ideas from entering

the commercialization process. Justifying

new innovation to others can often be really

hard.

How can you reduce many of these uncertainties?

• Often what is missing is ensuring the innovation business

case takes a clear methodical approach and builds the

arguments up in a sound structured way. Far too many

cases are based on emotion and gut feel. Some of these

clearly work but an awful lot get lost along the way,

especially in the more structured organization. So often

good ideas are ‘killed’ because the Business Case was not

as well thought through as possible. It simply became the

necessary chore at the end of a set of events that were in

themselves a mountain to climb. The last mile may be

putting together the best possible business case, and

sometimes the hardest to achieve, but the accumulation of

all your efforts in many cases rest on this document.

Page 3

What is a good business case?

• A good business case for innovation concepts needs to show the

areas of clear discussion, not just ‘brushing over’ the unknowns but

attempting to quantify and qualify them as best as you can with the

information to hand. Ensure conclusions to reduce down the more

‘emotive’ parts, so as to allow the ‘idea/concept’ to firm up, stand

tall & be seen for their real merits. Deep conviction needs to come

through when there are a number of unknowns to allow for genuine

discussion & growing identification in solving issues & evaluating

risks as a common point.

What is a good business case?

• We often write the business case from our own

perspectives not from others, especially not from the

consumer insights that might have started us off on the

given journey in the first place. We also need to reflect and

account for the multiple stakeholders, both internally and

externally, that this idea is trying to address through the

innovation concept we are proposing.

• Knowing the issues, reducing the ‘noise and distractions’

and making the professional case is what we need to do to

attract commitment to the projects we are working on, At

the same time we also need to consciously work on

keeping the project on track. This all helps.

Page 4

What is the suggested approach we should be taking?

• Firstly I would argue that each organization needs a clear

systematic model that you go through, that everyone goes

through, and that takes the business case through a

structured step-by-step approach. It needs to allow

enabling arguments based on facts to build and grow, to

lay out challenges and uncertainties. This enables everyone

involved to see the same steps of approach taken in making

their business case. Transparency gives similarity and the

‘common’ business evaluation provides a consistency of

approach to all cases, irrespective across the organization.

It gives everyone the same platform to justify their

business case.

The Business Case needs to include within its proposal:

• There will be different creativity tools to start the process

but the need is to structure the project information on a

comparable basis. This requires laying out often difficult

definitions of success, providing suggested guidelines to

individuals listening to attempt to get everyone on the

‘same page’ so as to judge the case, provide different

options of alternatives to ‘getting ready’ within the case

and what these might means and then clearly point to

where these issues can be possibly resolved. Innovation in

its early stages is full of open questions and the hard work

is trying to answer these as best you can, ignoring the

difficult issues does not help your case I would argue, it is

better to address them as best you can.

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The Business Case needs to include within its proposal:

• Then we move into building the business case preparation,

cost and benefit analysis (where we can), clarifying

opportunity needs (for instance unmet customer needs),

offer different factor analysis, assessing stakeholder

interests, clarifying uncertainties where you can.

• The next group of factors to consider is making the clear

assessments of competition, outlining the tactical moves to

be considered for market attractiveness, the implications,

the ability to execute and what business model does the

business case take to provide the fit and attract the

commitment. Finally how to stage this- through piloting,

trails or moving towards full blown commercialization and

what each will entail in commitment and resources.

Business Plan

• A business plan is a written document that

describes your business. It covers

objectives, strategies, sales, marketing and

financial forecasts. A business planhelps

you to: clarify your business idea. spot

potential problems.

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What business plan includes

• Details of the product or service

• Assessment of the market opportunity

• Identification of target customers

• Barriers to entry and competitor analysis

• Experience, expertize and commitment of the management

team

• Strategy for pricing, distribution and sales

• Identification and planning for key risks

• Cash flow calculation including break even points and

sensitivity

• Financial and other resources requirements of the business

Forecasting Innovation

• Forecasting the future has a pretty bad track

record, but central role in business planning.

I most cases the outputs, that is predicted

are less valuable than the process of

forecasting. If conducted in the right spirit,

forecasting should provide a framework for

gathering and sharing data, debating

interpretations and making assumptions,

challenges and risks more explicit.

Page 7

Methods to support forecasting

• Trend extrapolation

• Product and technology road mapping

• Regression, econometric models and

simulation

• Customer and marketing methods

• Benchmarking

• Brainstorming (internal analysis)

• Delphi and experts (external assessment)

• Scenarios

Trend extrapolation

• Trend extrapolation is a forecasting

technique that can be used to estimate both

demand for and supply of human resources.

This technique is based on what is called a

time series – a set of observations measured

at successive points in time (e.g., weekly,

monthly, yearly).

• Uses: short term, stable environment.

• Limitations: Relies on past data and

assumes past patterns.

Page 8

Product and technology road mapping

• The product–technology roadmap process developed at Philips

Electronics aims at better integration of business & technology

strategy & improvement of the front end of the product creation

process (the concept and idea phase). The outcomes are roadmaps

that present products and technologies required to realize these

products, as well as their mutual relationship over a five-year

period. Teamwork, integral involvement by the organization &

good communication are essential characteristics of the process.

Benefits include a shared product–technology strategy & a cross-

functional approach to product & technology planning & vision

building.

• Uses: medium term, stable platform & clear trajectory

• Limitations: incremental, fails to identify future uncertainties.

Regression, econometric models and simulation

• Regression: A technique for determining the statistical

relationship between two or more variables where a change

in a dependent variable is associated with, and depends on,

a change in one or more independent variables.

• Econometric model: Forecasting technique that uses

computer processed mathematical equations (that are based

on historical data and certain assumptions) to predict

economic conditions. These models are employed

commonly in determining the economic aspects of changes

in government policies, regulatory conditions, interest

rates, demographic changes, tax laws, wage levels, etc.

Page 9

Regression, econometric models and simulation

• Simulation modelling is the process of creating and

analyzing a digital prototype of a physical model to predict

its performance in the real world. Simulation modelling is

used to help designers and engineers understand whether,

under what conditions, and in which ways a part could fail

and what loads it can withstand.

• Uses: Medium term, where relationship between

independent and dependent variables understood.

• Limitations: identification and behaviour of independent

variables limited

Customer and marketing methods

• Strategy combines all of its marketing goals into one

comprehensive plan. A good marketing strategy should

be drawn from market research and focus on the product

mix in order to achieve the maximum profit and sustain the

business.

• Customer marketing is built around activities designed to

drive retention, loyalty, advocacy, growth and community

participation for current customers. The strategy, with the

goal of acquiring new customers, relies heavily on

maximizing strong customer relationships.

• Uses: medium term, product attributes and market segment

understood

• Limitations: sophistication of users, limitations of tools to

distinguish noise and information

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Benchmarking

• Benchmarking is comparing one's business processes and

performance metrics to industry bests and best practices

from other companies. In project management

benchmarking can also support the selection, planning

and delivery of projects. Dimensions typically measured

are quality, time and cost.

• Uses: medium term, product and process improvement

• Limitations: identifying relevant benchmarking candidates

Brainstorming (internal analysis)

• Structured idea generation or brainstorming, aims to solve

specific problems or to identify new product.

• A small group of experts are gathered together and allowed

to interact. A chairman records all suggestions without

comment or criticism to find as many ideas as possible.

• Vote on various suggestions to select the best.

• Steps required are: understanding the problem, creating

ideas and planning for action once selected the best

idea.

Page 11

Delphi and experts

• The Delphi method (/ˈdɛlfaɪ/ DEL-fy) is a structured

communication technique or method, originally developed

as a systematic, interactive forecasting method which

relies on a panel of experts. The experts answer

questionnaires in two or more rounds.

• Uses: long term, consensus-building

• Limitations: expensive, experts disagree or consensus

wrong

Scenarios

• Scenarios are internally consistent descriptions of

alternative possible futures, based upon different

assumptions and interpretations of the driving forces of

change. Scenario planning, also called scenario thinking

or scenario analysis, is a strategic planning method that

some organizations use to make flexible long-term plans.

Scenarios to be effective need to be inclusive, plausible

and compelling as well as being challenging to the

assumptions of stakeholders.

• A strong scenario should be consistent, plausible,

transparent, differentiated, communicable and practical.

• Uses: long term, high uncertainty.

• Limitations: time consuming, unpalatable outcomes

Page 12

Assessing risk and recognizing uncertainty

• Dealing with risk and uncertainty is central to the

assessment of most innovative projects. It is usually

considered possible to estimate risk, either qualitatively –

high, medium, low or ideally by probability estimate.

• Uncertainty is by definition unknowable, but nonetheless

the fields and degree of uncertainty should be identified to

help to select the most appropriate methods of assessment

and plan for contingencies.

• Traditional approaches to assessing risk focus on the

probability.

Anticipating the resources

• The Concept of a Project Resource In the context of

project management, a resource is any entity that

contributes to the accomplishment of project activities.

Most project resources perform work and include such

entities as personnel, equipment and contractors. However,

the concept of a resource can also be applied to entities that

do not perform work, but which must be available in order

for work to be performed. Examples include materials,

cash, and workspace. So the focus should be on the

resource that is of greatest concern to most organizations

personnel. In a project management system, personnel

resources may be identified as individuals by name or as

functional groups, such as computer programmers.

Page 13

VT-F4/Innovation and Commercialisation/Support/Lecture 8 Innov and Commerce.pdf

Page 1

Innovation and Commercialization

Lecture 7 LO 3: Process required to commercialize innovation.

End of the Session Objectives You will be able to:

• Understand the planning of innovation.

• Understand the challenges of innovation

• Understand the executive inquisition.

• Understand the funding sources

• Understand the resources required to

commercialize

Page 2

Planning Innovation

Page 3

Page 4

Page 5

Page 6

Page 7

Page 8

Page 9

Page 10

Page 11

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Page 13

Page 14

Most Common Reasons Businesses Seek Funding

• Working capital

• Asset purchase

• Start a business

• Growth funding

• Debt restructuring

• Product development

• Marketing

• Distribution

Working capital

• Sufficient working capital is a key aspect of any

company’s financial health, and not having enough

working capital can have a serious impact on the future of

your business.

• Many businesses choose to apply for external funding to

create enough working capital to enable them to fulfil their

growth ambitions.

• A loan can cover short-term funding requirements while

giving the business the money it needs to grow, or can

bridge the gap between customer orders and supplier

payments to help the company meet its funding

obligations.

Page 15

Working capital

• This type of funding can also allow your company to take

advantage of new opportunities that arise, investing in new

products or services to enable you to expand. Working

capital loans can provide a useful ‘cushion’ for your

company should you need a bit of extra cash – you’ll know

your day-to- day running costs are covered with a loan, so

you’ll have the funds available to meet any unexpected

costs. Seasonal businesses may benefit from working

capital funding during their quieter periods to cover basic

expenses.

Asset purchase

• Growing your business and increasing sales often requires

you to purchase assets such as new machinery or vehicles.

While you may have enough cash to cover working capital

expenses for your company, you may look for a loan to

cover the purchase of new assets to enable your business to

expand. An asset funding loan is a great way to spread the

costs of acquiring an expensive new asset. Fixed monthly

repayments and loan terms from 6 months to 5 years can

help you plan your cash flow in advance so you can make

the most of your opportunity to grow.

Page 16

Asset purchase

• An asset purchase loan can be used to buy different things

for your business, depending on what you need to fulfil

your expansion plans. Funds can be used for business

vehicles, whether you’re looking to buy your company’s

first vehicle or want to increase capacity by adding to your

existing fleet. You could also use a loan to buy office and

IT equipment to make sure your staff have everything they

need to grow the business, or new machinery to enable you

to make new products or scale up production while

spreading the cost instead of paying a large amount

upfront.

Start a business

• New businesses that are still in the start up stage will need

funding to get off the ground. While most directors will

use their own funds to start the business, very few manage

to entirely self-fund the company to profitability, and will

therefore have to seek external funding. There are a variety

of options for external start up funding, including bank

loans, borrowing from family and friends, equity

investment from a business angel, crowdfunding, and

funding grants. A loan to start a business can be used for

everything from buying stock to marketing to hiring staff,

but start up funding can be difficult to secure and many

traditional finance providers will require lots of

information, such as a detailed business plan.

Page 17

Growth funding

• If you’re looking to grow your business to take it to the

next level, you may very well need funding that enables

you to execute on your business plans. Whether you want

to increase sales, expand your range of products or

services, move into new premises, hire more staff, or

expand internationally, a loan for growth finance can help.

However you are planning to expand your business,

growth finance that’s right for your company can help you

take advantage of new opportunities and make your

ambitions a reality. If your business has its daily running

costs covered, external funding may be the solution you

need to grow. Many such loans will have fixed monthly

repayments over the term of the loan, enabling you to more

easily plan your business finances as you grow.

Debt restructuring

• If you need to restructure your company’s debt, a

loan that consolidates your borrowings and

reduces costs can make your finances more

manageable for your business. A loan to

restructure your existing debt can make financial

planning easier by reducing the number of

monthly repayments you have to keep track of,

and could potentially reduce your total monthly

repayments. Refinancing your existing company

debt can help your company grow by freeing up

cash in your business for working capital and

expansion.

Page 18

Resources required to coomercialize new product or services

• Office space

• Personnel

• Equipment & materials

• Access to technology

• Access to distribution channels

• Availability of external services

VT-F4/Innovation and Commercialisation/Support/Lecture 9 Innov and Commerce.pdf

Page 1

Innovation and Commercialization

Lecture 8 LO 3: Process required to commercialize innovation.

The impact of technologies on innovation

Page 2

End of the Session Objectives You will be able to:

• Understand the impact of technology on

innovation.

• Understand the outsourcing and shared

services and

• Understand the business process

reengineering.

• Understand the use of big data

• Understand the role of social media

Outsourcing

• The practice of having certain job functions done outside a

company instead of having an in-house department or

employee handle them; functions can be outsourced to

either a company or an individual .

• Outsourcing has become a major trend in human resources

over the past decade. It's the practice of sending certain job

functions outside a company instead of handling them in

house. More and more companies, large and small, are

turning to outsourcing as a way to grow while restraining

payroll and overhead costs

Page 3

How can you make outsourcing work for your business?

• Make sure the company you're hiring can really do the job. That

means getting references. Ask former or current clients about their

satisfaction with the client. Find out what industries and what type

of workload the firm or individual is accustomed to handling. Can

you expect your deadlines to be met, or will your small business's

projects be pushed aside if a bigger client has an emergency?

• Also, make sure you feel comfortable with who will be doing the

work and that you can discuss your concerns and needs openly. Ask

to see samples of work if appropriate.

• Hire independent contractors. Instead of hiring an in-house

bookkeeper, for example, you might outsource the job to an

independent accountant who comes in once a month or does all the

work off-site. Independent contractors can be more flexible and

lower in cost than outsourcing firms.

Benefits of Outsourcing

• Outsourcing can free up cash, personnel, facilities and time

resources for a company. It can result in cost savings from

lower labor costs, taxes, energy costs and reductions in the

cost of production.

• In addition to cost savings, a company may also employ an

outsourcing strategy in order to focus on its core business

competencies. This allows the company to devote more

resources to what it does well, which can improve efficiency

and increase its competitiveness. Production can be

streamlined and production time shortened while reducing

operational costs.

• A company may also choose to outsource in order to avoid

government regulations or mandates, such as environmental

regulations or safety regulations and requirements.

Page 4

Disadvantages of Outsourcing

• The relationship with the third party that takes on the outsourced

functions must be managed. This includes the negotiating and

signing of contracts, which requires time and the involvement of a

company's legal counsel, as well as the day-to-day communication

with and oversight of the outsourced work.

• Security is an important factor in outsourcing. The relationship

will inevitably involve the third party organization's access to

sensitive business data, trade secrets and other confidential

information that is necessary for it to perform its contracted

function.

• There may also be some negative public relations impacts for a

company when outsourcing results in the loss of a large number of

jobs.

Shared services

• Shared services is the provision of

a service by one part of an organization or

group, where that service had previously

been found, in more than one part of the

organization or group. Thus the funding and

resourcing of the service is shared and the

providing department effectively becomes

an internal service provider.

Page 5

Why Shared Services?

• Shared services are cost-efficient because they centralize

back-office operations that are used by multiple divisions

of the same company and eliminate redundancy. Some

companies use a chargeback system to bill divisions that

use the service on a per-use, per-quarter or per-year

basis. Other companies absorb the cost of shared services

as part of the continuing cost of running the business.

Today, most companies employ a shared services model

for finance, human resources management (HRM) and

information technology (IT).

Business process reengineering

• Business Process Reengineering involves

the radical redesign of core business

processes to achieve dramatic

improvements in productivity, cycle times

and quality. In Business Process

Reengineering, companies start with a

blank sheet of paper and rethink

existing processes to deliver more value to

the customer.

http://searchcio.techtarget.com/definition/human-resource-management-HRM

http://searchdatacenter.techtarget.com/definition/IT

Page 6

Business process reengineering

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Big data to predict future behaviour and trends

• Big data is the name that has been given to that

combination of advanced computer analysis and huge

datasets – although I prefer the term ’smart data’ as it

emphasises that the analysis is just as, if not more,

important than the size of the data. And by cleverly

applying it to spot emerging trends we have the closest

thing yet to a crystal ball.

• It makes sense, if you think about it. Until recently, trend

analysis and prediction often came down to ‘gut instinct’ –

that feeling that people who are confident in their abilities

get, and which they often feel puts them at the top of their

game or gives them an edge over their competitors.

Page 11

A gut feeling is not a good predictor

• Throughout history, and particularly in

business, plenty of ‘great’ strategists have

fallen flat on their faces because their gut

instinct let them down at a crucial point.

Experience certainly helps, but experienced

people can be unlucky just as often as

rookies – if by “luck” we mean anything

outside of our control which could interfere

with our desired outcome.

Data-driven predictive analysis

• What data-driven predictive analysis does is

remove the egotistical hubris of the ‘gut

feeling’. It also minimises the random

influence of luck, by making us aware of as

many of the factors which could influence

our outcome as possible – giving us the

vital opportunity to bring them under our

control.

Page 12

Role of social media

• Marketing is a great example. Times have changed since

George Gallup introduced market research by polling

customers in the 1930s. With the advent of social media

and the internet, we’re used to (knowingly or

unknowingly) sharing vast amounts of data about

ourselves, our interests, habits, likes and dislikes – and

savvy marketers have been quick to tap into this.

• Trending topics flash across Facebook and Twitter every

day, making it easier than it has ever been before to work

out what people are looking for, and what they want.

Products and services can then be marketed to fill those

needs. Services such as Trendera and Trend Hunter collate

this data and use it to answer specific questions for their

business customers.

Spotting trends

• The ability to know what the public wants before they know it

themselves is every marketer’s Holy Grail. In retail, online and

offline customer behaviour can be measured to microscopic detail.

That data can be compared with external data, such as the time of the

year, economic conditions and even the weather, to build up a

detailed picture of what we’re likely to buy, and when. Walmart, a

business which has put the big data ethos at the heart of its

operations, bases all of its stocking decisions on data algorithms.

Thanks to a famous early experiment in big data towards the start of

the last decade, they learned that demand for beer and pop-tarts

would often increase in areas forecast to be hit by severe weather

such as hurricanes. Since then they’ve collected and drilled into data

with ever-increasing vigour, yielding more and more insights which

inform their stocking and logistical operations year in, year out.

Page 13

The basic principles of data-driven predictive analytics

• The basic principles of data-driven

predictive analytics are being used to spot

trends in all industries. The fortunes of

internationally-renowned fashion and

lifestyle brands are made or broken by their

ability to predict what we want. In the not-

so-old days, this would often involve

identifying ‘trend setters’ – those ultra-cool

individuals who the rest of us mere mortals

aspire to be like.

Role of social media (2)

• Millions of photos are uploaded to Facebook, Twitter and

Instagram every day, and algorithms have been developed

to scan them as quickly as they’re shared, picking out the

brands of drinks we’re enjoying in our holiday snaps, and

even our moods. People with large numbers of friends or

followers can generally be assumed to be more sociable

and influential, so the algorithm can identify them as more

valuable trend indicators.

Page 14

Spotting trends in small businesses

• Today, our ability to predict trends is limited only by our

ability to think SMART about the data and the technology

we have available to us, rather than limited by the data and

technology itself. Despite the name big data, it’s no longer

something which is solely for big business, with dedicated

IT teams and warehouses stuffed with years of collated

records. Much of the technology is based on free, open-

source software, or inexpensive, software-as-service cloud-

based solutions. And a lot of businesses have gained very

valuable insights from the free, huge public datasets made

available by companies like Google (Google Trends is a

fantastic tool) and government services such as

data.gov.uk.

Social media for promotion and distribution

• Facebook: With more than 1.59 billion users, Facebook comprises of the largest blend of demographics of any social platform. It

provides an extraordinary medium for your business to connect

with your prospective customers all around the world.

• Witter: Twitter’s value lies in its ability for your posts to go viral:

the more people share your posts and “retweet” your content, the

more followers you will attain.

• LinkedIn: If you are working in a B2B field, this is the social

media network for you to focus on.

• Instagram: We use this popular photo-sharing platform at events

and tradeshows.

• Pinterest: Only use this channel if you have great images to share.

• Only use this channel if you have great images to share

• YouTube

VT-F4/Management Accounting/Module Booklet/Harvard Referencing.pdf

@ICTM PAGE 1 OF 9

ICON COLLEGE OF TECHNOLOGY AND MANAGEMENT

Harvard Referencing and Citation Guidelines

Referencing:

points or numbering)

PRINTED/PUBLISHED SOURCES

Book: by one Author

@ICTM PAGE 2 OF 9

Reference List: Barker, R., Kirk, J. and Munday, R.J. (1988) Narrative analysis. 3rd ed. Bloomington: Indiana University Press. In text reference for the above examples:

Book: Translated Author (surname), Initials. (Year) Title of book. Translated from (language) by (name of translator) Place of publication: Publisher.

Canetti, E. (2001) The voices of Marrakesh: a record of a visit. Translated from German by J.A.Underwood. San Francisco: Arion.

Multiple Books by same Author published in the same year Author (surname), Initals.(Year a/b/c) Title of book. Place: Publisher.

Soros (1966a) mentioned in his …………… According to Soros (1966b) modern literature……….

@ICTM PAGE 3 OF 9

Chapter of edited book or Secondary reference for Book and Journal

When an author refers to another author’s work and the primary source is not available

References List:

N.B. You are advised that secondary referencing should be avoided wherever possible and you should always try to find the original work

Journal Articles

Boughton, J.M. (2002) The Bretton Woods proposal: an in-depth look. Political Science Quarterly, 42(6), pp.564-78.

Foreign Journal

Author (surname), initials. (Year) Title of article [square brackets] Journal title Edition Page number Language of translation (round brackets) References List:

Caballero, D. (2003) [Policing without borders] Cambi16. 1(668) pg. 24 (in Spanish)

Report

Author (surname), initials. (Year) Title of report (underline or italicise) Publisher Report code and number (in brackets) References List:

Dearing, R. (1996) Review of qualifications for 16 – 19 year olds: quality and rigour in A Level examinations. London: SCAA Publications (COM/96/467)

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Annual Report:

Corporate author, Year of publication. Full title of annual report (if available), Place of Publication: Publisher.

Hounsome, I. W. (2001) Factors affecting the design and performance of flexible ducts in trench reinstatements. Unpublished Ph.D. thesis. Napier University.

Newspaper

Article with author

Author (surname), initials. (Year) Article Title (underline or italicise) Name of Newspaper Date (day, month, year) Page number References List:

Ward, L. (2004) Diploma plan to reward lower and higher abilities. The Guardian.18th February, p.4.

Article without an author

Title of publication Year of publication (in brackets) Title of article (underline or italicise) Day and Month Page number References List:

The Guardian (2004) HSBC CEO has come down at last. 23rd November, p. 10.

@ICTM PAGE 5 OF 9

ELECTRONIC SOURCES

Electronic Book (e-book)

Author (surname), initials. (Year) Title of book (underline or italicise) Name of e-book supplier [Online] Available at: URL (Date accessed) References List:

Articles in Electronic Journal

Haliday, J. (2004) 'Ford dealers test custom cable ads', Advertising age,75 (42), pg. 6. Proquest [Online]. Available at: http://proquest.umi.com/ (Accessed: 23 November 2004).

Article in Internet Journal Database

Lloyd, J. (2001) Blessed are the pure in heart: globalisation. New Statesman, 23 April [Online]. Available at: http://www.findarticles.com/p/articles(Accessed: 23 November 2004).

Online Material in the Internet without Date

Author (surname), initials. (Year) Title of article (underline or italicise) [Online], issue [Online] Available at: URL of web page (Date accessed).

References List:

Lloyd, J. (No Date) Blessed are the pure in heart: globalisation [Online]. Available at: http://www.findarticles.com/p/articles (Accessed: 23 November 2004).

Online Material from Internet without Author’s Name

Name of the Organisation, (Year) Title of article (underline or italicise) [Online] Available at: URL of web page (Date accessed).

References List: Marks & Spencer (2010) Marks and Spencer’s Corporate Strategy [Online]. Available at: http://www.m&s.co.uk/corporate/ (Accessed: 23 November 2004)

@ICTM PAGE 6 OF 9

Images from the Internet

Author (surname), initials. (Year) Title of image (underline or italicise) [Online image] Available at: URL (Date accessed) References List:

Marshall, J. (2000) Cathedral clock. [Online image]. Available at: http://www.westminstercathedral.org.uk/art/art_cathclock.html (Accessed 23 November 2004).

OTHER SOURCES

References List:

Sanders, B. and William, B. (2001) Java in 2 semesters. (version 2) [computer programme] Microsoft Inc. New York.

Atlas

As for books, using the title page to find the information

References List: The times atlas of the world (2004) London: Times Books.

Video / Film Title of programme/film (underline or italicise) Year of distribution (in brackets) Director [Videocassette] Place of distribution: distribution company

References List All about Eve (1977) Directed by Joseph Mankiewiez [Film]. United States: Twentieth Century Fox.

@ICTM PAGE 7 OF 9

Television programme Title of programme (underline or italicise) Year of publication (in brackets) Name of channel Date of transmission (day/month/time)

References List

Coronation Street (2004) ITV1, 25 November. 19.00hrs.

Audiocassette/CD/DVD

Author (if available, if not use title first) Year of publication (in brackets) Title of recording (underline or italicise) [Audiocassette] Place of publication: publisher. References List

Buenos: world Spanish (1995) [Audiocassette or CD or DVD]. London: BBC Books.

QUOTATIONS AND CITING INSIDE THE TEXT

You can incorporate references and quotations in a number of ways. The following examples use the Harvard Referencing.

Short quotations of a sentence or two are enclosed with quotation marks (“…”) and included in the main text.

Short Quotation

In this example, you are making a direct quote. Up to two lines can be included in the body of the text and must include the page number.

Smith (2003, p. 11) states that “Harvard referencing has to be done accurately”

@ICTM PAGE 8 OF 9

Longer Quotation

This should be indented in a separate paragraph. If part of the quotation is omitted, then this can be indicated by three dots.

Citations (inside the text)  If the originator’s name occurs naturally in the sentence, the year of publication

should follow in brackets. Example Smith (2003) found that…or, In a recent study Smith (2003) argued that…

 If the author’s name would not naturally be included in the sentence add the author’s

name and year of publication in brackets i.e. Example

Management theories have become much more diverse (Anderson, 1996)

 For publications by two authors: Example

In a recent study (Smith & Jones, 2003) it was argued that…

 If you are referring to a particular page or section of a work and the author’s name

would naturally be included in the sentence the date and page numbers follow in brackets i.e.

Example

In a recent study Smith (1996, p.26) argued that….

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 If the author’s name will not normally be included in the sentence all information is given in brackets i.e.

Example

In a recent study (Smith, 1996, p.26) it was argued that…

 In cases where the name of the author cannot be identified, the item should be referred to by title:

Example

Figures in a recent survey (Tourism trends, 2003. p. 12) showed that…

 In cases where the date of an item cannot be identified, the item should be cited:

Example

The earliest report (Smith, no date, p. 231) showed that…

 If the author and date are unknown:

Example

 When you refer to a corporate publication e.g. a company report, use the Company

Name: Example

A survey (Tourism trends, no date) showed that…

The recession affected………..(Hanson Trust plc, 1990)

VT-F4/Management Accounting/Module Booklet/Unit 5 Mgmnt Accounting Assignment Brief - Feb 2018 NN.pdf

ICON COLLEGE OF TECHNOLOGY AND MANAGEMENT Pearson BTEC HND in Business (RQF)

Unit 5 Management Accounting

Assignment Brief Session: February 2018

Programme title TNA67 Pearson BTEC HND in Business

Unit number and title Unit 5 Management Accounting

Unit Type Core

Unit Level and Credit Value

Level 4 15 Credit

Assessor (s) Mr A Appiah, Dr A Akanga, Mr K Barimah, Mr B Klichev, Mr Dan Sookun

Issue Date 3 March 2018

Final assignment submission deadline

11-16 June 2018

Late submission deadline

18-23 June 2018

Resubmission deadline TBA

Feedback

Formative feedback will be available in class during the semester.

Final feedback will be available within 2 weeks of the assignment submission date.

General Guidelines

 The work you submit must be in your own words. If you use a quote or an illustration from somewhere you must give the source.

 Include a list of references at the end of your document. You must give all your sources of information.

 Make sure your work is clearly presented and that you use correct grammar.

 Wherever possible use a word processor and its “spell-checker”.

Internal verifier Prof Nurun Nabi

Signature (IV of the brief) *

[email protected] Date 1/3/18

mailto:[email protected]

Assignment Brief – continued

ICON College of Technology and Management Pearson BTEC HND in Business (RQF)

Unit 5: Management Accounting (L4) Session: February 2018

Coursework Recommended Word limit: 3,000–4,000

This Unit will be assessed by assignment. You are strongly advised to read “Preparation guidelines of the Coursework Document” before answering your assignment. ASSIGNMENT

Assignment Context and Business Scenario

You have been the Management Accountant of Zylla Company for a number of years. It is a large multinational organisation, which has undergone a number of changes over some time, the result of expansion into new markets and locations, restructuring and acquisitions. The Finance Director considers that the existing management accounting system needs to be revamped to make it more relevant to the changes that have occurred. You are required to review the existing system, and conduct a research on developments in

management accounting, with the view to recommending comprehensive changes to Zylla

Company management accounting system, and preparing a report of same to the Finance

Director for review and onward submission to the Board of Directors.

Your report must consider a number of themes in management accounting. Specifically it must

recommend changes that cover the following:

1. Management accounting and management accounting systems,

2. Management accounting techniques for determining costs,

3. Management accounting planning tools, and

4. Response to financial problems using management accounting.

Your report must also provide examples of income statements prepared on the basis of

absorption costing and marginal costing. In order to do this, you may use the data attached to

this assignment brief, or you may collect your own data for that purpose. These may be

presented as appendices appropriately referenced in the body of your report.

Your report must be appropriately structured. The following is suggested as a guide of how a

good report should be:

 An introductory section with brief a description of Zylla Company and what the report is

about.

 The main section (body) of the report, which may be subdivided on the basis of the four

themes listed above corresponding to the tasks on the next page.

 A concluding section that briefly summarises your work.

Assignment Brief – continued

What you must do

The following tasks are required to be carried out: LO1: Demonstrate an understanding of management accounting systems Explain management accounting and give the essential requirements of different types of management accounting. [P1]. Explain different methods used for management accounting reporting. [P2]. To achieve M1, you should evaluate the benefits of management accounting systems and their application within an organisational context. To achieve D1, you should provide a critical evaluation of how management accounting systems and management accounting reporting are integrated within organisational processes. LO2: Apply a range of management accounting techniques. Calculate costs using appropriate techniques of cost analysis to prepare an income statement using marginal and absorption costing. (You may use attached data or your own) [P3]. To achieve M2, you should apply a range of management accounting techniques and produce appropriate financial reporting documents. To achieve D2, you should produce financial reports that accurately apply and interpret data for a

range of business activities. LO3: Explain the use of planning tools used in management accounting

Explain the advantages and disadvantages of different types of planning tools used in

budgetary control [P4].

To achieve M3, you should analyse the use of different planning tools and their application for preparing and forecasting budgets. LO4: Compare ways in which organisations could use management accounting to respond to financial problems. Compare how organisations are adapting management accounting systems to respond to financial problems. [P5]. To achieve M4, you should analyse how, in responding to financial problems, management accounting can lead organisations to sustainable success.

To achieve D3, you should critically evaluate how planning tools for accounting respond appropriately to solving financial problems to lead organisations to sustainable success.

Assignment Brief – continued

Grading Criteria

Learning Outcome Pass Merit Distinction

LO1 Demonstrate an

understanding of

management

accounting systems..

P1 Explain

management

accounting and give

the essential

requirements of

different types of

management

accounting systems.

P2 Explain different

methods used for

management

accounting reporting.

M1 Evaluate the

benefits of

management

accounting systems

and their application

within an organisational

context.

D1 Critically evaluate

how management

accounting systems

and management

accounting reporting is

integrated within

organisational

processes.

LO2 Apply a range of

management

accounting techniques

P3 Calculate costs

using appropriate

techniques of costs

analysis to prepare an

income statement

using marginal and

absorption costs.

M2 Accurately apply a

range of management

accounting techniques

and produce

appropriate financial

reporting documents

D2 Produce financial

reports that accurately

apply and interpret

data for a range of

business activities

LO3 Explain the use of

planning tools used in

management

accounting

P4 Explain the advantages and disadvantages of different types of planning tools used in budgetary control.

M3 Analyse the use of

different planning tools

and their application

for preparing and

forecasting budgets.

D3 Evaluate how

planning tools for

accounting respond

appropriately to solving

financial problems to

lead organisations to

sustainable success. LO4 Compare ways in

which organisations

could use management

accounting to respond

to financial problems

P5 Compare how organisations are adapting management accounting systems to respond to financial problems.

M4 Analyse how, in responding to financial problems, management accounting can lead organisations to sustainable success.

Assignment Brief – continued

Relevant Information Guide to student 1. Preparation guidelines of the Coursework Document

referencing system. g. You should provide references using the Harvard referencing system. h. Do not use Wikipedia as a reference.

2. Plagiarism and Collusion

Any act of plagiarism or collusion will be seriously dealt with according to the College regulations. In this context the definition and scope of plagiarism and collusion are presented below: Plagiarism is presenting somebody else’s work as your own. It includes copying information directly from the Web or books without referencing the material; submitting joint coursework as an individual effort. Collusion is copying another student’s coursework; stealing coursework from another student and submitting it as your own work. Suspected plagiarism or collusion will be investigated and if found to have occurred will be dealt with according to the College procedure. (For details on Plagiarism & Collusion please see the Student Handbook)

3. Submission

a. Initial submission of coursework to the tutors is compulsory in each unit of the course. b. Student must check their assignments on ICON VLE with plagiarism software Turnitin to

make sure the similarity index for their assignment stays within the College approved level. A student can check the similarity index of their assignment three times in the Draft Assignment submission point located in the home page of the ICON VLE.

c. All Final coursework must be submitted to the Final submission point into the unit (not to the Tutor). A student would be allowed to submit only once and that is the final submission.

d. Any computer files generated such as program code (software), graphic files that form part of the coursework must be submitted as an attachment to the assignment with all documentation.

e. Any portfolio for a unit must be submitted as a hardcopy to the Examination Office. f. The student must attach a tutor’s comment in between the cover page and the answer in the

case of Resubmission. 4. Good practice

a. Make backup of your work in different media (hard disk, memory stick, etc.) to avoid distress due to loss or damage of your original copy.

Assignment Brief – continued

5. Extension and Late Submission and Resubmission

a. If you need an extension for a valid reason, you must request one using an Exceptional Extenuating Circumstances (EEC) form available from the Examination Office and ICON VLE. Please note that the tutors do not have the authority to extend the coursework deadlines and therefore do not ask them to award a coursework extension. The completed form must be accompanied by evidence such as a medical certificate in the event of you being sick.

b. Late submission will be accepted and marked according to the College procedure. It is noted that late submission may not be graded for Merit and Distinction.

c. All Late coursework must be submitted to the Late submission point into the unit (not to the Tutor). A student will be allowed to submit only once and that is the final submission.

e. Repeat Units – A student who has failed to achieve a Pass in both Final/Late submission and in the Resubmission must retake the unit with full attendance and payment of the unit fee. The overall unit grade for a successfully completed repeat unit is capped at Pass for that unit. Units can only be repeated once.

6. Submission deadlines

Submission deadlines Online to the ICON College VLE Final Submission date: 11-16 June 2018 Late Submission date: 18-23 June 2018

Glossary:

Analyse: Break an issue or topic into smaller parts by looking in depth at each part. Support each part with arguments and evidence for and against (Pros and cons). Break something down into its components; examine factors methodically and in detail to recognise patterns by applying concepts and making connections to predict consequences. Apply: Use a particular method/technique to solve a problem Critically Evaluate/Analyse: When you critically evaluate you look at the arguments for and against an issue. You look at the strengths and weaknesses of the arguments. Conduct: To do or carry out, to organise and perform a particular activity Determine: Find a solution by argument, making clear your reasoning (e.g., determine the type of event that has occurred, based on the data provided”) (application) or “Determine the most appropriate course of action for the company, within the given constraints” (higher order skills). Demonstrate: Show that you can do a particular activity or skill. Provide several relevant examples or related evidence which clearly support the arguments you are making. Explain: When you explain you must say why it is important or not important. Clarify a topic by giving a detailed account as to how and why it occurs, or what is meant by the use of this term in a particular context. Identify: When you identify you look at the most important points. Establish or indicate the origin, nature or definitive character of something

VT-F4/Management Accounting/Module Booklet/Unit 5 Mngmt Accounting SoW - Feb 18.pdf

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ICON COLLEGE OF TECHNOLOGY AND MANAGEMENT Pearson BTEC HND in Business (RQF)

Unit 5 Management Accounting Scheme of Work

Session: February 2018

This unit is aimed at achieving the following learning outcomes: LO1: Demonstrate an understanding of management accounting systems LO2: Apply a range of management accounting techniques. LO3: Explain the use of planning tools used in management accounting LO4: Compare ways in which organisations could use management accounting to respond to financial problems

Programme Title: TNA67 Pearson BTEC HND in Business

Level:

Unit number and Title Unit 5 Management Accounting

Unit Type Core

Level 4

Unit Level and Credit Value Level 4 15 Credit

Sessions Learning Outcomes Session Activities

Session 1 Lecture 2 hours Tutorial 2 hours

LO1: To introduce the Unit’s content and the Unit assessment

Introduction to the Unit learning outcome, Syllabus, and assignment briefing Reading, Academic Skill, citation and referencing, group formation.

Session 2 Lecture 2 hours Tutorial 2 hours

LO1: Demonstrate an understanding of management accounting systems

Introduction to management accounting: Definition of management accounting and

systems; importance of integrating these

within the organisation. Origin, role and

principles of management accounting;

distinction between financial accounting

Sample activities: Mini case report writing on variance analysis

Group activity: Events and epochs in the development

of management accounting and the relevant

management accounting principles based on Johnson

and Kaplan (1987), post-war Japanese Quality

Management, Marketing and Strategic Management

era to modern IT-driven Integrated Planning and

Production and CIM

Session 3 Lecture 2 hours Tutorial 2 hours

LO1: Demonstrate an understanding of management accounting systems Topic: Different types of management accounting systems

Management accounting systems:

Cost-accounting systems, inventory management

systems, job-costing systems and price-optimising

systems

Sample activities: Question and answer activity on types of management

accounting systems

Group activity – Whether any or all of these systems fit

Johnson and Kaplan’s “Lost Relevance” and why

Session 4: Lecture 2 hours Tutorial 2 hours

LO1: Demonstrate an understanding of management accounting systems Topic: Presentation of financial information

Why information should be relevant to the user, up to

date, reliant and accurate

Why the way in which information is presented must

be understandable

Differences types of managerial accounting reports Sample activities: Group activity – Relative merits and demerits of different types of managerial accounting reports

Page 2 of 5

Class discussion – Why should financial information possess such attributes as relevance, reliability, timeless accuracy and understandability? Formative Feedback Brief tutor-led overview of assessment requirements Academic writing

Session 5: Lecture 2 hours Tutorial 2 hours

LO2: Apply a range of management accounting techniques Topic: Microeconomic techniques

What is meant by cost? Different costs and analysis. Cost-volume-profit analysis, flexible budgeting and cost variances. Applying absorption and marginal costing Formative feedback

Session 6: Lecture 2 hours Tutorial 2 hours

LO2: Apply a range of management accounting techniques Topic: Product costings

Fixed and variable costs, cost allocation.. Normal and standard costing, activity-based costing (ABC) and role of costing in setting price. Group activity – Comparison of ABC and traditional costing methods (marginal and absorption costing

Session 7 Lecture 2 hours Tutorial 2 hours

LO2: Apply a range of management accounting techniques Topic: Cost of inventory

Definition and meaning of inventory costs and different

types of invent costs. The benefits of reducing inventory costs. Valuation methods. Cost variances. Overhead costs. Sample activities: Question and answer activity on limitations of the economic order quantity method and how managers may overcome these in applying the method Formative feedback

Session 8 Lecture 2 hours Tutorial 2 hours

LO3: Explain the use of planning tools used in management accounting Topics:

 Using budgets for planning and control

 Pricing

Preparing a budget. Different types of budgets

(e.g. capital and operating). Alternative methods

of budgeting. Behavioural implications of budgets. Pricing strategies. How do competitors determine their prices? Supply and demand considerations. Sample activities: Class question and answer activity – Discuss the difference between budgeting and budgetary control Group activity – Comparing and contrasting different pricing strategies. Formative Feedback Brief tutor-led overview of assessment requirements Academic writing

Session 9: Lecture 2 hours Tutorial 2 hours

LO3: Explain the use of planning tools used in management accounting Topics:

 Common costing systems

 Strategic planning

Actual costing, normal costing and standards costing systems. How cost systems differ depending on the costing activity: job costing, process costing, batch costing and contract costing. Applying PEST, SWOT, balance scorecard or Porter’s Five Forces analysis to the financial position of an organisation. Sample activities: Question and answer activity – what are the strengths

Page 3 of 5

weaknesses of PESTEL analysis? Group discussion – How costing systems differ on the basis of costing activity

Session 10: Lecture 2 hours Tutorial 2 hours

LO4: Common ways in which organisations could use management accounting to respond to financial problems Topics:

 Identifying financial problems

 Financial governance

Using benchmarks. Key performance indicators (financial non-financial) and budgetary targets to identify variances and problems. Definition of financial governance and how these can be used to pre-empt or prevent financial problems. Using financial governance to monitor strategy. Sample activities: Group activity – Usefulness of financial governance in monitoring strategy. Class discussion – Are non-financial performance indicators as important as financial indicators in performance management and control? Formative feedback

Session 11 Lecture 2 hours Tutorial 2 hours

LO4: Common ways in which organisations could use management accounting to respond to financial problems Topics:

 Management accounting skills set

 Effective strategies and systems

What are the characteristics of an effective management accountant? How can these skills be used to prevent and/or deal with problems? The development of strategies and systems which require effective and timely reporting, full disclosure of financial positions and are responsibly owned and governed. Sample activities: Student debate – What skills set should an effective management accountant possess? Are practical skills as important as conceptual and intellectual ones? Formative Feedback Brief tutor-led overview of assessment requirements Academic writing

Session 12 Lecture 2 hours Tutorial 2 hours

Revision Session

Reserve class to cover any missing class and revision.

Session 13 Study week

Formative feedback

Session 14 Final Assignment Submission

Page 4 of 5

Pearson Edexcel Standard Verifier (EE): Cheran Stevens Standard Verifier (EE): Visit Date: TBA Recommended Reading Text Books: Bailey, S. (2011), Academic Writing – A Handbook for International Students, London, Routledge Burns, T. and Sinfield, S (2016), Essential Study Skills: The Complete Guide to Success at University, Los Angeles, SAGE. Drury, C. (2015), Management and Cost Accounting. 9th Ed., London: CengGe Learning. Edmonds, T. and Olds, P. (2013), Fundaments of Managerial Accounting Concepts. 7th Ed., Maidenhead: McGraw-Hill. Horngren, C, Sunden, G, Stratton, N, Burgstalher, D, and Schatzcerg, J. (2013), Introduction to Management Accounting. Global Ed. Harlow: Pearson. Seal, W, et el. (2014), Management Accounting. 5th Ed., Maidenhead: McGraw-Hill. Swales, J. M and Feak, C, B. (2012), Academic Writing for Graduate Students, Ann Abor, The University of Michigan. Articles Online Johnson, H. Thomas; Kaplan, Robert S. (1987). Relevance Lost: The Rise: and Fall of Management Accounting, Management Accounting; Jan 1987; 68, 7; ABI/INFORM Global pg. 22 http://coin.wne.uw.edu.pl/pmodzelewski/The%20rise%20and%20fall%20of%20management%20accountin g.pdf Brewer, P C (2017). Redefining Management Accounting, IFAC http://www.ifac.org/system/files/publications/files/redefining-management-accounting.pdf Nelson Maina Waweru (2010). The origin and evolution of management accounting: a review of the theoretical framework. Problems and Perspectives in Management (open-access)

https://businessperspectives.org/media/zoo/applications/publishing/templates/article/assets/js/pdfjs/web/34 11 Chapters from Books Online An introduction to management and cost accounting: cost terms, systems design and cost behaviour http://www.mheducation.co.uk/he/chapters/9780077138424.pdf Chapter 2 Management Accounting http://www.springer.com/cda/content/document/cda_downloaddocument/9783642332081- c1.pdf%3FSGWID%3D0-0-45-1364127-p174609616 Journals: Harvard Business Review (available in ICON Library) Economist (available in ICON Library News Papers The Financial Times Business http://www.ft.com/home/uk Evening Standard Business http://www.standard.co.uk/business/

http://coin.wne.uw.edu.pl/pmodzelewski/The%20rise%20and%20fall%20of%20management%20accounting.pdf

http://www.ifac.org/system/files/publications/files/redefining-management-accounting.pdf

https://businessperspectives.org/media/zoo/applications/publishing/templates/article/assets/js/pdfjs/web/3411

http://www.mheducation.co.uk/he/chapters/9780077138424.pdf

http://www.springer.com/cda/content/document/cda_downloaddocument/9783642332081-c1.pdf%3FSGWID%3D0-0-45-1364127-p174609616

http://www.ft.com/home/uk

http://www.standard.co.uk/business/

Page 5 of 5

CITY A.M. Business http://www.cityam.com/ Pearson Resources: Student Portal: HN Global Please access HN Global for additional resources support and reading for this unit. For further guidance and support on presentation skills please refer to the Study Skills Unit on HN Global. Link to: https://www.highernationals.com/

http://www.cityam.com/

https://www.highernationals.com/

VT-F4/Management Accounting/Support/absorption marginal costing class exercise answers.pdf

ANSWER TO Class work

variable cost (5+8+2) 15

fixed cost per unit 5

Total cost per unit 20

MARGINAL COSTING PROFIT STATEMENT

£ £

SALES (1,500 X35) 52,500

COST OF SALE

OPENING STOCK 0

production(2,000 x15) 30,000

closing stock(500 x15) -7,500

-22,500

contribution 30,000

Fixed production cost (actual) -15,000

selling and distribution costs

fixed 10,000

Variable(15% x52,500) 7,875

-17,875

Loss for the period -2,875

absorption costing profit statement

£ £

SALES (1,500 X35) 52,500

COST OF SALE

OPENING STOCK 0

production (2000 x 20) 40,000

closing stock(500 x 20) -10,000

-30,000

gross profit 22,500

over / under absorption

actual overheads 15,000

absorbed overheads (5 x2,000) 10,000

-5,000

17,500

selling and distribution costs

fixed 10,000

Variable(15% x52,500) 7,875

-17,875

Loss for the period -375

Reconciliation of profits

Absorption costing profit -375

fixed cost in closing inventory (5 x 500 ) -2,500

marginal costing profit -2,875

VT-F4/Management Accounting/Support/absorption and marginal costing answer.pdf

ANSWER TO Class work

variable cost (5+8+2) 15

fixed cost per unit 5

Total cost per unit 20

MARGINAL COSTING PROFIT STATEMENT

£ £

SALES (1,500 X35) 52,500

COST OF SALE

OPENING STOCK 0

production(2,000 x15) 30,000

closing stock(500 x15) -7,500

-22,500

contribution 30,000

Fixed production cost (actual) -15,000

selling and distribution costs

fixed 10,000

Variable(15% x52,500) 7,875

-17,875

Loss for the period -2,875

absorption costing profit statement

£ £

SALES (1,500 X35) 52,500

COST OF SALE

OPENING STOCK 0

production (2000 x 20) 40,000

closing stock(500 x 20) -10,000

-30,000

gross profit 22,500

over / under absorption

actual overheads 15,000

absorbed overheads (5 x2,000) 10,000

-5,000

17,500

selling and distribution costs

fixed 10,000

Variable(15% x52,500) 7,875

-17,875

Loss for the period -375

Reconciliation of profits

Absorption costing profit -375

fixed cost in closing inventory (5 x 500 ) -2,500

marginal costing profit -2,875

VT-F4/Management Accounting/Support/absorption and marginal costing.xlsx

Sheet1

Income statement for the year using absorption costing principles
cost for one unit (5+8+2+5 = 20)
£
Sales revenue (1,500 x £35)	52,500
Cost of sale	£
opening stock	0
production (2000 x 20)	40,000
closing stock (500 x20)	-10,000
-30,000
Gross profit	22,500
check for over/under charging
charged (2000 x£5)	10,000
actual overhead cost	15,000
5,000	-5,000
17,500
distribution costs
fixed cost	10,000
variable cost (15% x 52,500)	7,875
-17,875
Loss for the period	-375
Income statement for the year using marginal costing principles
cost for one unit (5+8+2= 15)	£
Sales revenue (1,500 x £35)	52,500
cost of sale	£
opening stock	0
production (2,000 x 15)	30000
closing stock (500 x 15)	-7500
-22500
contribution	30,000
Less: actual fixed overhead cost	-15000
profit before distribution cost	15,000
distribution costs
fixed cost	10000
variable cost (15% x 52,500)	7875
-17875
Loss for the year	-2,875
last year	current	next year
opening
styock	absorption costing	-375
0	500x5
2500
reconciliation
absorption costing	-375
opening stock	0
closing stock (500 x 5)	-2500
-2875
marginal costing	-2875

VT-F4/Management Accounting/Support/absorption costiong answer statement.pdf

ABSORPTION COSTING STATEMENT

Note:

In absorption costing, stock is valued at full cost of production.

That is, we include both fixed cost and variable cost of production.

We need to know the fixed cost of production per unit

To get this, we need to calculate the overhead absorption rate (OAR)

The basis of absorption given in the question are:

budgeted overhead cost of: £300,000 and

budgeted production of 150,000 units

OVERHEAD ABSORPTION RATE (OAR) is calculated as:

BUDGETED OVERHEAD

BUDGETED LEVEL OF ACTIVITY

Note:

Level of activity (also know as basis of absorption) could be :

- Machine hours, labour hours, number of units produced etc.

This will be given in the question.

Hence OAR IS £300,000 / 150,000 UNITS

OAR is £2 PER UNIT

Hence full cost of production is:

Variable cost per unit (Given in question) 6

Fixed OAR 9calculated) 2

Full cost of producing one unit of the procust 8

In absorption costing, sales less full cost of sale is called gross profit, not contribution

period one

£000' £000'

Sales (150,000 x £10) 1,500

Less cost of sale

(valued at full cost of production)

Opening stock: None (as per question) 0

production stock cost: (150x £ 8) 1,200

Closing stock cost: All units produced are sold 0

Total cost of sale -1,200

Gross profit 300

Adjust for under / over absorption (working) 0

300

Less: non-manufacturing costs (given in question) -100

Net profit 200

working: Over /under absorption

ACTUAL OVERHEAD 300

absorbed (£2 x 150) 300

over absorbed 0

NB: Absorbed overhead is (OAR X units produced)

Also, note that absorbed overhead is the same as overhead charged during the period

period two

£000' £000'

Sales (£10 x 120,000) 1,200

Less cost of sale

(valued at full cost of production)

opening stock: 0

production stock cost: (150 x£8) 1,200

Closing stock cost: (30 x £8) -240

Total cost of sale -960

Gross profit 240

Adjust for under / over absorption (working) 0

240

Less: non-manufacturing costs (given in question) -100

Net profit 140

working: Over /under absorption

ACTUAL OVERHEAD 300

absorbed (£2 x 150) 300

over absorbed 0

NB: Absorbed overhead is (OAR X units produced)

period three

£000' £000'

Sales (£10 x 180,000) 1,800

Less cost of sale

(valued at full cost of production)

opening stock: (30 x £8 ) 240

production stock cost: (150 x £8 ) 1,200

Closing stock cost: 0

Total cost of sale -1,440

Gross profit 360

Adjust for under / over absorption (working) 0

360

Less: non-manufacturing costs (given in question) -100

Net profit 260

working: Over /under absorption

ACTUAL OVERHEAD 300

absorbed (£2 x 150) 300

over absorbed 0

NB: Absorbed overhead is (OAR X units produced)

period four

£000' £000'

Sales (£10 x 150,000) 1,500

Less cost of sale

(valued at full cost of production)

opening stock: 0

production stock cost: (150 x £8) 1,200

Closing stock cost: 0

Total cost of sale -1,200

Gross profit 300

Adjust for under / over absorption (working) 0

300

Less: non-manufacturing costs (given in question) -100

Net profit 200

working: Over /under absorption

ACTUAL OVERHEAD 300

absorbed (£2 x 150) 300

over absorbed 0

NB: Absorbed overhead is (OAR X units produced)

period five

£000' £000'

Sales (£10 x 140,000) 1,400

Less cost of sale

(valued at full cost of production)

opening stock: 0

production stock cost: (170 x £8 ) 1,360

Closing stock cost: (30 x £8 ) -240

Total cost of sale -1,120

Gross profit 280

Adjust for under / over absorption (working) 40

320

Less: non-manufacturing costs (given in question) -100

Net profit 220

working: Over /under absorption

ACTUAL OVERHEAD 300

absorbed (£2 x 170) 340

over absorbed 40 extra profit for the period

period six

£000' £000'

Sales (£10 x 160,000) 1,600

Less cost of sale

(valued at full cost of production)

opening stock: (30 x £8) 240

production stock cost: 1,120

Closing stock cost: (10 x £8) -80

Total cost of sale -1,280

Gross profit 320

Adjust for under / over absorption (working) -20

300

Less: non-manufacturing costs (given in question) -100

Net profit 200

working: Over /under absorption

ACTUAL OVERHEAD 300

absorbed (£2 x 140) 280

over absorbed 20 extra cost for the period

summary statement

period period period period period period

1 2 3 4 5 6

£000' £000' £000' £000' £000' £000'

Sales 1,500 1,200 1,800 1,500 1,400 1,600

Less cost of sale

(valued at full cost

of production)

opening stock: 0 0 240 0 0 240

production stock cost: 1,200 1,200 1,200 1,200 1,360 1,120

Closing stock cost: 0 -240 0 0 -240 -80

-1,200 -960 -1,440 -1,200 -1,120 -1,280

Total cost of sale

Gross profit 300 240 360 300 280 320

Adjust for 0 0 0 0 40 -20

under / over absorption 300 240 360 300 320 300

Less: non-manufacturing costs -100 -100 -100 -100 -100 -100

Net profit 200 140 260 200 220 200

SOME POINTS TO NOTE

The concept of over and under absorption of overheads

There are two approaches to how the OAR should be calculate:

1. wait until the year end so that two figures required for its calculation can be obtained:

units produced during the period and

total overheads incurred during the period

2. Or we can make budgets for these two figures at the start of the period.

If we use the first approach, it means that we cannot obtain the rate at the start of the year

and hence all products sold during the year will not include the fixed overhead

cost of production. This will lead to a loss for the company, as customers will only pay

for the variable cost of production. Hence, in practice, option two is used.

However, option 2 has a problem.

Take for example :

Budgeted overheads £300,000

Budgeted production 100,000 units

Hence OAR is £3 per unit

this is used to charge for all products sold during the year

However, IF at the year end, the actual figures are as follows:

Actual overheads £400,000

Actual production is 80,000 units

Hence Actual OAR should have been £5 per unit

Hence for all products sold, we have under charged fixed overheads by £2 per unit.

If we sold, 50,000 units for each period we have under charged by: £2 x 50,000 ie. £100,0000

This is a loss for the company and should be charged as a cost

Hence under absorption reduces profits for the period.

On the other hand, suppose:

Actual overheads incurred were £300,000

Actual production were 150,000 units

I.e actual OAR SHOULD HAVE BEEN £2 per unit

As we charges £3 per unit, we would have overchargerd customers by £1 per unit

If we sold 50,000 unit , it would mean that we hould have overcharged customers by

£1 x 50,000 £50,000

Over absorption of overheads results in extra profit, hence

we add it to profits for the year.

VT-F4/Management Accounting/Support/Academic Writing 2.pdf

Academic writing skills

Writing, referencing & using electronic resources

“Care in the choice of one’s words is the respect that the mind

pays

to the instrument of its own being”

Agenda

• Writing

– What is academic writing

• Referencing

– Books

– Articles

– Others

• Electronic resources

Academic writing

• What is it all about?

Writing

• Academic writing is Formal

– No exaggeration (Not: extremely important)

– Impersonal (no use of “I am”)

– Direct to the meaning

– No final judgment!! Always allow for arguing and

accepting other opinions!!

WHAT DOES FORMAL WRITING

LOOK LIKE?

• Focus on the issue, not the writer Keeping

your writing objective and impersonal can make

it more convincing.

– It will be argued that the benefits of sales

promotion outweigh the disadvantages.

– I will argue in this assignment that ...

Choose words with precise

meanings

• Avoid words with vague meanings

– Compare:

• The writer looks at the issue

– with

• The writer examines the issue.

• The second option is more formal.

– Formal choices:

• He states … maintains … argues

– Informal choices:

• He says … talks about …

Add some style

• Writing is a very logical exercise, adding

style to it will enhance clearness and

power of convincing…

– Phrases for transition

– Phrases for emphasis

– Phrases for counterpoint

Phrases for transition

• Regarding

• Admittedly

• Consequently

• As a result

• Ultimately

• According to

• For this reason

Phrases for emphasis

• Moreover

• In fact

• Additionally

• For example

• In point of fact

• As a matter of fact

• Indeed

Phrases for counterpoint

• Conversely

• On the other hand

• However

• Nevertheless

• Notwithstanding

• Nonetheless

• Yet

• Despite

• Although

• Instead

Referencing

• What does referencing mean?

• Why should I include references in my

work?

• How do I reference my work?

What does referencing mean?

• When writing an academic piece of work

you need to acknowledge any ideas,

information or quotations which are the

work of other people. This is known as

referencing or citing.

Why should I include references

in my work?

• You should include references in order to:

– acknowledge the work of others

– provide evidence of your own research

– illustrate a particular point

– support an argument or theory

– allow others to locate the resources you have used

• And most importantly:

– avoid accusations of plagiarism

How do I reference my work?

• Your references should be consistent and

follow the same format. Various systems

have been devised for citing references,

but most Schools use the Harvard system

Referencing while writing

• References will be cited in your work in

two places: -

– 1) Where a source is referred to in the text

(Citation)

– 2) In a list (the Bibliography/List of references)

at the end of the assignment.

Citing references in the text

• Citing the author in the text

• Whenever a reference to a source is

made, its author's surname and the year

of publication are inserted in the text as

in the following examples...

Citing references in the text Cont.

– Dogs were the first animals to be

domesticated (Sheldrake, 1999).

• If the author's name occurs naturally in the

sentence the year is given in brackets .>>

– Sheldrake (1999) asserts that dogs were the

first animals to be domesticated.

Using direct quotes

• If you quote directly from a source you must

insert the author’s name, date of publication

and the page number of the quotation.

– ‘The domestication of dogs long predated the

domestication of other animals.’ (Sheldrake, 1999,

p.5).

• The page number should be given at the end of

the quote, in separate brackets if necessary, as

in the example below.

– Sheldrake (1999) asserts that the ‘domestication of

dogs long predated that of other animals.’ (p.15).

Citing works by more than one

author

• If your source has two authors you should

include both names in the text.

– Anderson and Poole (1998) note that a

‘narrow line often separates plagiarism from

good scholarship.’ (p.16).

Citing works by three or more authors

• If there are three or more authors you should

include the first named author and then add ‘et

al.’ in italics followed by a full stop. This is an

abbreviation of ‘et alia’ which means ‘and others’

in Latin.

– In the United States revenue from computer games

now exceeds that of movies (Kline et al., 2003).

Citing works by the same author written

in the same year

• If you cite two or more works written in the same year by the same author, then you must differentiate between them in both the text and your List of references by listing them as a,b,c etc.

– Natural selection can cause rapid adaptive changes in insect populations (Ayala, 1965a) and various laboratory experiments have been conducted to assess this theory (Ayala, 1965b).

Citing secondary sources

– Sheff (1993) notes that Nintendo invested heavily in advertising (cited in Kline et al.,2003, p.118).

Writing a Bibliography or List of

references

• The List of references appears at the end of

your work and gives the full details of everything

that you have cited in the text in alphabetical

order by the author’s surname

Printed books

• Printed books should be referenced using the following format and punctuation.

– Author/editor’s surname and initials.,

– (Year of publication).

– Title of book: including subtitles. (in italics or underlined)

– Edition. (if applicable)

– Place of publication: (followed by a colon)

– Name of publisher.

• Reference to a book with one author

– Sheldrake, R., (1999). Dogs that know when

their owners are coming home: and other

unexplained powers of animals. London:

Arrow Books.

• Reference to a book with two authors

– Anderson, J. and Poole, M., (1998).

Assignment and thesis writing. 3rd ed.

Chichester: John Wiley & Sons.

Print journals and newspapers

• Print journals should be referenced using the following format and punctuation. – Author's surname, initials., (or Newspaper title where

there is no author,)

– (Year of publication).

– Title of article.

– Name of journal. (in italics or underlined),

– Date of publication (if applicable e.g. 18 June)

– Volume number (in bold) (if applicable)

– (Part/issue number), (if applicable)

– Page numbers.

Example

• Britton, A., (2006). How much and how

often should we drink? British Medical

Journal. 332 (7552), 1224-1225.

• Britton, A., (2006). How much and how

often should we drink? British Medical

Journal. Vol. 332, No. 7552, pp.1224-1225

E-journal article accessed via

website on the open Internet

• Britton, A., (2006). How much and how often

should we drink? British Medical Journal. 332

(7552), 1224-1225. [online] Available

from:http://bmj.bmjjournals.com/cgi/content/full/3

32/7552/1224 [Accessed 2 June 2006].

http://bmj.bmjjournals.com/cgi/content/full/332/7552/1224

Websites, web pages

e.g. University of London)

– (Year of publication).

– Title. (in italics or underlined)

– Edition. (if applicable, e.g. update 2 or version 4.1)

– [online]

– Place of publication: (if known)

– Name of publisher. (if known)

– Available from: <URL>

– [Accessed (enter date you viewed the website)].

References

– Holland, M., (2005). Citing references. [online] Poole:

Bournemouth University. Available from:

<http://www.bournemouth.ac.uk/academic_services/d

ocuments/Library/Citing_References.pdf> [Accessed

2 June 2006].

– University of Westminster, (2007). Harry Potter fans to

cast spell over Westminster. [online] London:

University of Westminster. Available from:

<http://www.wmin.ac.uk/page-14428> [Accessed 24

July 2007].

VT-F4/Management Accounting/Support/Academic Writing Skills 1.pdf

Dr Marco Angelini,

UCL Transition Programme

With thanks to Dr Colleen McKenna for kind

permission in reproducing her material in this

presentation

Approaches to critical reading and writing

Outline for today

 Introduction

 Considering your writing practices

 Reading as part of writing

 Writing as part of thinking

 Planning

 Organising written work

 Looking at text

 Finding time to write

What type of writer are you?

The diver

The patchworker

The architect

The grand planner

Identifying your writing style

Previous writing experiences …

Reading as part of writing

Critical reading (and how it benefits your writing)

 Helps you determine what is and

what is not a robust piece of

research and writing in your field

 Helps you identify where existing

research has left a gap that your

work could fill

 Attention you pay to writing of others

helps you become more self-aware

of your own written work:

– Sufficient evidence to back up claims;

argumentation/reasoning; becoming

alert to your assumptions and how they

affect your claims

 Wallace and Wray, 2006

Critical reading?

How do you go about

reading an academic text

in your field?

Critical reading? Some possible approaches

How do you go about reading an

academic text?

 Use parts of the text: abstract,

contents, index, sub-headings,

graphs, tables, introduction and

conclusion

 Skim to get the gist of the argument

 Read with questions in mind

Critical reading? Some possible approaches

 Make notes/mind map/ use

highlighter

 Write a summary in your own words

 Write a brief critical response

 Keep note of bibliographic details

Critical reading/ critical writing

Handout – p. 12-13 Wallace and Wray

 As a critical reader, one evaluates

the attempts of others to

communicate with and convince

their target audience by means of

developing an argument;

 As a writer, one develops one's own

argument, making it as strong and

as clear as possible, so as to

communicate with and convince

one's target audience.

– Wallace and Wray, 2006

Free writing

 Way of using writing as a tool for

thinking

 Allows you to write without

constraints.

To do it –

Write continuously, in complete

sentences, anything that occurs to

you.

Free writing

Please write down EITHER

1. An idea / theme from your field

2. Use the topic:

‘what I enjoy about writing…’

Use a free writing technique to write

anything at all that occurs to you

about this topic.

This writing will not be shown to

anyone else.

Planning (Sharples)

 Plans should be flexible

 Through the writing process a deeper

understanding of topic is gained – thus,

planning is increasingly out of step as

writing develops:

– “The act of writing brings into being ideas

and intentions that the writer never had at

the start of the task or that could not be

expressed in any detail.”

Plans

 Free writing

 Notes/sketches

 Idea lists

– Ideas on post-it notes

 Mind map

 Skeleton paper with

sub-headings

 Outline

 Draft text

 Adapted from

Sharples, 1999

 What techniques do you use to

develop ideas in your writing

and/or signpost an argument?

Developing/sustaining argument

 ‘proving’ the thesis statement or

controlling argument

 Signposting argument (Giving the

reader cues; anticipating/referring

back)

 Using words which signal transition or

development – “However”,

“Nevertheless”, “Thus”, “Therefore”,

“Despite”

 Illustrating theoretical positions with

concrete examples

 Generalising from a particular set of

findings if possible

 Using subheadings

 Using/responding to counterarguments

and examples

 Anticipate next paragraph at end of

previous one

Signposting and making transitions

 Links between paragraphs – pick up point from the end of a paragraph at the start of next one.

 Conjunctions to express different kinds of meaning relations

– Temporal: when, while, after, before, then

– Causative: because, if, although, so that, therefore

– Adversative: however, alternatively, although, nevertheless, while

– Additive: and, or, similarly, incidentally

 Signposting through pronouns - this, these, those, that, they, it, them

 Adverbs: Firstly, secondly, etc

 Illustrative: For example, in illustration, that is to say,

Signalling conclusions

Citation

Examples of Citing

• The hip bone is confirmed to be connected to the thigh bone (Funny Bones, 1989).

• The cytoskeletal network acts like the strong bars within a scaffolding (Alberts et al., 1998)

• Slavic-Smith (2006) postulated three classifications for nucleoli in neurons

• It was shown in 2006 by Take That, that a successful comeback tour was possible [1].

Bibliographies

 Alberts, Bray, Johnson, Lewis,

Raff, Roberts & Walter. Essential

Cell Biology, 1st Edition, Garland,

1998

 Dickson, B (2002) Molecular

Mechanisms of Axon Guidance.

Science 298 1959-1964

 [1] www.bbc.co.uk/news

Writing tips

 Write a sentence for each paragraph you want

to write – you can then move them about easily

to form thread of argument

 Index tag the main points you want to use in

your references, so they can be found easily

while writing

 Write the introduction last

 Write the conclusion first

 Read what you have written aloud to see if it

sounds right

 Find best environment for you – when and

where do you work best

 Take a break before trying to do your final check

 Use a writing checklist

Making time for writing

 Write throughout the course

 Do free writing as frequently as

possible

 Snack and binge writing (Rowena

Murray)

 Writing groups

 Don’t wait until you feel ‘ready’ to

write…

Writing for learning

 Read regularly in the field. Find writers whose work you admire and study what and how they do things.

 View writing as part of a process rather than a product

 Find models of good writing in your discipline – analyse it; ask what works and what doesn’t; consider writing style; vocabulary; techniques – metaphor; explanation; signposting

 Reflect on your own writing practices

 Keep a notebook or learning journal

 Explore free writing

To sum up…

1. Asked ‘what type of writer are

you’? What are your writing

practices?

2. What are your approaches to

reading? How might you link

reading and writing?

3. Free writing as a means of

generating ideas

4. Thought about structure of the

essay at the paragraph level and

the overall level

5. Tried to relate these ideas back

to the outline.

Reference

Academic Writing Skills

Presentation - UCL https://www.ucl.ac.uk/transition/study-

skills.../Academic_Writing_Skills_11.pptx

VT-F4/Management Accounting/Support/Answers to scenarios.pdf

WORKSHOP 4 COST VOLUME PROFIT ANALYSIS

ANSWERS TO SCENARIO 1

BREAKEVEN POINT IN UNITS: Total fixed codt/controbution per unit

so, first calculate contribution per unit.

contriburion per unit is given as: selling price per unit - variable cost per unit

Hence, 500 - 300 200

BREAKEVEN POINT IN UNITS: 5,000/200 25 units

Breakeven point in revenue is : brekeven point units x selling price per unit

Hence, 25 x 500 12,500

Breakeven point in revenue can also be calculated as:

Total fixed cost

C / S Ratio

so calculate : c/s ratio contribution per unit

selling price per unit

Hence, 200/ 500 0.4

Hence, breakeven point in revenue is : 5,000 12500

0.4

ANSWERS TO SCENARIO 2.

To achieve a target profit, we need to make enough sales to breakeven and then to

sell more to achieve that profit

Hence, the formular is given as: •Expected Profit + Total Fixed Cost

Contribution per unit

so, first calculate contribution per unit.

contriburion per unit is given as: selling price per unit - variable cost per unit

Hence, 500 - 300 200

Hence units to sell to achieve £2,000 profit is given as:

2,000 + 5,000 35 units

200

proof:

sales income (£500 X35) 17,500

Less: variable cost (£300 x 35) -10,500

contriburion 7,000

Less: fixed costs -5,000

profit 2,000

Scenario 3 - indicative answer:

Turbo Dynamic Ltd Expected level of sales: 10000 units

Selling price: 350

Manufacturing costs

Variable materials 100

Variable labour 80

Other variable costs 40

Variable selling costs 25

-245

Contribution / unit 105

Fixed Costs 600,000

Fixed costs 100,000

700,000

Breakeven = total fixed cost 700,000

contribution per unit 105

6,667

turbochargers

Breakeven point in sales revenue =

brakeven units x selling price per unit 6,667 x 350

£2,333,333

Margin of safety: expected sales units - breakeven point in units 3,333

units

Margin of safety in revenue : = margin of safety in unts x selling price per unit

3,333 x 350

1,166,667

Forecast Profit (based on sales of 10,000 units)

sales revenue(10,000 x 350) 3,500,000

less: variable cost (10,000 x 245) -2,450,000

contribustion 1,050,000

Less total fixed cost -700,000

Profit 350,000

VT-F4/Management Accounting/Support/L1 Class and Group Activities.pdf

Unit 5 Management Accounting Class and Group Activities

Activity 1 – Variance Report The Angamah Company is a retail organisation that operates in North London area. The following variance report is for the month of August of 2017 operations. You are the management accounting technician who extracted the information from the company's management accounting system.

Angamah Company Variance Report - August 2017

Required:

Write a covering report to your manager explaining the performance of the company for the month of August and attach your variance report as an appendix.

Budget Actual Variance

£ £ £

Revenues 57,000 60,000 3,000 F

Cost of goods sold 40,000 43,400 3,400 U

Wages 6,700 7,000 300 U

General expenses 1,300 900 400 F

Fixed costs 5,000 5,000 -

Operating profit 4,000 3,700 300 U

Lecturer: Kofi Barimah �1 Lecture 1

Unit 5 Management Accounting Class and Group Activities

Activity 2 – Epochs in the Development of Management Accounting Identify the key epochs in the development of management accounting from the period prior to the the Industrial Revolution to the present day. For each period, indicate the triggers/reasons of change in management accounting approaches, and the key management accounting techniques, methods and/or principles that emerged. Tabulate your your findings using the following format:

Epochs Triggers/reasons Management Accounting Methods

Pre Industrial Revolution (IR)

None; external transactions only

No MA; double-entry bookkeeping developed

Start of IR to mid 19th Century

Mid 19th Century to end

Start of 20th Century to 1920s

From 1920s to 1980s

Since the 1980s

Lecturer: Kofi Barimah �2 Lecture 1

Unit 5 Management Accounting Class and Group Activities

Activity 3 – Financial versus Management Accounting Examine the accounting activities listed below. Classify each, by ticking the appropriate box, on the basis of whether the activity is financial accounting or management accounting. Suggest a reason or reasons for your choices.

Accounting activity Financial accounting Management accounting

(a) Auditing the accounting systems and records of a business

(b) Managing the tax affairs of a business

(d) Preparing financial statements at the end of the financial year

(e) Ensuring compliance with legal and other regulations

(f) Providing financial information to management

(g) Keeping the accounting records of the business

Lecturer: Kofi Barimah �3 Lecture 1

Unit 5 Management Accounting Class and Group Activities

VT-F4/Management Accounting/Support/MA L3 Activity - CHECK YOUR UNDERSTANDING.pdf

• 1. Management accounting is one of the six main branches of accounting.

• 2 Its main purpose is to collect data and provide information for use in planning and control and for decision making.

• 3 Management accounting evolved in the late nineteenth century out of the simple financial accounting systems used at the time when more detailed information was needed for stock control and for production costing purposes.

• 4 It began to be used as a planning and control technique in the early part of the twentieth century.

• 5 In more recent years, management accounting techniques have become incorporated into managerial decision making.

• 6 Six main functions of modern management accounting can now be recog- nized: planning, control, cost accounting, decision making, financial management and auditing.

• 7 Management accounting practices can have a negative impact on both the providers and the users of information if management accountants adopt an autocratic and non-participative attitude.

• 8 A negative approach to management accounting requirements may result in poor-quality information and erroneous decision making.

• (Glen 643)Glen. Higher Nationals in Business Core Textbook: BTEC Level 4 Higher National Certificate in Business/BTEC Level 5 Higher National Diploma in Business, 2nd Edition. Pearson Higher Education (UK), 2016. VitalBook file.The citation provided is a guideline. Please check each citation for accuracy before use.

Check your learning

• 1What is meant by ‘management accounting’

• 2 List six ways in which it is different from financial accounting.

• 3 Suggest two reasons why in pre-industrial times there was no need for entities to have a management accounting system.

• 4 For what purposes did nineteenth century managers need a more detailed costing system?

• 5 What is meant by ‘strategic planning’?

Check your learning

6. How does it differ from budgeting? ７．What are the six steps involved in preparing a strategic plan?

8 What is meant by ‘control’? 9 Describe briefly the nature of cost accounting. １０．What is meant by‘ decision making’?

１１．What is the main purpose of financial management?

12 Why should management accountants be aware of the behavioural impact of information supply?

VT-F4/Management Accounting/Support/MA L4 Class Activity 2.pdf

Cost-Volume-Profit Analysis

Behaviour of costs:

Different types of cost will behave in differing ways as the volume

of activity within a business increases.

We can look at these graphically.

Graph of fixed cost(s) against the level of activity

Cost

(£)

Volume of activity (units of output)

Graph of rent cost against the level of activity

Rent

cost

(£)

Volume of activity

Graph of variable costs (e.g. raw materials) against

the level of activity

Cost

(£)

Volume of activity 0

Graph of semi-variable costs against the level of

activity (e.g. electricity costs)

Electricity

cost

(£)

Volume of activity0

The slope of this line

gives the variable cost

per unit of activity

Fixed

cost

element

Break-even analysis:

A business will break-even at the level of activity where total revenue

just equals total costs.

In other words, if a business can identify the level of activity that

it requires to break-even it will be able to identify the level of activity

it needs to achieve before it can make a profit.

See scenario details on separate sheet:

At the breakeven point:

• Total Cost = total revenue

• That is:

• FC + VC = REVENUE

• Hence, at that point:

• profit = zero

Break-even Chart (Weekly)

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

0 5 10 15 20 25 30

Unit Sales

C o

s ts

/ R

e v e n

u e s

Fixed Costs

Break-even Chart (Weekly)

2000

4000

6000

8000

10000

12000

14000

16000

0 5 10 15 20 25 30

Unit Sales

C o

s ts

/ R

e v e n

u e s

Variable Costs

Fixed Costs

Break-even Chart (Weekly)

2000

4000

6000

8000

10000

12000

14000

16000

0 5 10 15 20 25 30

Unit Sales

C o

s ts

/ R

e v e n

u e s Variable Costs

Fixed Costs

Total Costs

Break-even Chart (Weekly)

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

0 5 10 15 20 25 30

Unit Sales

C o

s ts

/ R

e v e n

u e s

Total Costs

Break-even Chart (Weekly)

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

0 5 10 15 20 25 30

Unit Sales

C o

s ts

/ R

e v e n

u e s

Total Costs

Total Revenue

Breakeven chart

Breakeven therefore will be in two parts:

• Either in finding the sale quantity that an organisation needs to achieve to make zero profit

• OR

• Finding the sales revenue that organisation needs to achieve to make zero profit

Formulas for break-even in units of sales

• Sales unit to break-even = Total Fixed Cost Contribution per unit

Formulas for break-even in sales revenue:

Total Fixed Cost

C/S Ratio*

Sales revenue to make some expected profit:

C/S Ratio*

Sales revenue to break-even =

*C/S RATIO (for a single product) =

Contribution per unit

Selling price per unit

Expected Profit + Total Fixed Cost

Formulas for break-even in sales revenue:

*C/S RATIO (for more than product) =

Total Contribution

Total sale revenue

Sales unit to make an expected profit

• In this case you should assume that:

• Step 1. the company must sell enough to break- even, i.e. to cover all Fixed costs and

• THEN, sell enough to make that amount of profit

Sales unit to make an expected profit

Expected Profit + Total Fixed Cost Contribution per unit=

Margin of safety

• Margin of safety: measures the difference between:

• the expected or budgeted sales and

• the breakeven point

Formula for Margin of safety :

• Margin of safety =

Budgeted sales – Break-even point

• The margin of safety results can be expressed as a percentage of either the budgeted sales

• the break-even point

Margin of safety =

Budgeted sales – Break-even point

Budgeted sales X 100

Class exercise

Alpha plc plans to sell a new product . Details are as follows:

Direct Materials 15

Direct Labour 8

Variable overheads 7

Annual fixed cost are expected to be £40,000 and the selling price is £38 per unit

• Required

(a) Calculate the breakeven point in units

(b) Calculate the breakeven point in Revenue

(d) Calculate profit if sales were 6,000 units

(e) Suppose that Alpha plc expects to sell 5,800 units how far is it above the breakeven point? Or calculate the margin of safety.

Contribution per unit

first calculate Contribution per unit

Contribution per unit

= SP – VC

= 38 – (15 + 8 + 7) = 8

Second step

• (a) BEP (units)

• (b) BEP (revenue) = BEP (units) x Sp per unit

• (a) BEP (units) = 40,000 / 8 = 5,000 units

• (b) BEP (revenue) = BEP (units) x SP per unit

• = 5,000 x £38 = £190,000

• Or

• BEP (revenue) = 40,000 / (8/38) = 190,000

Third step

• Calculate the sales volume required to make a profit of £16,000

Calculate the sales volume required to make a profit of £16,000

• Expected Profit + Total Fixed Cost

Contribution per unit

• (c) BEP (units) = (16,000 + 40,000) / 8 = 7,000 units

d) Calculate profit if sales were 6,000 units

• (d) 6,000 = (Profit + 40,000) / 8

• Profit = (6,000 x 8) - £40,000 = £8,000

(e) Margin of safety

• Budgeted sales – Break-even point

• = 5,800 – 5,000 = 800 units

Scenario 1.

• A business is attempting to ascertain the level of weekly activity needed if it is to achieve a break-even level of sales. The following data is relevant to this analysis:

• Weekly fixed costs - £5,000 • Sales price per unit - £500 • Variable costs per unit - £300

• Required : • Determine the breakeven point in units and sales

revenue 32

Scenario 2. Target profit analysis

• A business is attempting to ascertain the level of weekly activity needed if it is to achieve a target profit of £2000 per week. The following data is relevant to this analysis:

• Weekly fixed costs - £5,000

• Sales price per unit - £500

• Variable costs per unit - £300

• Required:

• Advise the company in the analysis

SCENARIO 3. Margin of safety:

Manufacturing Variable materials £100 per turbocharger Variable labour £80 per turbocharger Other variable costs £40 per turbocharger Fixed costs £600,000 per year Admin and selling Variable £25 per turbocharger Fixed £100,000 per year

Required:

•Calculate the break-even point for next year, expressed both in turbochargers

and sales revenue .

•Calculate the margin of safety for next year, expressed both in turbochargers

and sales revenue.

•What is their forecast profit for the year assuming they achieve planned sales

Turbo Dynamic Ltd makes a specialist turbocharger for the marine industry,

which it sells to marine engine manufacturers for £350 each. Next year the

company plans to make and sell 10,000 turbochargers. The company’s

costs are as follows

VT-F4/Management Accounting/Support/MA L4 Class Activity Answers.pdf

Class Activity 1 - Flexible Budget

Determine variable cost per unit:

The following will be the fixed and flexible budgets:

Units £

High 9,800 44,400

Low 7,700 38,100

Differences 2,100 6,300

Variable cost per unit 6,300 ÷ 2,100 = £3

Total cost of 9,800 units 44,400

Variable cost of 9,800 units (£3 x 9,800) 29,400

Fixed cost (all levels of output) 15,000

Flexible Budgets (Units)

8,000 9,000 10,000

£ £ £

Sales (£5 each) 40,000 45,000 50,000

Variable cost (£3 each) 24,000 27,000 30,000

Contribution 16,000 18,000 20,000

Fixed costs 15,000 15,000 15,000

Profit 1,000 3,000 5,000

Class Activity 2 - Flexible budget and cost variances

Budget 200 units

Budget per unit

Flexed 230 units

Actual 230 units Variance

£ £ £ £ £

Sales 71,400 357 82,110 69,000 13,110 A

Variable cost

Labour 31,600 158 36,340 27,000 9,340 F

Material 12,600 63 14,490 24,000 9,510 A

44,200 221 50,830 51,000

Contribution 27,200 136 31,280 18,000 13,280 A

Fixed costs 18,900 18,900 10,000 8,900 F

Profit 8,300 12,380 8,000 4,380 A

VT-F4/Management Accounting/Support/Management Accounting - Lecture 1 Introduction.ppt

Lecture 1: Introduction of the Unit

Prepared by: Dr Gilbert Zvobgo

ICTM

Aim of Session: To introduce the Unit’s content and the Unit assessment

1. Ground Rules

2. Going over the Assignment Brief, including the assessment criteria of the Unit

3. Going over the Scheme of Work so that students see how they could allocate their time wisely.

4. Going over the Unit Specification so that students have an overview of the syllabus (also available on ICON VLE).

5. Library visit to help students check available books in their Unit and to suggest those they want the College to purchase.

6. Ask students to register with HN Global at:

Pearson Resources: Student Portal: HN Global (RQF)

https://www.highernationals.com/

7. Help students understand the importance of academic skills, academic writing, and referencing (citation and references).

VT-F4/Management Accounting/Support/Management Accounting - Lecture 1.pdf

L1: INTRODUCTION TO

MANAGEMENT

ACCOUNTING

UNIT 5: MANAGEMENT

ACCOUNTING

Lecturer: Kofi Barimah

UNIT 5 MANAGEMENT ACCOUNTING L1 INTRODUCTION TO MANAGEMENT ACCOUNTING

Lecturer: Kofi Barimah

LEARNING OUTCOMES

LEARNING OUTCOMES AND OBJECTIVES

1. Demonstrate an understanding of management

accounting systems

2. Apply a range of management accounting techniques

3. Explain the use of planning tools used in management accounting

4. Compare ways in which organisations could use management

accounting to respond to financial problems

3Lecturer: Kofi Barimah

LEARNING OBJECTIVES

LEARNING OUTCOMES AND OBJECTIVES

1. Define management accounting

2. Understand a management accounting system

3. Explain the importance of integrating these within an organisation

4. Explore the origin, role and principles of management accounting

5. Identify the distinction between management and financial

accounting

4Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

DEFINING MANAGEMENT ACCOUNTING (MA)

• Management accounting provides information for the organisation's

information value chain by converting raw data into information and

useful knowledge to help in managerial decision-making and control

(CIMA, 2009)

• Management accounting measures and reports financial and non-

financial information that helps managers make decisions to fulfill

the goals of an organisation (Horngren et el, 2013)

• From the authoritative definitions above, MA can be considered as

an Information System whose purpose is to support, influence and

motivate effective managerial decision making and activity

5Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

DEFINING MANAGEMENT ACCOUNTING (MA)

• Managerial activity falls into three broad categories:

6Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

DEFINING MANAGEMENT ACCOUNTING (MA)

• Planning involves the following:

DETERMINE

ALTERNATIVES

CHOOSE ALTERNATIVE

THAT BEST FURTHERS

THE ORGANISATION’S

OBJECTIVES

DEVELOP BUDGETS

TO GUIDE TOWARD

THE CHOSEN

ALTERNATIVE

Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

DEFINING MANAGEMENT ACCOUNTING (MA)

• Directing and motivating is making sure that the day-to-day

activities of the organisation are going according to plan. They

normally involve the following activities:

• Employee work assignments

• Effective communication

• Conflict resolution, and

• Problem solving

8Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

DEFINING MANAGEMENT ACCOUNTING (MA)

• Controlling

• This function ensures that plans are being followed

• It is achieved by means of variance (feedback) reports which

compare actual performance with budgets

• Appropriate corrective measures are taken where there is a

deviation between the two

• Attempt Activity 1 - Variance Report available on VLE

9Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

DEFINING MANAGEMENT ACCOUNTING (MA)

• The planning control cycle

10Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

DEFINING MANAGEMENT ACCOUNTING (MA)

• Decision making involves the following steps (Horngren et al,

2014):

• identifying problems and uncertainties

• obtaining information

• making a prediction about the future

• making a decision by choosing among alternatives

• implementing the decision, evaluating the performance and

learning

11Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

MANAGEMENT ACCOUNTING SYSTEM (MAS)

12Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

MANAGEMENT ACCOUNTING SYSTEM (MAS)

• A system is a set of interacting, interrelated, or interdependent

components that work towards a common objective

• The interacting components are subsystems, which themselves

have their own components (subsystems)

• Earlier on we learned that MA is an information system that

provides information to management to facilitate decision making

• Therefore, a MAS is a subsystem of an organisation's accounting

system, which is itself a subsystem of the organisation's overall

information system

13Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

MANAGEMENT ACCOUNTING SYSTEM (MAS)

• The financial accounting system primarily provides information for

the benefit of external users

• The MAS focusses on the provision of information for internal,

principally decision-making, purposes

• The cost accounting system serves both the financial accounting

system and the MAS:

• For financial accounting, the cost accounting system provides

information for measuring the cost of goods sold, overheads

(selling, administrative and distribution expenses) and cost

valuations of non-current assets

14Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

MANAGEMENT ACCOUNTING SYSTEM (MAS)

• For MAS, the cost accounting system provides information on

standard product and service cost, cost per unit of products and

services, variance analysis, capital budgeting, projected cost

information for budgeting, costs for pricing of goods and service

• Under Learning Objective 5 of this lecture, we will distinguish

management and financial accounting in more detail

• In Lecture 2, we will examine different types of MASs, which

include, cost-accounting systems, inventory management systems,

job-costing systems and price-optimising system

15Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

MANAGEMENT ACCOUNTING SYSTEM (MAS)

• A good MAS must have the following characteristics (Johnson and

Kaplan, 1987):

• Provision of timely and accurate information to control costs,

measure and improve productivity, and improve production

processes;

• Provision of accurate cost reports for pricing decisions, new

product launches, discontinuation of obsolete products, and

response to rival products;

• Motivation and evaluation of managers on the basis of

performance reports; and

16Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

MANAGEMENT ACCOUNTING SYSTEM (MAS)

• Facilitation of two-way communication between strategic

managers (handing down of organisational goals and objectives)

and operational managers (reporting up product performance and

production efficiencies)

17Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3

INTEGRATING MA AND MAS WITHIN AN ORGANISATION

• We used systems theory to explain the relations a MAS has with

the accounting system and the organisation's overall information

system (IS)

• IS is a subsystem of the organisation, which is itself a subsystem

of the economic system (the competitive environment) within

which it operates

• This theory, therefore, provides one reason for the importance of

integrating MA and MAS within an organisation. Failing that, they

will not work in congruence with the other subsystems of the

organisation (eg production system) to achieve corporate

objectives. This is known as system noise

18Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3

INTEGRATING MA AND MAS WITHIN AN ORGANISATION

• Developments in information technology (IT) has made processing

accounting information quicker and cheaper

• IT has also automated other business and production processes

and facilitated the integration of them, including the processing of

accounting information

• The result is efficiency, effectiveness and better productivity

within the organisation

• Real time information processing and reporting afforded by

developments in IT also results in better decision making from good

quality and timely information

19Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4

ORIGIN, ROLE AND PRINCIPLES OF MA

• Up to the dawn of the Industrial Revolution in the 19th Century

• Accounting information served the needs of owner/entrepreneur in

assessing profitability

• Transactions involved exchange between the entrepreneur and

external entities (customer, supplier and ad-hoc labour)

• MA had no role as organisations with internal processes didn't exist

• Double-entry bookkeeping system, developed by an Italian monk

Pacioli, was adequate to provide the information needs of

entrepreneurs

20Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4

ORIGIN, ROLE AND PRINCIPLES OF MA

• Industrial Revolution and Railroad Invention in 19th Century

• The entrepreneur/owner form of business gave way to

hierarchical organisations managed from distant locations to the

factory

• Conversion processes became internalised compared to the

external conversion process of buying in goods and selling of the

previous era. Therefore no costs existed for the internal

processes

• Production was on large scale to achieve economies of scale and

capital investment was huge

21Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4

ORIGIN, ROLE AND PRINCIPLES OF MA

• MA emerged to serve the hierarchical organisations by:

• Determining costs for the conversion processes

• Providing production summary measures for performance

evaluation of processes and managers

• Assessing the viability of the capital investment

• In mid 19th Century the invention of railways and telegraph

communication saw the arrival multi-location (decentralised)

organisations. MA evolved to measure key operating activities to

ensure efficiency (KPIs)

22Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4

ORIGIN, ROLE AND PRINCIPLES OF MA

• Scientific Management movement - last two decades of Century

• Objective of scientific management was to improve efficiency in

labour and materials utilisation

• Metrics were developed for labour grades and hours per unit, and

material quantities per unit

• MA converted these metrics into standard labour and material

costs. MA techniques developed were

• Standard costing methods

• Job order costing

23Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4

ORIGIN, ROLE AND PRINCIPLES OF MA

• Early decades of the 20th Century

• Business organisations transformed into multi-product, diversified

corporations, and vertically integrated corporations

• Divisionalisation also occurred in the 1920s, whereby central functions

of finance, marketing and purchasing devolved to the divisions

• MA tools developed to assess decentralised/divisionalised units:

• ROI, ROCE and Dupont-Model (decomposed ROI)

• Budgetary planning and control

• Systems of transfer pricing

24Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4

ORIGIN, ROLE AND PRINCIPLES OF MA

• Depression of the 1930s to the 1980s

• MA stagnated. Possible causes have been attributed to:

• The stock crash of 1929 led to focus on fraud prevention and

financial accounting

• Separate MA and FA systems considered unviable. FA

information used for management decisions and control

• Intervening wars led to war economies

• Post-war boom

25Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4

ORIGIN, ROLE AND PRINCIPLES OF MA

• Marketing and Strategic Management era

• Cost effectiveness not seen as key success factor

• Market orientation was seen more as a success factor

• Market/product concepts emerged, eg. Boston Consulting Group

advocated

• invest to attain market share

• penetration pricing

• simple control measure used: TC/unit of output

26Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4

ORIGIN, ROLE AND PRINCIPLES OF MA

• 1980s Development

• Japanese approach to competition

• Continuous improvement of processes, design and quality

• CIM to reduce data accumulation cost

• Inventory seen as inhibiting efficiency (reduced)

• Time from customer order to delivery slashed

• MA evolved to provide information to achieve above

27Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4

ORIGIN, ROLE AND PRINCIPLES OF MA

• Focus on production again:

• TQM - quality is free

• Production management on the basis of non-financial data:

• defectives in total production

• yield rate, first-pass yields, rework and scrap rates

• timely delivery rates; manufacturing cycle time

• MA information extended to include statistical methods

28Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4

ORIGIN, ROLE AND PRINCIPLES OF MA

• Financial performance measurement innovation

• Activity-based costing

• cost driver analysis

• standard costing incorporated (activity based budgeting)

• better attribution of resource costs to products, customers

and services

• Attempt Activity 2 – Epochs in Development of MA available on

the VLE

29Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4

ORIGIN, ROLE AND PRINCIPLES OF MA

• Since the 1990s - Integrated Production

• Extensive use of IT: CIM

• Material Requirements Planning Systems develop into:

• Enterprise Resource Planning Systems

• Integrated Enterprise data bases with e-business portals

• Supply chain management

• Balance scorecard

30Lecturer: Kofi Barimah

LEARNING OBJECTIVE 5

DISTINCTION BETWEEN FINANCIAL AND MA

Financial Accounting Management Accounting

1. Users External parties to make

investment decisions

Managers who plan and control the

company

2. Time focus Historical perspective Future emphasis

3. Verifiability

versus

relevance

Emphasis on verfiability Emphasis on relevance for planning

and control

4. Precision

versus

timeliness

Emphasis on precision Emphasis on timeliness

5. Subject Primary emphasis on the whole

organisation

Primary emphasis on segments of the

organisation

6. GAAP Must follow GAAP and

prescribed formats

Need not follow GAAP and prescribed

formats

7. Requirement Mandatory for external reports Not mandatory

• Attempt activity 3 FA versus MA available on VLE

Lecturer: Kofi Barimah

REFERENCES

CIMA (2009). Management accounting tools for today and tomorrow.

http://www.cimaglobal.com/Documents/Thought_leadership_docs/CIM

A%20Tools%20and%20Techiques%2030-11-09%20PDF.pdf

Horngren, C., Sunden, G., Straton, W., Burgstalher, D. and

Schatzberg, J. (2013) Introduction to Management Accounting. Global

Ed. Harlow: Pearson Education

Horngren, C.T., Datar, S.M., and Rajan, M.V., (2014) Cost

Accounting: a Managerial Emphasis. Harlow: Pearson Education

Johnson, H S and Kaplan, R S (1987). Relevance Lost: The Rise and

Fall of Management Accounting. Boston: Havard Business School

Press

32Lecturer: Kofi Barimah

http://www.cimaglobal

VT-F4/Management Accounting/Support/Management Accounting - Lecture 10.pdf

L9: FINANCIAL PROBLEMS

AND FINANCIAL

GOVERNANCE

UNIT 5 MANAGEMENT ACCOUNTING

Lecturer: Kofi Barimah

UNIT 5 MANAGEMENT ACCOUNTING

L9: FINANCIAL PROBLEMS AND FINANCIAL GOVERNANCE

2Lecturer: Kofi Barimah

LEARNING OUTCOMES

LEARNING OUTCOMES AND OBJECTIVES

1. Demonstrate an understanding of management accounting

systems

2. Apply a range of management accounting techniques

3. Explain the use of planning tools used in management accounting

4. Compare ways in which organisations could use

management accounting to respond to financial

problems

3Lecturer: Kofi Barimah

LEARNING OBJECTIVES

LEARNING OUTCOMES AND OBJECTIVES

1. Using benchmarks

2. KPIs — financial and non-financial

3. Budgetary targets to identify variances and problems

4. Defining financial governance

5. Using Financial governance to pre-empt/prevent financial problems

6. Using Financial governance to monitor strategy

4Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

USING BENCHMARKS

• Benchmarking compares two things:

1. the levels of performance in producing products and services

and executing activities, against

2. the best levels of performance in competing companies or in

companies having similar processes

• When standards set in benchmarks are attained, it gives comfort to

managers that the company will be competitive in the market

• Unlike the use of variances, which assesses internal performance,

benchmarking assesses capability against external competitors

5Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

USING BENCHMARKS

• There are problems in implementing benchmarking:

• Finding appropriate benchmarks is a major issue

• Ensuring the benchmark numbers are comparable

• Benchmarking data are useful in providing insights into why costs

or revenues differ across companies, or within plants of the same

company

• In making comparisons of performance against the best levels of

performance of competitors, key performance indicators (KPIs) are

used as the basis

6Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

FINANCIAL AND NON-FINANCIAL KPIS

• KPIs establish how well an organisation is doing in relation to a

plan

• KPIs may be either financial or non-financial

• Financial measures typically relate to revenues, costs, profits,

return on capital, asset values or cash flows

• Non-financial measures relate to a number of different aspects

of performance, such as product or service quality, reliability,

risk, speed of performance, customer attitudes, flexibility,

innovation, pollution and capability

7Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

FINANCIAL KPIS

• Financial KPIs analyse return on capital, profitability, liquidity, efficiency

and financial risk against a benchmark such as:

• Budgeted sales, costs and profits

• Standards in a standard costing system

• The trend over time (last year/this year, say)

• The results of other parts of the business

• The results of other businesses

• Future potential (for example the performance of a new business may be

judged in terms of nearness to breaking even)

8Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

FINANCIAL KPIS

• Profitability — an indicator of how well the performed

• Gross profit (GP) Margin – GP as a percentage of turnover/sales

• Net profit (NP) Margin – PBT/PBIT as a percentage of turnover

• PBT – profit on ordinary activities before taxation

• PBIT – profit on ordinary activities before taxation + interest

charges on long-term loan capital

• Earnings per share (EPS) – profit after tax (and any preference

dividend) divided by the number of shares in issue

9Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

FINANCIAL KPIS

• Profitability and Return

• Return on capital employed (ROCE) –

• Capital employed – Shareholders' funds plus 'payables:

amounts falling due after more than one year' plus any long-

term provisions for liabilities = Total assets less current

liabilities

• Analysing profitability and return:

10Lecturer: Kofi Barimah

Profit margin x Asset turnover = ROCE

x =

LEARNING OBJECTIVE 2

FINANCIAL KPIS

Class Activity 1

11Lecturer: Kofi Barimah

Statement of Income: 31 July 2017 (£000)

2017 2016

Turnover 2,793 2,208

Cost of sales (1,270) (1,040)

Gross profit 1,523 1,168

Operating expenses (415) (310)

Profit from operations 1,108 858

Interest receivable 7 2

Profit before tax 1,115 860

Income tax expense (331) (290)

Profit for the period 784 570

Cost of Sales comprises the following:

2017 2016

Game writers salaries 700 550

Production costs 215 160

Directors remuneration 200 200

Other costs 155 130

1,270 1,040

Statement of Changes in Equity

Opening balance 703 483

Profit for the period 784 570

Dividends (500) (350)

Closing balance 987 703

12Lecturer: Kofi Barimah

Statement of Financial Position as at 31 July 2017 (£000)

2017 2016

Non-current assets:

Property, plant and equipment 610 620

Current assets:

Inventories 68 59

Trade receivables 460 324

Cash 216 20

744 403

1,354 1,023

Equity:

Share capital 60 60

Retained earnings 927 643

987 703

Current liabilities:

Trade and other payables 36 30

Income tax 331 290

367 320

1,354 1,023

Class Activity 1 Continued

LEARNING OBJECTIVE 2

FINANCIAL KPIS

Class Activity 1 Continued

The financial statements of Fobi Limited are presented above. From

the financial statements, prepare a report on the the profitability and

return on capital of the company to be presented to the board of

directors

13Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

FINANCIAL KPIS

• Gearing - measures financial risk of a company's capital structure

• Gearing ratio - or

• Debt is any loans which pay fixed interest and are secure

(excludes overdrafts)

• A gearing ratio of over 50% is high

• A highly geared company must earn enough profit to cover its

interest charges before anything is available for equity

14Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

FINANCIAL KPIS

• Liquidity and cash flow - ability to settle debts

• Current ratio -

• A ratio in excess of 1 is expected, but 2:1 is considered safe

• Certain assets are not easily convertible to cash eg stock

• Hence an additional liquidity ratio is calculated that considers

this fact:

• Quick or acid test ration -

15Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

FINANCIAL KPIS

• Accounts receivable payment period - average collection time

• Accounts receivable days -

• Inventory turnover period - average period inventory is held

• Inventory days -

• Inventory days plus accounts receivable days indicate how soon

inventory is convertible to cash, a further indication of liquidity

• Accounts payable payment period - average payment time

• Accounts payable days -

16Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

FINANCIAL KPIS

Class Activity 2

17Lecturer: Kofi Barimah

2017 2016

Turnover 2,065.0 1,788.7

Cost of sales 1,478.6 1,304.0

Gross profit 3,543.6 3,092.7

Current assets

Inventories 119.0 109.0

Receivable (note 1) 400.9 347.4

Short-term investments 4.2 18.8

Cash and bank 48.2 48.0

572.3 523.2

2017 2016

Current liabilities

Loans and overdrafts 49.1 35.3

Corporation taxes 62.0 46.7

Dividend 19.2 14.3

Payables (note 2) 370.7 324.0

501.0 420.3

Net current assets 71.3 102.9

Notes

1. Trade receivables 329.8 285.4

2. Trade payables 236.2 210.8

LEARNING OBJECTIVE 2

FINANCIAL KPIS

Class activity 2 Continued

Using the data on the previous slide, calculate liquidity and working

capital ratios of a manufacturer of products for the construction

industry, and comment on the ratios

18Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

NON-FINANCIAL KPIS

• A number of factors have contributed to the use of non-financial

KPIs:

• Changes in cost structures

• The competitive environment

• The manufacturing environment

• Usefulness of non-financial KPIs as guide to future financial

performance

• Lack of quality information from financial KPIs

19Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

NON-FINANCIAL KPIS

• General non-financial KPIs:

• Quality of production: wastage rates or percentage of rejects in

production

• Speed or efficiency, such as output per hour; average time

taken per unit of activity

• Delivery: average time between taking an order and delivery to

the customer

• Reliability: percentage of calls answered within a given target

time; number of equipment failures or amount of ‘down time’

20Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

NON-FINANCIAL KPIS

• Customer satisfaction: number of complaints

• Innovation: number of new products developed and launched on to

the market

• Employees Performance Measurements

• Employee attitudes and morale measured by employee surveys

• Education and skills

• Promotion and training

• Labour turnover

21Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

NON-FINANCIAL KPIS

• TQM environment

• Quality of incoming supplies

• Monitoring work done as it proceeds

• Measuring customer satisfaction

• Customers satisfaction measurements

• Questionnaires

• Market research information on customer preferences and

customer satisfaction

22Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

NON-FINANCIAL KPIS

• Number of defective units supplied to customers as a percentage of

total units supplied

• Number of customer complaints as a percentage of total sales volume

• Percentage of products which fail early or excessively

• On-time delivery rate

• Average time to deal with customer queries

• New customer accounts opened

• Repeat business from existing customers

23Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 – BUDGETARY TARGETS

BUDGETARY TARGETS TO IDENTITY PROBLEMS

• After a master budget has been approved it is disaggregated by:

• Time — daily, weekly, monthly, or quarterly as appropriate, and

• Responsibility — cost, revenue, department, division, subsidiary

(investment), as appropriate

• The budget allocations by time and responsibility constitute targets

that need to be met by:

• Employees — production line, sales, service points, and

• Managers — departmental, divisional, subsidiary

24Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 – IDENTIFYING VARIANCES

BUDGETARY TARGETS TO IDENTITY PROBLEMS

• Actual data after implementation of the budget will be compared

with the targets to isolate variances all all levels

• Managers use the to evaluate performance, to trigger organisation

learning, and to make continuous improvements

• Variances serve as an early warning system to alert managers to

existing problems or to prospective opportunities

• Variance analysis enables managers to:

• evaluate the effectiveness of the actions and performance of

personnel in the current period, and

25Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 – IDENTIFYING VARIANCES

BUDGETARY TARGETS TO IDENTITY PROBLEMS

• fine-tune strategies for achieving improved performance in the

future

• Managers need to recognise that variances can have multiple

causes and must not interpret them in isolation

• The causes of variances in one part of the value chain can be the

result of decisions made in another part of the value chain

• An unfavourable direct materials efficiency variance on a line may

have these possible operational causes across the value chain:

• Poor design of products or processes

26Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 – IDENTIFYING VARIANCES

BUDGETARY TARGETS TO IDENTITY PROBLEMS

• Poor work on the production line because of under-skilled

workers or faulty machines

• Inappropriate assignment of labour or machines to specific jobs

• Congestion due to scheduling a large number of rush orders from

sales representatives

• The company’s suppliers not manufacturing materials of

uniformly high quality

• Managers must attempt to understand the root causes of the

variances

27Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 – IDENTIFYING VARIANCES

BUDGETARY TARGETS TO IDENTITY PROBLEMS

• Managers often use variance analysis when evaluating the

performance of their subordinates

• Two attributes of performance are commonly evaluated:

• Effectiveness: the degree to which a predetermined objective or

target is met—for example, sales, market share and customer

satisfaction ratings

• Efficiency: the relative amount of inputs used to achieve a given

output level—the smaller the quantity of materials used to make a

given number of output or the greater the number of output made

from a given quantity of input, the greater the efficiency

28Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4–DEFINING FINANCIAL GOVERNANCE

FINANCIAL GOVERNANCE

• Governance, in general, is concerned with the structures and

systems of control by which managers are held accountable to those

who have a legitimate stake in an organisation

• The governance framework describes who the decision makers are

and how the purpose and priorities should be decided

• Financial governance in an organisation can be seen as concerning

• financial structures and systems of control

• accountability of financial decision makers to stakeholders

• who makes financial decisions

29Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4–DEFINING FINANCIAL GOVERNANCE

FINANCIAL GOVERNANCE

• Financial governance is part of the overall corporate governance of

the organisation

• Corporate governance deals with the structures, accountability,

decision making and determination of priorities and purposes of the

organisation

30Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4–DEFINING FINANCIAL GOVERNANCE

FINANCIAL GOVERNANCE

• Typical Corporate Governance Structure

31Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4–DEFINING FINANCIAL GOVERNANCE

FINANCIAL GOVERNANCE

• Typical Financial Governance Structure

32Lecturer: Kofi Barimah

LEARNING OBJECTIVE 5 – PREVENTING FINANCIAL

PROBLEMS

FINANCIAL GOVERNANCE

• Various ways of using financial governance to pre-empt or prevent

financial problems include:

• Audit committee

• Internal audit

• Systems of internal control

• External auditing

• Annual report and accounts to shareholders

33Lecturer: Kofi Barimah

LEARNING OBJECTIVE 6 – MONITORING STRATEGY

FINANCIAL GOVERNANCE

• Financial governance can be used to strategy through various reports

to the board of directors and board committee:

• Strategic planning reports

• Budget reports

• Forecasting and other statistical reports

• Variance analysis and reports

• Capital and investment appraisal reports

• The above may the effectiveness or otherwise of strategy

34Lecturer: Kofi Barimah

VT-F4/Management Accounting/Support/Management Accounting - Lecture 11.pdf

L10: MA SKILLS SET

AND EFFECTIVE

SYSTEMS

UNIT 5 MANAGEMENT ACCOUNTING

Lecturer: Kofi Barimah

UNIT 5 MANAGEMENT ACCOUNTING L9: FINANCIAL PROBLEMS AND FINANCIAL GOVERNANCE

2Lecturer: Kofi Barimah

LEARNING OUTCOMES

LEARNING OUTCOMES AND OBJECTIVES

1. Demonstrate an understanding of management accounting

systems

2. Apply a range of management accounting techniques

3. Explain the use of planning tools used in management accounting

4. Compare ways in which organisations could use

management accounting to respond to financial

problems

3Lecturer: Kofi Barimah

LEARNING OBJECTIVES

LEARNING OUTCOMES AND OBJECTIVES

1. Characteristics of an effective management accountant

2. Using the skills to prevent and/or deal with problems

3. The development of strategies and systems requiring:

• effective and timely reporting,

• full disclosure of financial positions

4Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

CHARACTERISTICS OF MANAGEMENT ACCOUNTANT

• An organisational strategy enables a firm to attract customers

• Customers may choose an organisation over its competitors if it is

able to offer what Treacy and Wiersema (1993) refer to as the

essence of strategy: customer value propositions

• This involves doing better than competitors under three categories:

• customer intimacy — understanding quickly and responding to

customer needs

• product leadership — offering higher quality products

5Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

CHARACTERISTICS OF MANAGEMENT ACCOUNTANT

• operational excellence — delivering products and services faster,

more conveniently, and at a lower price

• In implementing strategy the board of directors delegate decision-

making responsibility to employees, both line and staff

6Lecturer: Kofi Barimah

Line Positions Staff Positions

Directly related to the basic

objectives of organisation Support and assist line positions

Example: Production supervisors

in a manufacturing plant

Example: Cost accountants in a

manufacturing plant

LEARNING OBJECTIVE 1

CHARACTERISTICS OF MANAGEMENT ACCOUNTANT

• Staff employees provide support services to line employees and

other parts of the organisation

• The management accountant occupies a staff role

• The role of the management accountant include the following:

• internal consultants or business analysts within their companies

• analysing and interpreting information

• To be effective in their role, the management accountant must

possess some capabilities (skills set):

7Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

CHARACTERISTICS OF MANAGEMENT ACCOUNTANT

• be skilful accountants

• know the tax implications of proposed courses of action

• understand cost flows and information flows

• be very comfortable with technology and be an expert in the

company’s business and accounting software

• a working knowledge of what people do in marketing,

engineering, and other departments

• think strategically

8Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

CHARACTERISTICS OF MANAGEMENT ACCOUNTANT

• understand how the processes, departments, and functions work

together to run the business

• contribute ideas at planning meetings, so has to see the big

picture, keep a focus on the bottom line

• understand work management, which we learnt in lecture to

comprise of three things:

• planning

• directing and motivating, and

• controlling

9Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

USING SKILLS SET TO DEAL WITH PROBLEMS

• We looked at the evolution and development of management accounting in lecture 1

• Over the past twenty the business environment has experienced significant changes:

• Just-in-time production (JIT)

• Total quality management (TQM)

• Process re-engineering

• Theory of constraints

• Globalisation and international competition

• E-commerce and technological advancement

10Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

USING SKILLS SET TO DEAL WITH PROBLEMS

• The above developments have posed challenges to businesses, for

which the skills set of the management accountant has been part of

the solutions

• JIT

11Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

USING SKILLS SET TO DEAL WITH PROBLEMS

• JIT Consequences

12Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

USING SKILLS SET TO DEAL WITH PROBLEMS

• JIT Benefits

13Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

USING SKILLS SET TO DEAL WITH PROBLEMS

• TQM improves productivity by encouraging the use of fact and

analysis for decision making

• If properly implemented, avoids counter-productive organisational

infighting

14Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

USING SKILLS SET TO DEAL WITH PROBLEMS

• TQM vs Process Re-engineering

15Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

USING SKILLS SET TO DEAL WITH PROBLEMS

• A constraint (also called a bottleneck) is anything that prevents you

from getting more of what you want

16Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

USING SKILLS SET TO DEAL WITH PROBLEMS

• Theory of constraints

17Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

USING SKILLS SET TO DEAL WITH PROBLEMS

• Globalisation and international competition

18Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3

DEVELOPMENT OF SYSTEMS FOR REPORTING

• The key strategies and systems developed for effective and timely

reporting and disclosures of financial position are principally IT

based, including:

• Enterprise Resource Planning (ERP) software

• Cloud-based computing

• Big data and data warehousing

• Networking, including intranets and extranets

• Mobile computing

19Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3

DEVELOPMENT OF SYSTEMS FOR REPORTING

• ERP software

• This is an integrated business software solution that has modules for

accounting, sales, human resource, supply chain, etc

• The integrated and interconnected nature of the different functions of

the organisation facilitates planning and timely access to information

in real time

• For management accounting, feedback from operations and timely

reporting to managers is made possible

• For financial accounting the impact of operations on financial position

can instantly be reported

20Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3

DEVELOPMENT OF SYSTEMS FOR REPORTING

• Cloud based computing

• Software and business data storage are increasingly becoming

cloud based rather than on computers and servers in business

offices

• It makes it possible to access business data anywhere in the

world and at all times over the Internet

• Popular productivity software like Microsoft Office, and

accounting software like Sage, have cloud based versions

• Staff can work from anywhere

21Lecturer: Kofi Barimah

REFERENCES

Michael Treacy and Fred Wiersema (1993), “Customer Intimacy and

Other Value Disciplines,” Harvard Business Review, Volume 71 Issue

1, pp. 84–93

22Lecturer: Kofi Barimah

VT-F4/Management Accounting/Support/Management Accounting - Lecture 2.pdf

L2: TYPES OF

MANAGEMENT

ACCOUNTING SYSTEMS

UNIT 5: MANAGEMENT

ACCOUNTING

Lecturer: Kofi Barimah

UNIT 5 MANAGEMENT ACCOUNTING

Lecturer: Kofi Barimah

LEARNING OUTCOMES

LEARNING OUTCOMES AND OBJECTIVES

1. Demonstrate an understanding of management

accounting systems

2. Apply a range of management accounting techniques

3. Explain the use of planning tools used in management accounting

4. Compare ways in which organisations could use management

accounting to respond to financial problems

3Lecturer: Kofi Barimah

LEARNING OBJECTIVES

LEARNING OUTCOMES AND OBJECTIVES

• Cost-accounting systems and benefits

• Inventory management systems and benefits

• Job-costing (and process-costing) systems and benefits

• Price-optimising systems and benefits

4Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

COST–ACCOUNTING SYSTEMS

5Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

COST–ACCOUNTING SYSTEMS

• Cost-accounting systems provide information to management

• Under the contingency theory accounting systems provide

information according to what management requires (Chapman,

1977). Thus

• Managers of small or large organisations will require different

types of information

• As the nature, complexity and size of an organisation change, the

accounting system should be capable of adaption to provide the

required information

6Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

COST–ACCOUNTING SYSTEMS

• “Cost accounting measures, analyzes, and reports financial and non-

financial information relating to the costs of acquiring or using

resources in an organization”. (Horngren et el, 2014, p27)

• Cost accounting systems enable managers to ascertain the costs of

cost units and and cost centres

• A cost unit the unit of product or service of an organisation to which

costs are allocated:

• in a car manufacturing organisation, it a model or models of car

• in a haulage business, it may be cost of moving a ton of goods over

one mile

7Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

COST–ACCOUNTING SYSTEMS

• A cost centre is a section of the organisation for which costs are

accumulated for planning, decision making and control purposes

• In a factory, the following cost centres may be distinguished:

• production cost centres, eg assembly, finishing and packing

departments

• service cost centres, eg maintenance, stores and canteen

Activity 1 - Cost Centres

From the two businesses the next slide, indicate the cost centres.

8Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

COST–ACCOUNTING SYSTEMS

Cost Centres

Toy manufacturer Hotel

Assembly department Kitchen

Stores department Cost of drinks

Sales team Reception area

Specialised moulding machine Laundry

Clerical salaries Restaurant

Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

COST–ACCOUNTING SYSTEMS

• Some of the benefits of cost accounting systems include:

• To value inventory: raw materials, work in progress and finished

goods

• To plan production: knowledge of all the elements of production

process and the funds required

• To maintain control: comparison of costs incurred to planned

costs for efficiency and for performance evaluation

• To aid decision making: selling prices, whether to invest in new

machinery, evaluate alternative ways of performing activities

10Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

INVENTORY MANAGEMENT SYSTEMS

• Inventory management systems deal with the components of

inventory costs, relevant costs for different inventory-related

decisions, and planning and control systems for managing inventory

• Under this learning objective, we cover the following systems:

• Economic order quantity (EOQ) decision model

• Just-in-time inventory management system

• Materials requirements planning (MRP) systems

LEARNING OBJECTIVE 2 – EOQ DECISION MODEL

INVENTORY MANAGEMENT SYSTEMS

• Inventory management relates to planning, coordinating and

controlling activities that enable inventory to flow into, through and

out of the business

• Managers need to manage costs associated with these activities.

The costs are:

• Purchasing costs: - cost of goods including freight costs and

discounts

• Ordering costs: preparing and issuing orders, receiving and

inspecting orders, matching invoices received, special order

processing costs

12Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – EOQ DECISION MODEL

INVENTORY MANAGEMENT SYSTEMS

• Holding costs: they arise while the inventory is stored awaiting

sale; include opportunity cost of funds tied in the inventory

• Stockout costs: losses or opportunity cost of missed contribution

when stocks run out with customers available for them.

• Costs of quality: where features and characteristics do not

conform to customer expectations

• Shrinkage costs: embezzlement by employees, theft from

outsiders, misclassifications and clerical errors

13Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – EOQ DECISION MODEL

INVENTORY MANAGEMENT SYSTEMS

• The economic order quantity (EOQ) decision model attempts to

balance the advantages and disadvantages of holding stock

• The model takes account of:

• Holding costs – working capital, storage and obsolescence risk

costs, and

• Ordering costs – price discounts and costs of placing orders

• The rationale underlying the EOQ model is that, for any given set of

circumstances, an order quantity, Q, exists that minimises the total

order and holding costs. See the following chart

14Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – EOQ DECISION MODEL

INVENTORY MANAGEMENT SYSTEMS

15Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – EOQ DECISION MODEL

INVENTORY MANAGEMENT SYSTEMS

• EOQ is the order quantity that minimises the relevant ordering and

holding costs:

• Total costs = Ordering Costs + Holding Costs

• D = Demand in units for a specified period

• Q = Size of each order (order quantity)

• Number of orders =

• Average inventory in units =

16Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – EOQ DECISION MODEL

INVENTORY MANAGEMENT SYSTEMS

• Holding costs = holding cost/unit x average inventory =

• Order costs = order cost x number of orders per period =

• So, Total cost, Ct =

• With low values of Q, holding costs are low but ordering costs are

high

• Initially the decrease in ordering costs is greater than the increase

in holding costs so total costs fall

17Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – EOQ DECISION MODEL

INVENTORY MANAGEMENT SYSTEMS

• After a point, the decrease in ordering costs slows whilst the

increase in holding costs is constant, so total costs start to increase

• The ‘optimum’ order quantity is known as the economic order

quantity (EOQ)

• The total cost, Ct when differentiated gives a general EOQ formula

thus:

• EOQ =

18Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – EOQ DECISION MODEL

INVENTORY MANAGEMENT SYSTEMS

Activity 2 - Economic Order Quantity

A building materials supplier obtains its bagged cement from a single

supplier. Demand is reasonably constant throughout the year, and

last year the company sold 2000 tonnes of this product. It estimates

the costs of placing an order at around £25 each time an order is

placed, and calculates that the annual cost of holding inventory is 20

per cent of purchase cost. The company purchases the cement at £60

per tonne.

Determine the EOQ

19Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – EOQ DECISION MODEL 2

INVENTORY MANAGEMENT SYSTEMS

• The EOQ is not particularly sensitive to small changes in Q

• To build an EOQ model various costs have to be estimated. As the

EOQ is not particularly sensitive to small variations in Q, it does not

matter if these estimates are not 100% accurate

• The EOQ assumes that the entire replenishment batch arrives at a

single point in time

• Sometimes this is not the case, and in these circumstances it is

better to use the economic batch quantity (EBQ) model

20Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – EOQ DECISION MODEL

INVENTORY MANAGEMENT SYSTEMS

• Benefit of the EOQ decision model:

• A guide to managers on the quantity to order

• Helps avoid tying up funds in inventories

• It minimises managing costs of inventories

• It frees storage/warehousing space for other uses

21Lecturer: Kofi Barimah

Reflection: Consider the above benefits against the limitations

of the EOQ decision model

LEARNING OBJECTIVE 2 – JIT

INVENTORY MANAGEMENT SYSTEMS

• Just-in-time (JIT) purchasing is where items ( materials ,

opponents an other supplies) are purchased of so that they are

delivered just when they are required for production (or sales)

• The costs of JIT are quality and timely deliveries

• Quality costs: inspection costs, product returns, lost reputation

• Timely deliveries cost: stockouts, operational disruption, customer

dissatisfaction

• To implement JIT purchasing companies need to choose their

suppliers carefully and develop long-term supplier relationships

22Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – JIT

INVENTORY MANAGEMENT SYSTEMS

• To avoid stockouts, businesses can implement JIT only if activities

throughout the supply chain are properly planned, coordinated, and

controlled

• The supply chain is the flow of goods, services, and information

from the initial sources of materials and services to the delivery of

products to consumers

• These activities may occur in the same company or in other

companies

• JIT thus requires the sharing of information and planning and

coordinating activities throughout the supply chain

23Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – JIT

INVENTORY MANAGEMENT SYSTEMS

• The benefits of JIT include:

• Sharing sales information reduced the level of uncertainty within

the supply chain

• Fewer stockouts at the consumer level

• Reduced manufacture of products not immediately needed by

consumers

• Fewer orders that have to be “rushed” or “expedited”

• Lower inventories held by each company in the supply chain

24Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – JIT

INVENTORY MANAGEMENT SYSTEMS

• In manufacturing, JIT application is referred to as lean production

• It is a 'demand-pull' manufacturing system that manufactures each

component in a production line as soon as, and only when, needed

by the next step

• Starting with the customer, each demand triggers each step in the

production process

• This results in close coordination among workstations

• Inventories don't exist and waste and defects are eliminated

• Setup time and manufacturing cycle time are reduced

25Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – MRP

INVENTORY MANAGEMENT SYSTEMS

• MRP is a "push-through" system that manufactures finished goods

for inventory based on demand forecasts

• MPR determines output using:

• demand forecasts for final products

• a bill of materials detailing the materials, components and

subassemblies for each final product

• available inventories of materials, components and products

• Once production starts, output of each station is pushed through

26Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – MRP

INVENTORY MANAGEMENT SYSTEMS

• MRP may result in inventory accumulation when a workstation

slows up

• Maintaining accurate inventory records and costs is critical

• The key benefit of MRP is the minimisation of the possibility of

stockouts

27Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – JOB & PROCESS COSTING

SYSTEMS

INVENTORY MANAGEMENT SYSTEMS

• Management accountants use two basic types of costing systems

to assign costs to products or services

• Job-order costing system, and

• Process costing system

• Many companies have costing systems that are neither pure job

costing nor pure process costing but have elements of both

• Either of the two Systems may use absorption system or marginal

costing system to determine the value of inventories

28Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – JOB & PROCESS COSTING

SYSTEMS

INVENTORY MANAGEMENT SYSTEMS

• Job-order costing systems are used in situations where many

different products are produced each period costs are traced and

allocated to jobs

• The total costs of the job are divided by the total number of units in

the job to arrive at an average cost per unit

• Examples of businesses where the costing system is used include:

• Large scale construction projects

• Clothing company that may order different types of clothing

• Service organisations such advertising and accountancy firms

29Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – JOB & PROCESS COSTING

SYSTEMS

INVENTORY MANAGEMENT SYSTEMS

• Process costing system is used in companies that produce many

units of a single product for long periods

• These are homogeneous products that flow through the production

process on a continuous basis

• Process costing systems accumulate costs in a particular operation

or department for an entire period (month, quarter, year) and then

divide the costs by the total number of units produced during the

period

• Thus, the process costing assigns an average cost to all products

as all units are the same

30Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – PRICE-OPTIMISING SYSTEMS

INVENTORY MANAGEMENT SYSTEMS

• Cost accounting systems and cost information discussed so far are

designed to support efficient price setting and also to support

organisational planning and control

• Economic theory suggests that efficient prices are determined by a

combination of demand and supply relationship (market forces),

competition and costs

• In practice businesses usually rely solely on costs in determining

prices because the application of the economic theory is expensive

• This cost based pricing may be modified by market conditions

31Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – PRICE-OPTIMISING SYSTEMS

INVENTORY MANAGEMENT SYSTEMS

32Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – PRICE-OPTIMISING SYSTEMS

INVENTORY MANAGEMENT SYSTEMS

• Full cost-plus pricing involves adding a markup to the total cost of the product, in order to arrive at the selling price

• The problem is that fixed costs are spread over the units of production

• This makes the full cost of a product a function of the number of units produced

• The number of units produced in turn will be a response to the number of units sold

33Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – PRICE-OPTIMISING SYSTEMS

INVENTORY MANAGEMENT SYSTEMS

• Yet, sales quantity will depend on the price charged for

the product

• It is therefore difficult to obtain a reliable cost on which

to base the price

• There is also the issue of deciding whether to use:

• a standard markup, or

• variable markup according to the market conditions,

type of customer, etc

34Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – PRICE-OPTIMISING SYSTEMS

INVENTORY MANAGEMENT SYSTEMS

• Marginal cost is variable cost, so a margin is added to

the variable cost to arrive at a price

• This approach may be preferable to total cost-plus

pricing for some reasons:

• Knowledge of marginal cost gives management the

option of pricing below total cost when times are

bad, in order to fill capacity

• It recognises the existence of scarce or limiting

resources

35Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – PRICE-OPTIMISING SYSTEMS

INVENTORY MANAGEMENT SYSTEMS

• Other than cost, there are other marketing-based

pricing strategies:

Premium pricing Market skimming

Penetration pricing Price differentiation

Loss leader pricing Discount pricing

Controlled pricing Product bundling

36Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – PRICE-OPTIMISING SYSTEMS

INVENTORY MANAGEMENT SYSTEMS

• Premium pricing is where a company prices its

products above the competition on a permanent basis,

where the customers perceive the product as superior

to, or 'different' from, competitors'

• The perception may be based on a number of factors:

Quality Image/style

Reliability/robustness Durability

After-sales service Extended warranty

37Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – PRICE-OPTIMISING SYSTEMS

INVENTORY MANAGEMENT SYSTEMS

• Market Skimming is a technique where a high price is set for the product initially, so that only those who are desperately keen on the product will buy it

• Then the price is lowered, making the product more accessible

• When the next group of customers have had a chance to buy at that price, the price is lowered again, and so on

• The aim of this strategy is usually to maximise revenue

• But, on occasions, it is also used to prolong the life of older products

38Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – PRICE-OPTIMISING SYSTEMS

INVENTORY MANAGEMENT SYSTEMS

• Penetration pricing occurs when a company sets a

very low price (below total cost) for the new product

initially so as to establish a large market share quickly

by encouraging customers to try the product and then

to repeat buy

• It is hoped to establish a dominant market position,

which will prevent new entrants coming into the market

because they could not establish a critical mass easily

with prices so low

39Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – PRICE-OPTIMISING SYSTEMS

INVENTORY MANAGEMENT SYSTEMS

• Price differentiation

• If the market can be split into different segments, each

quite separate from the others and with its own

individual demand function, it is possible to sell the

same product to different customers at different prices

• Marketing techniques can be employed to create

market segmentation, if natural demarcation lines are

not already in existence

40Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – PRICE-OPTIMISING SYSTEMS

INVENTORY MANAGEMENT SYSTEMS

• Segmentation will usually be on the basis of one or more of

the following:

• Time (e.g. rail travel is cheaper off-peak, hotel

accommodation, telecommunications)

• Quantity (e.g. small orders at a premium, bulk orders at a

discount)

• Type of customer (e.g. student and OAP rates)

• Outlet/function (e.g. different prices for wholesaler, retailer,

end consumer)

41Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – PRICE-OPTIMISING SYSTEMS

INVENTORY MANAGEMENT SYSTEMS

• Loss leader

• When a product range consists of one or more main

products and a series of related optional ‘extras’, which

the customer can ‘add on’ to the main product, the

supplier can set a relatively low price for the main

product and a high one for the ‘extras’

• The aim is to stimulate sufficient demand for the former

to ensure the target return from sales of the latter

• An example is aircraft engine manufacturers

42Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 – PRICE-OPTIMISING SYSTEMS

INVENTORY MANAGEMENT SYSTEMS

• Discount pricing

• This is a pricing strategy based on low cost, high

volume and low margins e.g. Ikea

• Products are priced lower than the market norm, but

are put forward as being of comparable quality

• The aim is that the product will procure a larger share

of the market than it might otherwise do, thereby

counteracting the reduction in selling price

43Lecturer: Kofi Barimah

REFERENCES

Chapman, C S (1977) Reflections on a contingent view of accounting.

Accounting Organisations and Society, 189-205

44Lecturer: Kofi Barimah

VT-F4/Management Accounting/Support/Management Accounting - Lecture 3.pdf

L3: PRESENTING

FINANCIAL

INFORMATION

UNIT 5 MANAGEMENT

ACCOUNTING

Lecturer: Kofi Barimah

UNIT 5: MANAGEMENT ACCOUNTING PRESENTING FINANCIAL INFORMATION

Lecturer: Kofi Barimah

LEARNING OUTCOMES

LEARNING OUTCOMES AND OBJECTIVES

1. Demonstrate an understanding of management

accounting systems

2. Apply a range of management accounting techniques

3. Explain the use of planning tools used in management accounting

4. Compare ways in which organisations could use management

accounting to respond to financial problems

Lecturer: Kofi Barimah 3

LEARNING OBJECTIVES

LEARNING OUTCOMES AND OBJECTIVES

1. Why information should be relevant, reliable, up-to-date, and

accurate

2. Why the presentation of information must be understandable

3. Different types of managerial accounting reports

Lecturer: Kofi Barimah 4

LEARNING OBJECTIVES 1 AND 2

RELEVANCE, RELIABILITY AND ACCURACY OF INFORMATION

• In lecture 1, we learned that the management accountant provides

information to management to help in decision making in the areas

• planning

• direction and motivation, and

• controlling

• Good decision making is affected by the quality of information

• Quality of information depends on some desirable characteristics

Lecturer: Kofi Barimah 5

LEARNING OBJECTIVES 1 AND 2

RELEVANCE, RELIABILITY AND ACCURACY OF INFORMATION

• The IASB's Conceptual Framework (CF) for Financial Reporting

gives the attributes financial information should have to make it

useful to the user in making economic decisions

• Financial information must possess two fundamental qualitative

characteristics, viz:

• relevance, and

• faithful representation

• The CF also describes enhancing qualitative characteristics that

distinguish more useful from less useful financial information

Lecturer: Kofi Barimah 6

LEARNING OBJECTIVES 1 AND 2

RELEVANCE, RELIABILITY AND ACCURACY OF INFORMATION

Lecturer: Kofi Barimah 7

LEARNING OBJECTIVES 1 AND 2

RELEVANCE, RELIABILITY AND ACCURACY OF INFORMATION

• Relevance

• Capable of making a difference to a financial statement user’s

decisions

• Has predictive value, i.e. helps to evaluate potential effects of

past, present, or future transactions or other events on future

cash flows, and

• Has confirmatory value, i.e. helps confirm or revise previous

evaluations

Lecturer: Kofi Barimah 8

LEARNING OBJECTIVES 1 AND 2

RELEVANCE, RELIABILITY AND ACCURACY OF INFORMATION

• Faithful representation

• Should be capable of portraying the economic phenomena that it

purports to represent faithfully

• The depiction of the economic phenomenon must be complete,

neutral and free from material error

• It should depict the economic substance of the underlying

transaction, event or circumstance

• Completeness is where the depiction omits nothing, as the

information will be otherwise false or misleading

Lecturer: Kofi Barimah 9

LEARNING OBJECTIVES 1 AND 2

RELEVANCE, RELIABILITY AND ACCURACY OF INFORMATION

• Neutrality is absence of bias designed to achieve a specific result

or to induce a particular behaviour

• Taken together, completeness and neutrality would ensure a

certain level of accuracy (absence of material error) and reliability

• With such attributes, information provided to management will

result in good decision making

Lecturer: Kofi Barimah 10

LEARNING OBJECTIVES 1 AND 2

RELEVANCE, RELIABILITY AND ACCURACY OF INFORMATION

• Comparability

• It requires consistency of treatment across like items over time,

within the entity and across entities

• This will ensure comparability:

• through time to identify trends, and

• with other entities’ financial information to evaluate relative

performance and financial position

• Identification of similarities in and differences between two sets of

economic phenomena

Lecturer: Kofi Barimah 11

LEARNING OBJECTIVES 1 AND 2

RELEVANCE, RELIABILITY AND ACCURACY OF INFORMATION

• Verifiability

• Different knowledgeable and independent observers could reach

general consensus that either:

• the information represents the economic phenomena that it

purports to represent without bias or material error; or

• an appropriate recognition or measurement method has been

applied without material error or bias

• Direct verification: amount or other is itself checked. Indirect: by

checking the inputs and recalculating the outputs

Lecturer: Kofi Barimah 12

LEARNING OBJECTIVES 1 AND 2

RELEVANCE, RELIABILITY AND ACCURACY OF INFORMATION

• Timeliness

• Information available to decision makers before losing its

capacity to influence decisions

• Availability of relevant information later than required can strip it

of its usefulness

• As information ages, it loses its usefulness for decision making

Lecturer: Kofi Barimah 13

LEARNING OBJECTIVES 1 AND 2

RELEVANCE, RELIABILITY AND ACCURACY OF INFORMATION

• Understandability

• The quality of information enhances its comprehension by users

• When information is classified, characterised and presented clearly

and concisely, its understandability is enhanced

• Users of financial information and reports are assumed to have a

reasonable knowledge of business and economic activities

• To make decisions, they should also be able to review and analyse

the financial information diligently

• For complex information, some users may consult advisors

Lecturer: Kofi Barimah 14

LEARNING OBJECTIVES 1 AND 2

RELEVANCE, RELIABILITY AND ACCURACY OF INFORMATION

• Constraints on financial information

• Two pervasive constraints limit ability to provide financial

information:

• Materiality: information whose omission or misstatement

influences the decision of users relying on financial reports.

Thus material omissions will result in information being

incomplete, biased or not free from error

• Cost: the benefits of financial information should justify its

costs

Lecturer: Kofi Barimah 15

LEARNING OBJECTIVES 1 AND 2

RELEVANCE, RELIABILITY AND ACCURACY OF INFORMATION

Lecturer: Kofi Barimah 16

LEARNING OBJECTIVES 1 AND 2

RELEVANCE, RELIABILITY AND ACCURACY OF INFORMATION

• The Conceptual Framework deals with the characteristics of

accounting information in financial statements

• These also apply to management accounting information

• As we learned in lecture 1, financial accounting information is

directed towards the needs of external users, whereas

management accounting information is principally for internal users

• These characteristics may also apply to non-accounting, statistical

information that is more prevalent in management accounting

Lecturer: Kofi Barimah 17

LEARNING OBJECTIVES 3

DIFFERENT TYPES OF MANAGERIAL ACCOUNTING REPORTS

• The types managerial reports include the following:

• Cost and sales reports (job, process and service)

• Budget reports (operational and cash)

• Divisional, segment, departmental (responsibility) reports

• Investment appraisal reports

Lecturer: Kofi Barimah 18

LEARNING OBJECTIVES 3

DIFFERENT TYPES OF MANAGERIAL ACCOUNTING REPORTS

Lecturer: Kofi Barimah 19

LEARNING OBJECTIVES 3 - COST & SALES VARIANCE

REPORTS

DIFFERENT TYPES OF MANAGERIAL ACCOUNTING REPORTS

• In a standard costing system, the following four are involved:

• Setting of standards based on pasts historical records or

engineering studies for material, labour, services and sales

• Comparison of actual with standard performance

• Analysis and reporting of variances to identify the cause and

ultimate responsibility

• Investigation of significant variances so appropriate corrective

action can be taken

Lecturer: Kofi Barimah 20

LEARNING OBJECTIVES 3 COST & SALES VARIANCE REPORTS

DIFFERENT TYPES OF MANAGERIAL ACCOUNTING REPORTS

• The main purposes for variances reports are

• to isolate off-standard performance

• to provide reasons for the variances

• to provide the basis to improve operations, correct errors and

deploy resources more effectively to reduce costs

• To be effective, variance reports should be produced at appropriate

and regular intervals

Activity 1 - Suggest some limitations of the practical application of

standard costing

Lecturer: Kofi Barimah 21

LEARNING OBJECTIVES 3 - BUDGET REPORTS

DIFFERENT TYPES OF MANAGERIAL ACCOUNTING REPORTS

• A budget is part of a long-term, organisation-wide strategic plan

• The stages involved in establishing a strategic plan are contained in

the next slide

• Once established, the plan is broken down into short-term, annual

plan for implementation

• Actual results are recorded and analysed against budget provision

to responsible managers

• Information about actual results is fed back to the responsible

management in the form of budget control reports

Lecturer: Kofi Barimah 22

LEARNING OBJECTIVES 3 - BUDGET REPORTS

DIFFERENT TYPES OF MANAGERIAL ACCOUNTING REPORTS

The Planning

Control Cycle

Lecturer: Kofi Barimah 23

LEARNING OBJECTIVES 3 - BUDGET REPORTS

DIFFERENT TYPES OF MANAGERIAL ACCOUNTING REPORTS

• From the budget control reports on the difference between

budgeted and actual expenditure, managers can take any of the

following actions:

• Take control action by identifying reasons for divergence and

taking corrective measures, if need be

• Do nothing if results are going better than planned, or poor

results are unlikely to happen in the future

• Alter the budget if actual results are due to unrealistic targets in

the budget and can do nothing to correct the situation

Lecturer: Kofi Barimah 24

LEARNING OBJECTIVES 3 - DIVISIONAL & SEGMENT REPORTS

DIFFERENT TYPES OF MANAGERIAL ACCOUNTING REPORTS

• Where there is decentralisation of authority it becomes necessary

to report the performance of the decentralised units

• The decentralised units are consequently created for which

managers are responsible

• In such a system of responsibility accounting the common centres

often created is on the next slide

• Each responsible manager plans and controls their areas and their

performance is regularly measured and reported to them

• Managers must only be held responsible for factors they control

Lecturer: Kofi Barimah 25

LEARNING OBJECTIVES 3 - DIVISIONAL & SEGMENT REPORTS

DIFFERENT TYPES OF MANAGERIAL ACCOUNTING REPORTS

Lecturer: Kofi Barimah 26

LEARNING OBJECTIVES 3 - DIVISIONAL & SEGMENT REPORTS

DIFFERENT TYPES OF MANAGERIAL ACCOUNTING REPORTS

• The following is usually contained in divisional, segment and

decentralised responsibility reports:

Lecturer: Kofi Barimah 27

Cost centre Profit centre Investment centre Revenue centre

What is it? Part of the business

for which costs are

identified and

recorded

Part of the business

for which costs

incurred and revenue

earned identified and

recorded

Part of the business

for which profits and

capital are meaured

Part of the business

for which revenues

earned are identified

and recorded

Where might it

be found?

Any production or

service location,

function, activity or

item of equipment

Divisions of large

operations; may

include several costs

and revenue centres

Business units of

large organisations

Sales divisions

How is

performance

measured?

Have cost targets

been achieved?

What profit has been

made by the centre?

Return on capital

employed and

residual income

What revenue has

been earned

What are the

manager's info

needs?

Costs incurred and

charged tot he cost

centre

Information about

costs and revenues

allocated

Information on

costs, revenue and

capital employed

Sales revenue

earned

LEARNING OBJECTIVES 3 - DIVISIONAL & SEGMENT REPORTS

DIFFERENT TYPES OF MANAGERIAL ACCOUNTING REPORTS

• The performance of an investment centre is usually monitored using

either or both of return on investment (ROI) and residual income (RI)

• ROI shows how much profit has been made in relation to the amount of

capital invested and is calculated as (profit/capital employed) x 100%

• There is no generally agreed method of calculating ROI

• It can have behavioural implications and lead to dysfunctional decision

making

• It focuses attention on short-run performance whereas investment

decisions should be evaluated over their full life

Lecturer: Kofi Barimah 28

LEARNING OBJECTIVES 3 - DIVISIONAL & SEGMENT REPORTS

DIFFERENT TYPES OF MANAGERIAL ACCOUNTING REPORTS

• RI can sometimes give results that avoid the behavioural problem

of dysfunctionality

• Its weakness is that it does not facilitate comparisons between

investment centres

• It also does not relate the size of a centre's income to the size of

the investment

• RI is a measure of the centre's profits after deducting a notional or

imputed interest cost

Lecturer: Kofi Barimah 29

LEARNING OBJECTIVES 3 - INVESTMENT APPRAISAL REPORTS

DIFFERENT TYPES OF MANAGERIAL ACCOUNTING REPORTS

• Investment appraisal relates to methods and techniques used in assessing

the viability and feasibility of long-term investment projects

• Managers would want to know whether such projects would be profitable,

before resources are invested in them

• Such projects require significant initial financial outlay, and the product will

be used over several years

• Managers may also have a number of alternative projects from which to

choose

Lecturer: Kofi Barimah 30

LEARNING OBJECTIVES 3 - INVESTMENT APPRAISAL REPORTS

DIFFERENT TYPES OF MANAGERIAL ACCOUNTING REPORTS

• Investment appraisal techniques can assist them in in choosing the

best option

• The following techniques are commonly used in making investment

appraisal decisions:

• ROCE(Return on capital employed)

• Payback

• Net present value

• Internal rate of return

Lecturer: Kofi Barimah 31

REFERENCES

CIMA (2007). "Standard Costing and Variance Analysis", Topic

Gateway Series No. 24, Online:

http://www.cimaglobal.com/Documents/ImportedDocuments/cid_tg_st

andard_costing_and_variance_analysis_mar08.pdf.pdf [Accessed:

03/09/2017]

32Lecturer: Kofi Barimah

http://www.cimaglobal.com/Documents/ImportedDocuments/cid_tg_standard_costing_and_variance_analysis_mar08.pdf.pdf

VT-F4/Management Accounting/Support/Management Accounting - Lecture 4.pdf

L4: MICROECONOMIC

TECHNIQUES

UNIT 5 MANAGEMENT

ACCOUNTING

Lecturer: Kofi Barimah

L4: MICROECONOMIC TECHNIQUES UNIT 5 MANAGEMENT ACCOUNTING

Lecturer: Kofi Barimah

LEARNING OUTCOMES

LEARNING OUTCOMES AND OBJECTIVES

1. Demonstrate an understanding of management accounting

systems

2. Apply a range of management accounting

techniques

3. Explain the use of planning tools used in management accounting

4. Compare ways in which organisations could use management

accounting to respond to financial problems

3Lecturer: Kofi Barimah

LEARNING OBJECTIVES

LEARNING OUTCOMES AND OBJECTIVES

1. Meaning of cost and different costs and analysis

2. Cost-volume-profit analysis

3. Flexible budgeting and cost variances

4. Applying absorption and marginal costing

4Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - DEFINING COST

COST AND COST ANALYSIS

• Horngren et al define cost as a resource sacrificed or forgone to

achieve a specific objective; an actual expenditure incurred in acquiring

a resource

• An item for which cost is measured is known as a cost object, which

may be a product, a service, a customer, a project, an activity or a

department

• In a management accounting system, costs are accumulated in a

systematic manner, and assigned to cost objects in order to:

• make decisions, e.g. whether to continue a product line

• control and motivate e.g. give incentives to employee to improve

5Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - CLASSIFYING COSTS

COST AND COST ANALYSIS

6Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - CLASSIFYING COSTS

COST AND COST ANALYSIS

• Non-production costs are costs not directly associated with the

production processes in a manufacturing organisation

7Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - CLASSIFYING COSTS

COST AND COST ANALYSIS

8Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - COST BEHAVIOUR

COST AND COST ANALYSIS

• Total variable costs change in tune with the changes in the level of

activity

• Variable cost per unit is constant

9Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - COST BEHAVIOUR

COST AND COST ANALYSIS

• Total FC remains constant within certain output and revenue limits,

and doesn’t change with changes in the level of activity

• FC per unit declines as out increases but doesn’t get to zero

10Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - COST BEHAVIOUR

COST AND COST ANALYSIS

• Step fixed cost is one which is only fixed within a certain level of

activity. Once the upper level is reached, a new level of fixed cost

becomes relevant

11Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - COST BEHAVIOUR

COST AND COST ANALYSIS

• A mixed cost has a fixed and a variable element, e.g. telephone

charges with fixed line rental and charge per call

• Total cost rises, and cost per unit declines,with increasing level of

activity

12Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - COST ANALYSIS

COST AND COST ANALYSIS

• You can analyse costs into fixed and variable elements by the

high/low method:

• Select high and low levels of activity and their associated costs

• Variable cost per unit =

• Fixed cost is derived by substitution:

FC per unit = TC - (VC per unit x Number of units)

13Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - COST ANALYSIS

COST AND COST ANALYSIS

Class Activity 1 - The meals sold at a restaurant over six of months and cost

preparing meals are follows:

Calculate the FC and VC elements

Month Cost Meals

1 15867 21605

2 13343 15025

3 14027 16127

4 17159 2600

5 18657 28310

6 15539 20599

Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - COST ANALYSIS

COST AND COST ANALYSIS

• The least square regression analysis can also be used to separate

the variable cost and fixed cost element of semi-variable costs

• It uses the function of a straight line to determine the intercept on

the y-axis, which represents the fixed cost

• The slope of the curve determines the variable cost per unit

• The function of the straight line is in the form:

y = a + bx

15Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - COST ANALYSIS

COST AND COST ANALYSIS

• Where

• a is the fixed cost and b is the variable cost per unit

• Spreadsheet functions =SLOPE can be used to calculate the VC

per unit, and =INTERCEPT can be used to calculate the FC

16Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - CVP ANALYSIS

COST AND COST ANALYSIS

• Cost-Volume-Profit analysis is a technique for assessing the

responsiveness of profits to variations in costs, volumes and prices. This

tool assists managers in making decisions on

• What volume of sales to produce in order to achieve a planned profit,

• What profit should be achieved to avoid losses, and

• Whether to increase fixed costs

• Profit = Total Revenue - Total Variable Cost – Total Fixed Cost [Eq 1]

• Assume selling price per unit and variable cost per unit are constant,

then:

17Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - CVP ANALYSIS

COST AND COST ANALYSIS

• Total Revenue = Selling Price x Quantity

• Total Variable Cost = Variable Cost x Quantity

• Thus equation 1 can be re-written as follows:

• Profit = P x Q – V x Q – F, or

• Profit = (P – V ) x Q – F

• Where:

• P = Selling price per unit

• V = Variable cost per unit

18Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - CVP ANALYSIS

COST AND COST ANALYSIS

• (P – V) = Contribution margin per unit

• Q = Quantity of goods or services sold

• F = Fixed costs

• Contribution margin per unit indicates the proportion of revenue

from each unit sold that can be applied towards fixed costs

• Once a sufficient number of units have been sold to cover all fixed

costs, all subsequent contribution margin per unit from sales is

profit

19Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - CVP ANALYSIS

COST AND COST ANALYSIS

• On the assumption that fixed cost is constant, managers can

determine the expected quantity of goods or services that must be

sold to achieve an expected level of profit, by solving for Q:

• Profit = (P – V ) x Q – F

20Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - CVP ANALYSIS

COST AND COST ANALYSIS

• The break-even level is the point where the number of quantity

multiplied by the contribution margin is equal to the fixed costs

• This is the level at which sufficient sales revenue have been

generated to cover the associated fixed costs, or total revenue

equals total costs. Therefore, any additional sales will be profit

• Breakeven quantity is determined by

21Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - CVP ANALYSIS

COST AND COST ANALYSIS

Activity 2 — A market survey carried out by Ella Company for a new

gizmo indicates that the product can be sold at £40 per unit. The fixed

cost for the period is £8430, and the variable selling expense is £25 per

unit. Production capacity per period is 850 units

1. Find the equations for Total Revenue and Total Cost

2. Determine the breakeven quantity

3. If Ella Company wants to earn a profit of at least £2,820, what quantity

must the company produce and sell?

4. If Ella Company sets a target of achieving a profit of £10,320, advice

the directors the implication of this

22Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - CVP ANALYSIS

COST AND COST ANALYSIS

• The following assumptions underlie CVP analysis:

• Linear cost function - fixed costs remain constant, variable cost

per unit is constant

• Linear revenue function - selling price per unit remains constant

• The organisation operates within a relevant range

• The above limitations means that the tool should be used with

caution as the a basis of management decision making

• It can only provide a guide

23Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - CVP ANALYSIS

COST AND COST ANALYSIS

• Break-even and cost-volume-profit analysis can be used for making

the following business decisions:

• Setting the minimum selling price

• Setting the minimum level of activity

• Planning the level of activity to generate a required profit

• Calculating the margin of safety at a given level of activity

24Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - CVP ANALYSIS

COST AND COST ANALYSIS

• From the analyses we have carried out so far, we have learned that

the following factors influence profitability of a business

• The price at which a product is sold

• The cost of producing the product

• The level of activity or the quantity produced

25Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 - BUDGET & COST VARIANCES

COST AND COST ANALYSIS

• A budget is a quantitative statement of a plan of action for a

forthcoming period, usually one year

• A budget is a plan of what an organisation aims to do and what

targets need to be achieved within the specified period

• A budget is the basis of a budgetary planning and control system:

• Actual performance is compared with the budget

• Any deviation or variance identified is investigated

• Appropriate corrective action is taken

26Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 - BUDGET & COST VARIANCES

COST AND COST ANALYSIS

• A fixed budget is prepared at the beginning of a period on the basis

of the organisation's planned sales and production

• When the actual volumes of sales and production in a control

period are achieved as planned, there is no need to alter the

budget

• A fixed budget is usually useful in controlling fixed costs, which are

not expected to change over the planning period

• It is inappropriate in a budgetary control system to compare the

volumes of sales and production set in fixed budget which are

different from actual volumes

27Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 - BUDGET & COST VARIANCES

COST AND COST ANALYSIS

• A flexible budget is one which changes to reflect the changes in

volumes of activity

• At the end of a control period a (flexible) budget is retrospectively

prepared to compare with what the results should have been

• A business is dynamic so actual result is not expected to be exactly

as budgeted

28Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 - BUDGET & COST VARIANCES

COST AND COST ANALYSIS

Class Activity 1 - Preparation of a flexible budget

The Akaglo Company expects production and sales to be 90% of

capacity of 100,000 units of a single product. Cost estimates are

made using high-low method. The following are the historical records

of costs:

29Lecturer: Kofi Barimah

Units of

output/sales Costs (£)

9,800 44,400

7,700 38,100

Management is uncertain that the

estimates of sales and has asked flexible

budgets to be prepared for 8,000 and

10,000 units. The sales price per unit has

been fixed at £5.

Prepare appropriate flexible budgets

LEARNING OBJECTIVE 3 - BUDGET & COST VARIANCES

COST AND COST ANALYSIS

Activity 2 - Flexible budget and cost variances

The Angamah company budgeted to sell 200 units and produced the

following budget.

30Lecturer: Kofi Barimah

£ £

Sales 71,400

Variable costs

Labour 31,600

Material 12,600 44,200

Contribution 27,200

Fixed costs 18,900

Profit 8,300

Actual sales turned out to be

2,300 units, which were sold for

£69,000. The actual expenditure

on labour was £27,000, and on

material £24,000. Fixed costs

totalled £10,000.

Prepare a flexible budget report

useful for control purposes.

LEARNING OBJECTIVE 4: ABSORPTION & MARGINAL COSTING

COST AND COST ANALYSIS

• Cost accounting is used to determine the cost of products, jobs or

services

• Such costs have to be built up using a process known as cost

accumulation

• Cost accounting accumulates the various cost elements which

make up total cost

• Two types of cost accounting system are in use, viz. absorption

costing system and marginal costing system

31Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4: ABSORPTION COSTING

COST AND COST ANALYSIS

32Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4: ABSORPTION COSTING

COST AND COST ANALYSIS

• In absorption costing, production overhead costs are included

(absorbed) into product or service costs

• Overhead costs are other costs incurred in making the product or

providing a service but are not directly attributable to a single

product

• They are incurred generally in the process of manufacturing a large

number of product units or providing a service

• Examples are light and heat, factory rent and rates, supervision

costs, machine depreciation

33Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4: ABSORPTION COSTING

COST AND COST ANALYSIS

• Reasons for using absorption costing:

• Inventory valuation for inclusion in the statement of profit and for

closing inventory in the statement of financial position

• Required by accounting regulation in arriving at profit

• Pricing decision so that the full product cost is established to

which a margin for profit is added - full-cost pricing

• In multi-product organisation, it allows profitability of different

products to be compared by include the fair share of overhead

costs in each product

34Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4: MARGINAL COSTING

COST AND COST ANALYSIS

• In marginal costing, only those manufacturing costs that vary with

output are treated as product costs

• This includes direct materials, direct labour, and the variable

portion of manufacturing overhead

• Fixed manufacturing overhead is treated as a period cost. Thus:

• It is expensed in its entirety each period, like selling and

administrative expenses,

• The cost of a unit of product in inventory or in cost of goods sold

does not contain any fixed manufacturing overhead cost

35Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4: MARGINAL COSTING

COST AND COST ANALYSIS

• In marginal costing

• Closing inventories are valued at marginal (variable) production cost

• If the opening and closing inventory levels differ in an accounting

period, the profit reported for the period will differ between absorption

costing and marginal costing

• In the long run, total profit for a company will be the same whichever

costing method is used

• For planning and decision-making purposes, marginal costing is useful

as a costing method

36Lecturer: Kofi Barimah

VT-F4/Management Accounting/Support/Management Accounting - Lecture 5 (1).pdf

L5: PRODUCT

COSTINGS

UNIT 5 MANAGEMENT

ACCOUNTING

Lecturer: Kofi Barimah

UNIT 5 MANAGEMENT ACCOUNTING L5: PRODUCT COSTINGS

2Lecturer: Kofi Barimah

LEARNING OUTCOMES

LEARNING OUTCOMES AND OBJECTIVES

1. Demonstrate an understanding of management accounting

systems

2. Apply a range of management accounting

techniques

3. Explain the use of planning tools used in management accounting

4. Compare ways in which organisations could use management

accounting to respond to financial problems

3Lecturer: Kofi Barimah

LEARNING OBJECTIVES

LEARNING OUTCOMES AND OBJECTIVES

1. Cost allocation

2. Normal and standard costing

3. Activity-based costing

4Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1- EXPLAINING COST ALLOCATION

COST ALLOCATION

• Cost is a resource sacrificed or forgone to achieve a specific objective

• A cost (such as direct materials or advertising) is usually measured as

the monetary amount that must be paid to acquire goods or services

• An actual cost is the cost incurred (a historical or past cost), as

distinguished from a budgeted cost ,which is a predicted or forecasted

cost (a future cost)

• Managers usually want to know the cost of something - a cost object,

which is anything for which a measurement of costs is desired

5Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - EXPLAINING COST ALLOCATION

COST ALLOCATION

• Examples cost objects are products,services,activities,processes,

and customers

• A cost system determine the costs of various cost objects typically

in two basic stages:

• Cost accumulation is the collection of cost data in some

organised way by means of an accounting system

• Cost assignment of these accumulated costs to designated cost

objects

• Managers use this cost information in two main ways:

6Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1- EXPLAINING COST ALLOCATION

COST ALLOCATION

• To make decisions,for instance, on how to price different

products or how much to invest in R&D and marketing and

• To implement decisions, by influencing and motivating

employees to act and learn, for example, by rewarding

employees for reducing costs

• Costs are broadly distinguished between:

• direct costs – costs that are traced to the cost object, and

• indirect costs/overheads – costs that are allocated to the cost

object

7Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1- EXPLAINING COST ALLOCATION

COST ALLOCATION

• Direct costs are easy to trace to cost objects, because the they

relate to them

• Indirect cost allocation poses a challenge as they don’t relate to any

specific cost object

• In absorption costing, an overhead absorption rate (based say on

direct labour hours) is usually used to allocate indirect

costs/overheads

• Thus a fully absorbed cost is used to value inventory and as a

basis for pricing

8Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1- EXPLAINING COST ALLOCATION

COST ALLOCATION

9Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - NORMAL AND STANDARD COSTING

NORMAL AND STANDARD COSTING

• Normal costing is where items are costed on the basis of historical

costs

• Historical costs are the price actually paid for items such as direct

labour and direct material

• Thus in normal costing product costs are arrived on the basis of

actual costs of elements:

• actual direct material cost

• actual direct labour cost

• overhead allocation based on estimated OAR

10Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - NORMAL AND STANDARD COSTING

NORMAL AND STANDARD COSTING

• The above costs are used as the basis of arriving at the cost of

goods sold and for valuing inventory

• There may be a difference between the overhead applied and

actual overhead incurred:

• Where the difference is insignificant, it is adjusted in the cost of

goods sold

• Where the difference is significant, is it pro-rated between the

cost of goods sold and inventory

11Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - NORMAL AND STANDARD COSTING

NORMAL AND STANDARD COSTING

• Standard costing is where all the elements of a product and

inventory costs are based of predetermined costs:

• Standard direct material costs

• Standard direct labour costs

• Overhead allocation based on predetermined OAR

• Any difference between these standard costs and actual costs are

known as variances

• Small variances are adjusted in cost of goods sold

12Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2

NORMAL AND STANDARD COSTING

• Significant variances are pro-rated between cost of goods sold and

inventory

• Standard costs are used to value cost of goods sold and inventories

• The application of the variances to these will then convert the

standard costs into actual costs

13Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 - ACTIVITY BASED COSTING

ACTIVITY BASED COSTING

• Traditional absorption costing is used to determine product costs for

valuing inventories and for external reporting

• Manufacturing overheads are assigned to product costs

• Non-manufacturing overheads are treated as period costs

• In ABC, products are assigned all of the overhead costs – non-

manufacturing and manufacturing – that they can be reasonably

supposed to have caused, i.e. the entire cost of a product rather than

just its manufacturing costs

• ABC charges overheads to products on a causal basis using cost

drivers

14Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 - ACTIVITY BASED COSTING

ACTIVITY BASED COSTING

• Activity cost pools are created in ABC

• Costs are linked to the activity accurately and from the activity to the

cost unit

• Knowledge of the activity is key to the application of ABC

• A cost driver is the causal link between the activity and the cost

object

• Cost drivers describe exactly how the production of units incur costs

within the activity

• The overhead is linked to the cost object using a cost driver rate

15Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 - ACTIVITY BASED COSTING

ACTIVITY BASED COSTING

• Traditional OARs are less reliable because of:

• Increased complexity of operation

• Increased proportion of overhead costs in modern manufacturing

systems

• Reduced significance of labour

• Less volume related costs

16Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 - ACTIVITY BASED COSTING

ACTIVITY BASED COSTING

17Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 - ACTIVITY BASED COSTING

ACTIVITY BASED COSTING

• ABC is suitable where:

• Production overheads are high relative to direct costs

• There is diversity in the product range

• There is diversity of overhead resource input to products

• Consumption of overhead resources is not driven primarily by

volume

18Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 - ACTIVITY BASED COSTING

ACTIVITY BASED COSTING

• Benefits of ABC

• More accurate product line costs

• More flexible the approach can analyse costs by processes, areas

of managerial responsibility and customers

• ABC avoids the problem of cost absorption on an inappropriate

basis

• Provides a reliable indication of long-run variable product cost

• Provides meaningful financial (periodic cost driver rates) and non-

financial (periodic cost driver volumes) measures

19Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 - ACTIVITY BASED COSTING

ACTIVITY BASED COSTING

• Limitations of ABC

• Little evidence that ABC improves corporate profitability

• ABC information is historic and internally orientated and therefore

lacks direct relevance for future strategic decisions

• Practical problems such as cost driver selection

• It can be viewed as simply a rigorous application of conventional

costing procedures

• More expensive than traditional absorption costing as it requires

more detailed information and analysis

20Lecturer: Kofi Barimah

VT-F4/Management Accounting/Support/Management Accounting - Lecture 5.pdf

Management Accounting

• The principles of marginal and absorption costing

By the end of this session you should be able to

• Explain the importance and apply the concept of contribution

• Calculate profit/loss using absorption and marginal costing principles

• Reconcile profit/loss under absorption and marginal costing

• Describe the advantages and disadvantages of absorption and marginal costing

The principle of marginal costing.

• Marginal cost is the variable cost of one unit of a product or service.

• in marginal costing, only variable costs are relevant in calculating cost of sale

• Closing inventory is valued at marginal/ variable production costs.

• Fixed costs are treated as period cost and are charged (just one line subtraction) in the income statement.

Marginal /variable production cost consists of the following

– Direct material cost

– Direct labour costs

– Variable production overheads

The principle of marginal costing.

• In marginal costing, it is important to identify the following

• variable cost

• fixed costs

• contribution

The concept of contribution

• Contribution is the backbone of marginal costing.

• It is calculated as follows

Sales x

Less variable/marginal cost of sale (x)

Contribution x

MARGINAL COSTING PROFIT STATEMENT

£ £

Sales X

Less cost of sale (Valued at marginal production

cost only)

Opening inventory x

Variable cost of production x

Less closing inventory (x)

(X)

Less other variable costs (X)

Contribution x

Less fixed costs (actual) (x)

Profit/ loss x

ABSORPTION COSTING PROFIT STATEMENT

£ £

SALES X

LESS COST OF SALE: (Valued at full production cost)

Opening inventory X

Variable cost of production X

Fixed overhead absorbed X

Less closing inventory (x)

(x)

(Under)/over- absorption (x) / x

Gross profit X

Less non-production costs (x)

Profit/ loss x

A company produces a product called ALB with the following details: £

Selling price 10 Variable cost per unit 6

•Fixed cost per each period £300,000 •Budgeted product is expected to be 150,000 units •There were no opening stock in period 1. Actual fixed overheads for each period was £300,000. non-manufacturing overheads were £100,00 per period. •Production and sales for each period are as follows:

Period

Units sold (000’s) 150 120 180 150 140 160

Units produced (000’s) 150 150 150 150 170 140

Calculate the profit or loss for each period using : Absorption costing and Marginal costing and reconcile the profits in each period

Class exercise

Comparing marginal costing and absorption costing

Marginal costing Absorption costing

Closing inventory-valued at

marginal production costs

Closing inventory- valued at

full production cost

Fixed costs are period costs Fixed costs are absorbed into

units costs

Cost of sale does not include

any fixed overheads

There is no need to adjust for

over/ under absorption.

Cost of sale includes a share

of fixed overhead.

There is the need to adjust for

over/ under absorption

Advantages and disadvantages of marginal and absorption costing

Advantages of marginal costing Advantages for absorption costing

1. Contribution per unit is constant unlike profit per unit which varies with changes in sales volume.

Absorption costing includes an element of fixed overheads in valuing inventory. Because without the overheads like rent, we cannot make the products.

2. There is no need to adjust for over/ under absorption.

There is the need to adjust for over/ under absorption. This helps in controlling costs.

1. Fixed costs are period costs and must be charges in full to the period, not products made. Because whether the products are made or not the fixed costs will be incurred

Absorbing overheads into the cost of products is the best way to estimate the price of jobs and the profits on those jobs.

Marginal costing is only used for making management accounts

Absorption costing is recommended by acceptable accounting standards and is used for reporting in external accounts.

home work A company makes a single product. At the start of the period, there was no opening inventory. The cost card was as follows:

Direct labour 5

Direct material 8

Variable production overhead 2

Fixed production overhead 5

The budgeted level of production was 36,000 units per annum. The actual fixed production overhead incurred in the period was £15,000. Selling, distribution and admin expenses are as follows: Fixed 10,000 per month Variable 15% of sales value The selling price per unit is £35. 2,000 units were produced but 1,500 were sold.

Determine the profit in each case using A)Absorption costing B)Marginal costing principles

VT-F4/Management Accounting/Support/Management Accounting - Lecture 7.pdf

L6: COST OF

INVENTORY

UNIT 5 MANAGEMENT

ACCOUNTING

Lecturer: Kofi Barimah

UNIT 5 MANAGEMENT ACCOUNTING L6: COST OF INVENTORY

2Lecturer: Kofi Barimah

LEARNING OUTCOMES

LEARNING OUTCOMES AND OBJECTIVES

1. Demonstrate an understanding of management accounting

systems

2. Apply a range of management accounting

techniques

3. Explain the use of planning tools used in management accounting

4. Compare ways in which organisations could use management

accounting to respond to financial problems

3Lecturer: Kofi Barimah

LEARNING OBJECTIVES

LEARNING OUTCOMES AND OBJECTIVES

• Definitions and meaning of inventory costs and different types of

inventory costs

• The benefits of reducing inventory costs

• Valuation methods

4Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - DEFINITION AND MEANING

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

• In a manufacturing entity, inventory costs are all costs of a product

that are regarded as assets when they are incurred and expenses

as cost of goods sold (CGS) when the product is sold

• Two types of inventory costing method are available to determine

inventory costs:

• absorption costing (AC) and

• marginal costing (MC)

5Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - INVENTORY COSTS IN AC

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

6Lecturer: Kofi Barimah

Trading Inventory Cost Flow

Manufacturing Inventory Cost Flow

LEARNING OBJECTIVE 1 - INVENTORY COSTS IN AC

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

• In AC, all variable and fixed manufacturing costs are included in

inventory costs

• For manufacturing companies all manufacturing costs (raw materials,

direct labour, manufacturing overheads) are product costs

• For trading companies, product costs are the costs of purchasing the

goods for resale in their same form

• Until the related products are sold, product costs stay in the statement

of financial position as inventories

• The cost related to the inventories are inventory costs

7Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - INVENTORY COSTS IN AC

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

• Manufacturing entities have three inventory types to which product

costs attach - raw material, work in process and finished goods

• When finished goods are sold, the cost of manufacturing them is

matched against revenues to which they relate

• In trading companies there is only one type of inventory - trading

inventory

• When trading inventory is sold the cost of goods sold is matched to the

related revenues to which they relate

• All costs other than manufacturing costs are period costs, eg

administration expenses and selling and distribution costs

8Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - INVENTORY COSTS IN AC

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

• Period costs are expensed directly in the statement of income

• The inventory of a trading company is recorded in the inventory

account

• The closing balance on the account goes into the statement of

financial position

• The cost of goods sold goes into the statement of Profit or Loss

• All period costs are expensed in the statement of profit or loss

• The exceptions are prepayments and accruals, if any, which are

reflected in the statement of financial position

9Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 - INVENTORY COSTS IN MC

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

• In marginal costing, all variable manufacturing costs (direct and

indirect) are included in inventory costs

• All fixed manufacturing costs are exclude from inventory costs

• Fixed manufacturing costs are treated as period costs

• Variable non-manufacturing costs are also treated as period costs

and so expensed in the Statement of Profit or Loss

• Marginal costing method is not allowed to be used to determine

inventory costs for external reporting purposes

10Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - REDUCING INVENTORY COSTS

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

• Inventory is a significant expenditure, particularly in a

manufacturing organisation

• It is important to manage inventory in order to control inventory

costs

• Inventory management involves three things:

• deciding how much to order;

• deciding when to order;

• deciding how to control the inventory

11Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - REDUCING INVENTORY COSTS

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

• Deciding how much to order involves a trade-of between:

• the cost of purchasing items, and

• the cost of holding stock

• Ordering small quantities reduces the capital tied up in raw

materials, but increases the time and effort that has to be invested

in placing orders

• Ordering large quantities makes frequent purchases unnecessary,

but requires greater capital investment and larger storage facilities

12Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - REDUCING INVENTORY COSTS

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

• There are various types of inventory cost:

• Price Discount costs – buying in bulk often results in price discounts

• Stock-out costs – caused by failure to meet demand

• Funding Inventory – companies pay suppliers long before they receive

payment from their customers so money is locked in inventory

• Storage Costs – inventory has to be stored, warehouses have to be

heated and store keepers have to be paid

• Obsolescence Costs – whenever goods are stored there is always a

danger that they will deteriorate, or become obsolete

13Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - REDUCING INVENTORY COSTS

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

• The economic order quantity (EOQ) attempts to balance the

advantages and disadvantages of holding stock

• The EOQ model takes account of:

• Holding costs – working capital, storage and obsolescence risk

costs

• Order costs – price discounts and costs of placing orders

• The rationale underlying the EOQ model is that, for any given set of

circumstances, an order quantity, Q, exists that minimises the total

order and holding costs

14Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - REDUCING INVENTORY COSTS

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

• Given two alternative inventory plans with different order quantities (Q)

15Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - REDUCING INVENTORY COSTS

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

16Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - REDUCING INVENTORY COSTS

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

• Holding costs = holding cost/unit x average inventory

• Order costs = order cost x number of orders per period

• So, Total cost, Ct =

• With low values of Q, holding costs are low but order costs are high

• Initially the decrease in ordering costs is greater than the increase in

holding costs so total costs fall

17Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - REDUCING INVENTORY COSTS

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

• After a point, the decrease in ordering costs slows whilst the

increase in holding costs is constant, so total costs start to increase

• The ‘optimum’ order quantity is known as the economic order quantity

(EOQ)

• The total cost, Ct when differentiated gives a general EOQ formula

thus:

18Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - REDUCING INVENTORY COSTS

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

• Assumptions underlying the EOQ model:

• Demand is certain, constant and continuous over time

• No stock-out

• All prices are constant and certain. There is no bulk order

discounts

• Supply of inventory is received all in one delivery and

instantaneously after ordering (supply lead time is constant and

certain)

19Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 - REDUCING INVENTORY COSTS

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

Class Activity

A building materials supplier obtains its bagged cement from a single

supplier. Demand is reasonably constant throughout the year, and

last year the company sold 2000 tonnes of this product. It estimates

the costs of placing an order at around £25 each time an order is

placed, and calculates that the annual cost of holding inventory is 20

per cent of purchase cost. The company purchases the cement at £60

per tonne.

Determine the EOQ

20Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 - INVENTORY VALUATION METHODS

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

• Accounting standards (IAS 2 Inventories) require that:

• Inventories shall be measured at the lower of cost and net

realisable value

• Cost of inventories shall comprise all costs of purchase, costs of

conversion and other costs incurred in bringing the inventories to

their present location and condition

• Costs which must be excluded from the cost of inventory are:

selling costs, storage costs, abnormal waste of materials, labour

or other costs and administrative overheads.

21Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 - INVENTORY VALUATION METHODS

DEFINITION, MEANING AND TYPES OF INVENTORY COSTS

• Net realisable value is the estimated proceeds from the sale of items

of stock less all further costs to completion and less all costs to be

incurred in marketing, selling and distributing directly related to the

items in question

• Inventory valuation methods include:

• First in, first out (FIFO)

• Last in, first out (LIFO)

• Average cost

• Standard costs

22Lecturer: Kofi Barimah

VT-F4/Management Accounting/Support/Management Accounting - Lecture 8.pdf

L7: BUDGETS AND

PRICING

UNIT 5 MANAGEMENT

ACCOUNTING

Lecturer: Kofi Barimah

L7: BUDGETS AND PRICING UNIT 5 MANAGEMENT ACCOUNTING

2Lecturer: Kofi Barimah

LEARNING OUTCOMES

LEARNING OUTCOMES AND OBJECTIVES

1. Demonstrate an understanding of management accounting

systems

2. Apply a range of management accounting techniques

3. Explain the use of planning tools used in

management accounting

4. Compare ways in which organisations could use management

accounting to respond to financial problems

LEARNING OBJECTIVES

LEARNING OUTCOMES AND OBJECTIVES

1. Preparing budgets; different types of budgets (e.g. capital and

operating).

2. Alternative methods of budgeting

3. Behavioural implications of budgets

4. Pricing strategies - Considered in Lecture 2

4Lecturer: Kofi Barimah

LEARN OBJECTIVE 1

PREPARING BUDGETS

• “A budget is (a) the quantitative expression of a proposed plan of action

by management for a specified period and (b) an aid to coordinate what

needs to be done to implement the plan" (Horngren et al, 2012 p184)

• A financial budget is a quantitative specification of management's

expectations relating to profits, financial position and cash flows for a

specified period based on long-term choices

• There are two types of budgets:

• Operational budget, and

• Capital budget

5Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – PREPARING OPERATIONAL BUDGET

PREPARING BUDGETS

• A budget is an important tool for implementing an organisation's

strategy (long-term goals and objectives) and vision

• Each year, an organisation will draw up a master budget

• This considers the operating and financial plans for the period and

expresses them into expected statements of income, financial

position and cashflow

• The next slide provides schematic view of the different components

of a master budget

• An explanation of what is on diagram follows

6Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – PREPARING OPERATIONAL BUDGET

PREPARING BUDGETS

7Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – PREPARING OPERATIONAL BUDGET

PREPARING BUDGETS

• Based on the organisation's long term plans, a sales budget will be

decided each year

• This budget will determine what will go into the production

budget,taking into account any existing inventory, and what

inventory need be maintained at the end of the period

• The direct material, direct labour and manufacturing overhead

budgets will be drawn on the basis of what is in the production

budget

• The sales, distribution andadministration expenses budgets will

also be prepared taking into account whatis in the sales budget

8Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – PREPARING OPERATIONAL BUDGET

PREPARING BUDGETS

• All these individual or departmental budgets are consolidated by

into the cash, statement of income and statement of financial

position budgets

• This then becomes the Master Budget for the year. This is

approved by senior management

• In order to facilitate decision making, the master budget needs to

be analysed both by period (daily, or weekly or monthly) and unit,

department or section

• Each year, organisation's actual performance are measured,and

analysed by period and department

9Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – PREPARING OPERATIONAL BUDGET

PREPARING BUDGETS

• This is compared to the periodic and departmental budgets

• This process of measuring actual performance and comparing with

budgets is referred to as feedback control

• Feedback control enable managers to make important decisions:

• difference between the actuals and the budget is known as a

variance

• with positive variance nothing may be done budget may be re-

examined for under-estimation

• With adverse variance corrective action is required

10Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – PREPARING CAPITAL BUDGETS

PREPARING BUDGETS

• Where the expenditure results in the acquisition of non-current

assets, or an improvement in their earning capacity, it is referred

to as capital expenditure

• Capital expenditure has the following characteristics:

• The outlay of large sums of money, and

• Any expected benefits may take a number of years to accrue

• For these reasons capital expenditure is subject to a rigorous

process of appraisal and control known as capital budgeting or

investment appraisal

11Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – PREPARING CAPITAL BUDGETS

PREPARING BUDGETS

• The techniques for capital budgeting fall into two main categories:

• Non-discounted cash flow techniques:

• Payback period, and

• Accounting rate of return

• Discounted cash flow techniques:

• Internal rate of return, and

• Net present value

12Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – PAYBACK PERIOD

PREPARING BUDGETS

• Payback is the time it takes the cash inflows from a capital

investment project to equal the cash outflows, usually expressed in

year

• Payback attempts to answer the question: 'How long will it take to

pay back a project's cost?

• An organisation might have a target payback

• Projects may be rejected unless the payback period is within the

expected period

13Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – PAYBACK PERIOD

PREPARING BUDGETS

• A project should not be evaluated on the basis of payback alone

• Payback is often used as a 'first screening method', and then

evaluated with one of the discounted cash flow methods

• The main reason is that it may result in choosing an inappropriate

project, as it ignores cash flows beyond the payback period - see

the following mutually exclusive projects:

14Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – PAYBACK PERIOD

PREPARING BUDGETS

• Project B recovers its cost in

under two years

• Project A recovers its cost in the

third year

• In this case Project B should be

accepted and Project A rejected

• However, if you look beyond

Year 2, project A returns

significantly higher cash flows,

which are ignored

15Lecturer: Kofi Barimah

Project A

Project B

Capital expenditure 60,000 60,000

Cash flows:

Year 1 20,000 50,000

Year 2 30,000 20,000

Year 3 40,000 5,000

Year 4 50,000 5,000

Year 5 60,000 5,000

LEARN OBJECTIVE 1 – PAYBACK PERIOD

PREPARING BUDGETS

• Advantages of Payback Period technique:

• It is simple to calculate and simple to understand

• It uses cash flows rather than accounting profits

• It can be used as a screening device as a first stage in eliminating

obviously inappropriate projects prior to more detailed evaluation

• The fact that it tends to bias in favour of short-term projects means

that it tends to minimise both financial and business risk

• It can be used when there is a capital rationing situation to identify

those projects which generate additional cash for investment quickly

16Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – PAYBACK PERIOD

PREPARING BUDGETS

• Disadvantages of Payback Period technique:

• It ignores the timing of cash flows within the payback period

• It ignores the cash flows after the end of payback period and

therefore the total project return

• It ignores the time value of money

• It is unable to distinguish between projects with the same

payback period

• The choice of cut-off payback period is arbitrary

17Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – ACCOUNTING RATE OF RETURN

PREPARING BUDGETS

• This techniques (also known as Return on Capital Employed

(ROCE)) estimates the accounting rate of return that the project

should yield

• If it exceeds a target rate of return, the project is accepted

• The problem is that there are several variants of the ARR:

18Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – ACCOUNTING RATE OF RETURN

PREPARING BUDGETS

• Any of the methods may be used, as each has their merits

• Any method selected may, however, be applied consistently

• Example

• A company has a target return on capital employed of 20% (using

the first definition from the previous slide), and is now

considering the following project

• The capital asset would be depreciated by 25% of its cost each

year, and will have no residual value. You are required to assess

whether the project should be undertaken

19Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – ACCOUNTING RATE OF RETURN

PREPARING BUDGETS

20Lecturer: Kofi Barimah

Capital cost of asset 80,000

Estimate useful life - 4 years

Year 1 20,000

Year 2 25,000

Year 3 35,000

Year 4 25,000

LEARN OBJECTIVE 1 – ACCOUNTING RATE OF RETURN

PREPARING BUDGETS

• Advantages of the ARR technique:

• It is a quick and simple calculation

• It involves the familiar concept of a percentage return

• It looks at the entire project life

• Disadvantages of the ARR technique:

• It is based on accounting profits and not cash flows. Accounting

profits are subject to a number of different accounting treatments

21Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – ACCOUNTING RATE OF RETURN

PREPARING BUDGETS

• It is a relative measure rather than an absolute measure and

hence takes no account of the size of the investment

• It takes no account of the length of the project

• Like the payback method, it ignores the time value of money

22Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – TIME VALUE OF MONEY

PREPARING BUDGETS

• Money received today is worth more than the same sum received in

the future because of:

• The potential for earning interest

• The impact of inflation

• The effect of risk

• Compounding and discounting techniques are used covert cash flows

to take account of the time value of money

• Cash flows that take into account the time value of money are known

as the discounted cash flows or DCF for short

23Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – TIME VALUE OF MONEY

PREPARING BUDGETS

• Capital budgeting techniques that make use of the DCFs look at the

total profitability over the project life

• DCFs look at the costs and benefits of a project and ignore notional

costs like depreciation

• Compounding calculates the future value of a given sum of money

where F = future value after n periods

P = present or initial value

24Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – TIME VALUE OF MONEY

PREPARING BUDGETS

r = rate of interest per period

n = number of periods

• Discounting is the conversion of future cash flows into their present

values:

where is the discount factor

25Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – NET PRESENT VALUE

PREPARING BUDGETS

• The net present value (NPV) is one of two DCF methods for

investment appraisal

• NPV is the value obtained by discounting all cash outflows and

inflows of a capital investment project by a chosen target rate of

return or cost of capital

• The NPV method compares the present value of all the cash inflows

from an investment with the present value of all the cash outflows

from an investment

• The NPV is thus calculated as the PV of cash inflows minus the PV

of cash outflows. Then:

26Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – NET PRESENT VALUE

PREPARING BUDGETS

• Positive NPV means return from investment's cash inflows exceeds cost

of capital: accept project

• Negative NPV means return from investment's cash inflows is below

cost of capital: reject project

• Zero NPV means return from investment's cash inflows is equivalent to

cost of capital

Class Activity:

A company has a capital investment. The cash flows estimated are as

follows. The cost of capital is 9%

Calculate the NPV of the project to assess whether it should be undertaken

27Lecturer: Kofi Barimah

Year 0 1 2 3 4 5

CFs (240,000) 80,000 120,000 70,000 40,000 20,000

LEARN OBJECTIVE 1 – NET PRESENT VALUE

PREPARING BUDGETS

• Advantages of the the NPV technique:

• It considers the time value of money

• It is an absolute measure of return

• It is based on cash flows, not on profits

• It should lead to the maximisation of shareholders' wealth

• Higher discount rates can be set for riskier projects

• Disadvantages:

• It is not easy to explain to managers

• It requires that the cost of capital is known

28Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – INTERNAL RATE OF RETURN

PREPARING BUDGETS

• Under this technique the company accepts projects whose IRR (the

rate at which the NPV is zero) exceeds a target rate of return

• The IRR is calculated using interpolation involving the following steps

• Calculate the NPV using the company's cost of capital

• Calculate the NPV again using a second discount rate

• If the NPV is positive, use a second rate that is greater than the

first rate

• If the NPV is negative, use a second rate that is less than the first

rate

29Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – INTERNAL RATE OF RETURN

PREPARING BUDGETS

• Use the two NPV values to estimate the IRR applying the

following formula:

Where N = NPV

L = Lower rate of interest

H = Higher rate of interest

• Projects should be accepted if their IRR is greater than the cost of

capital

30Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – INTERNAL RATE OF RETURN

PREPARING BUDGETS

Class Activity

A business undertakes high risk investments and requires

minimum expected rate of return of 17%. A proposed

capital investment has the following expected cash flows.

1. Calculate the NPV if the cost of capital is 15%

2. Calculate the NPV if the cost of capital is 20%

3. Use the calculated NPVs to estimate the IRR of the

project

4. Should the project be accepted

31Lecturer: Kofi Barimah

Year £

0 (50,000)

1 18,000

2 25,000

3 20,000

4 10,000

LEARN OBJECTIVE 1 – INTERNAL RATE OF RETURN

PREPARING BUDGETS

• Advantages of the IRR technique:

• It does consider the time value of money

• A percentage is easier to understand by managers

• It uses cash flows instead of profit

• It considers the whole life of the project

• A company selecting projects where the IRR exceeds the cost of

capital should increase shareholders' wealth

• It does not need the cost of capital to be known

32Lecturer: Kofi Barimah

LEARN OBJECTIVE 1 – INTERNAL RATE OF RETURN

PREPARING BUDGETS

• Disadvantages

• It is not a measure of absolute profitability

• Small projects with high IRRs might not enrich shareholders' wealth

as much as large projects with smaller IRRs

• Interpolation only provides an estimate

• Non-conventional cash flows may give rise to multiple IRRs

33Lecturer: Kofi Barimah

LEARN OBJECTIVE 2 – ALTERNATIVE BUDGETING METHODS

PREPARING BUDGETS

34Lecturer: Kofi Barimah

LEARN OBJECTIVE 2 – ALTERNATIVE BUDGETING METHODS

PREPARING BUDGETS

• Incremental budgeting

• The most common method of budgeting

• It involves adjusting the figures for the last period to reflect the

anticipated figures for next period

• Start with either the previous period’s budget or actual results

and add (or subtract) an incremental amount to cover inflation

and other known changes

35Lecturer: Kofi Barimah

LEARN OBJECTIVE 2 – ALTERNATIVE BUDGETING METHODS

PREPARING BUDGETS

• Zero-based budgeting

• This involves starting the preparation of the budget from zero

each time

• Every element of cost and benefit has to be justified as if it were

the first time of preparing a budget

• The principal behind this technique is to prepare for current

future needs, rather than reflect past actions

• ZBB is normally found in service industries where costs are

more likely to be discretionary

36Lecturer: Kofi Barimah

LEARN OBJECTIVE 2 – ALTERNATIVE BUDGETING METHODS

PREPARING BUDGETS

• Activity-based budgeting

• This method of budgeting which uses cost driver information to analyse

data

• May involve preparing an activity matrix

• Periodic budgeting

• Budget prepared for typically one year at a time

• No alterations once the budget has been set

• Suitable for stable businesses where forecasting is easy and where tight

control is not necessary

37Lecturer: Kofi Barimah

LEARN OBJECTIVE 2 – ALTERNATIVE BUDGETING METHODS

PREPARING BUDGETS

• Rolling (continuous) budget

• A budget kept continuously up to date by adding another

accounting period (e.g. month or quarter) when the earliest

accounting period has expired

• Useful for keeping tight control

• Always have an accurate budget for the next 12 months

• Fixed and flexible budget have been considered in previous

lectures

38Lecturer: Kofi Barimah

LEARN OBJECTIVE 3 – BEHAVIOURAL IMPLICATIONS

PREPARING BUDGETS

• Managers and other individuals may react to budgets and

budgetary control in a manner that will prevent budgets achieving

set objective

• Such behavioural challenges include the following:

• Dysfunctional behaviour is when individual managers seek to

achieve their own objectives at the expense of the objectives of

the organisation

• Budget slack (or bias) is a deliberate overestimation of

expenditure and/or underestimation of revenues in the budgeting

process

39Lecturer: Kofi Barimah

LEARN OBJECTIVE 3 – BEHAVIOURAL IMPLICATIONS

PREPARING BUDGETS

• Budget-constrained style – Here, the main emphasis in

performance evaluation is the manager’s success in meeting

budget targets in the short-term, with no consideration for other

aspects of performance that are not targeted in the budget

• Non-accounting style – With this style, performance evaluation is

not based on budgetary information, and accounting information

plays a relatively unimportant role. Other, non-accounting

performance indicators , such as quality, may be ignored though

they are as important as the budget targets

40Lecturer: Kofi Barimah

VT-F4/Management Accounting/Support/Management Accounting - Lecture 9.pdf

L8: STRATEGIC

PLNNING

UNIT 5 MANAGMENT ACCOUNTING

Lecturer: Kofi Barimah

UNIT 5 MANAGEMENT ACCOUNTING STRATEGIC PLANNING

2Lecturer: Kofi Barimah

LEARNING OUTCOMES

LEARNING OUTCOMES AND OBJECTIVES

1. Demonstrate an understanding of management accounting

systems

2. Apply a range of management accounting techniques

3. Explain the use of planning tools used in

management accounting

4. Compare ways in which organisations could use management

accounting to respond to financial problems

3Lecturer: Kofi Barimah

LEARNING OBJECTIVES

LEARNING OUTCOMES AND OBJECTIVES

1. Apply PEST to the financial position of an organisation

2. Apply Porter's Five Forces analysis to the financial position of an

organisation

3. Apply SWOT to the financial position of an organisation

4. Apply balance scorecard to the financial position of an organisation

Only one of the above strategic planning should be applied

4Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1

APPLYING STRATEGIC PLANNING TOOLS

• Strategic planning is a process of determining the organisation's

current and future direction, deciding on the allocation of resources

and identifying the corporate vision

• An important aspect of strategic planning is to analyse the business

environment

• The environment is both a means of survival and a source of

threats

• Managers need to analyse the environment in order to anticipate,

and possibly, influence environmental change

5Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 — PEST

APPLYING STRATEGIC PLANNING TOOLS

The Business Environment (Johnson, et el, 2007)

6Lecturer: Kofi Barimah

LEARNING OBJECTIVE

APPLYING STRATEGIC PLANNING TOOLS

• Johnson et el (2007) breaks down the business environment into

the macro environment, industry (or sector) and

competitors/markets. According to the authors:

• The PEST (or PESTEL) tool is used to gain an understanding of

the macro environment

• The Porter's Five Forces facilitates an understanding of industry

and

• The SWOT analysis is used to diagnose the strategic capability

of the business, and so its ability to compete in its market

7Lecturer: Kofi Barimah

LEARNING OBJECTIVE

APPLYING STRATEGIC PLANNING TOOLS

• From the management accounting perspective, when an

organisation performs well in its industry and markets, its financial

performance will improve

• Good financial performance enhances the financial position of the

organisation

• Kaplan and Norton (1992) suggested that strong financial

performance is not achievable in the long term unless non-financial

performance is sufficiently strong to sustain the business

• The authors proposed the balance scorecard (BSC) as a tool to

measure both financial and non-financial performance

8Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 — PEST

APPLYING STRATEGIC PLANNING TOOLS

• PEST framework categorises environmental influences into four

main types: political, economic, social, technological

• PEST provides a comprehensive list of influences on the possible

success or failure of particular strategies:

• Political Factors: For example, Government policies, taxation

changes, foreign trade regulations, political risk in foreign

markets, changes in trade blocks (EU and Brexit)

• Economic Factors: For example, business cycles, interest

rates,personal disposable income, exchange rates,

unemployment rates, GDP trends

9Lecturer: Kofi Barimah

LEARNING OBJECTIVE 1 — PEST

APPLYING STRATEGIC PLANNING TOOLS

• Socio-cultural Factors: For example, population changes, income

distribution, lifestyle changes, consumerism, changes in culture and

fashion

• Technological Factors: For example, new discoveries and technology

developments, ICT innovations (mobile and cloud computing), rates of

obsolescence, increased spending on R&D

• Managers need to identify key drivers for change that helps them to

focus on the PEST factors that are most important and which must be

addressed as the highest priority

• Improvements in IT are key drivers for change towards adoption activity-

based costing

10Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 — PORTER'S FIVE FORCES

APPLYING STRATEGIC PLANNING TOOLS

• The five forces framework helps identify the attractiveness of an

industry or sector in terms of competitive forces:

• the threat of entry,

• the threat of substitutes,

• the bargaining power of consumers,

• the bargaining power of suppliers and

• the extent of rivalry between competitors

11Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 — PORTER'S FIVE FORCES

APPLYING STRATEGIC PLANNING TOOLS

• The Five Forces (Johnson, et al, 1992)

12Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 — PORTER'S FIVE FORCES

APPLYING STRATEGIC PLANNING TOOLS

• The threat of entry is low when the barriers to entry are high and vice

versa

• The main barriers to entry are:

• Economies of scale/high fixed costs

• Experience and learning

• Access to supply and distribution channels

• Differentiation and market penetration costs

• Entrants must also consider retaliation from organisations in the

market

13Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 — PORTER'S FIVE FORCES

APPLYING STRATEGIC PLANNING TOOLS

• Bargaining power of buyers

• Buyers are the organisation’s immediate customers, not necessarily the

ultimate consumers

• If buyers are powerful, then they can demand cheap prices or

product/service improvements to reduce profits

• Buyers power is likely to be high when:

• Buyers are concentrated

• Buyers have low switching costs

• Buyers can supply their own inputs (backward vertical integration)

14Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 — PORTER'S FIVE FORCES

APPLYING STRATEGIC PLANNING TOOLS

• Bargaining power of suppliers

• Suppliers are those who supply what organisations need to produce the

product or service

• Suppliers power is likely to be high when:

• Suppliers are concentrated (few of them)

• Suppliers provide a specialist or rare input

• Switching costs are high (it is disruptive or expensive to change

suppliers)

• Suppliers can integrate forwards (e.g. low cost airlines have cut out

the use of travel agents)

15Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 — PORTER'S FIVE FORCES

APPLYING STRATEGIC PLANNING TOOLS

• Rivalry between competitors

• Competitive rivals are organisations with similar products and

services aimed at the same customer group and are direct

competitors in the same industry/market (they are distinct from

substitutes)

• The degree of rivalry is increased when:

• Competitors are of roughly equal size

• Competitors are aggressive in seeking leadership

• The market is mature or declining and low defferentiation

• There are high fixed costs exit barriers are high

16Lecturer: Kofi Barimah

LEARNING OBJECTIVE 2 — PORTER'S FIVE FORCES

APPLYING STRATEGIC PLANNING TOOLS

• Implications of the five forces

• Where the five forces are high, then industries are not attractive to

compete in

• Identifies the attractiveness of industries – which

industries/markets to enter or leave

• Identifies strategies to influence the impact of the forces, for

example, building barriers to entry by becoming more vertically

integrated

• The forces may have a different impact on different organisations

17Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 — SWOT

APPLYING STRATEGIC PLANNING TOOLS

• SWOT is an acronym for Strengths, Weaknesses, Opportunities and

Threats

• A SWOT analysis summarises the key issues from the business

environment and the strategic capability of an organisation that are

most likely to impact on strategy development

• It helps focus discussion on future choices and the extent to which an

organisation is capable of supporting these strategies

Class Activity

For a company operating in any market, list its strengths, weaknesses,

opportunities and threats. Suggest what actions need to be taken

18Lecturer: Kofi Barimah

LEARNING OBJECTIVE 3 — SWOT

APPLYING STRATEGIC PLANNING TOOLS

• Dangers in undertaking a SWOT analysis include:

• It can generate a very long list of apparent strengths,

weaknesses, opportunities and threats

• There is a danger of over-generalisation

• It maybe used as a substitute for rigorous analysis

• It maybe used as a guide to strategy ie an end in itself

19Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4 — BSC

APPLYING STRATEGIC PLANNING TOOLS

• The BSC is an approach to performance measurement that:

• presents four different perspectives of performance, and

• uses both financial and non-financial indicators, as the basis of

setting performance targets and monitoring performance

• The model uses multiple measures of performance each of

which reflects a different aspect of achievement

• The measures include both financial and non-financial indicators,

the latter facilitating the measurement of current and future

performance

20Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4 — BSC

APPLYING STRATEGIC PLANNING TOOLS

• Characteristics of BSC

• Objectives and targets are set for four different aspects or

perspectives of performance:

• a financial perspective;

• customer perspective;

• internal perspective and

• innovation and learning perspective

• A small number of targets for each of the four perspectives

21Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4 — BSC

APPLYING STRATEGIC PLANNING TOOLS

• The different targets for the four perspectives should be

consistent with each other

• where conflicts occur an acceptable balance should be

established between the different perspectives and targets

• Actual performance is measured regularly and compared with the

targets for all of the perspectives

• Differences between the target and actual performance are

investigated, and appropriate corrective action taken

22Lecturer: Kofi Barimah

THE BALANCED SCORECARD PERSPECTIVES

APPLYING STRATEGIC PLANNING TOOLS

23Lecturer: Kofi Barimah

LEARNING OBJECTIVE 4 — BSC

APPLYING STRATEGIC PLANNING TOOLS

• After identifying areas for improvement, performance targets are set

• Managers Managers are required to think in terms of all four

perspectives, so that improvements are not made in one area at the

expense of another - so scorecard is 'balanced'

• Important features of the BSC approach:

• It considers both internal and external maters

• It relates to the key elements of a company's strategy

• Financial and non-financial measures are linked together

24Lecturer: Kofi Barimah

REFERENCES

Johnson, G, Scholes, K and Whittington R (2007) Exploring Corporate

Strategy:Text & Cases, 8 Edition, London: Financial Times Prentice

Hall

Kaplan, R S, and Norton, D P (1992) "The Balanced Scorecard:

Measures that drive performance". Harvard Business Review, 172-

180

Lecturer: Kofi Barimah

VT-F4/Management Accounting/Support/MARGINAL COSTING ANSWER STATEMENT.pdf

MARGINAL PROFIT STATEMENT FOR SIX PERIODS

Note:

In marginal costing, inventory is valued at variable cost (marginal cost) of production

That is £6 in this question

Hence, in calculating cost of sale, we will only use £6

Also, in marginal costing, sales less variable cost of sale is called contribution

period 1

£000' £000'

Sales (£10 X 150) 1,500

Less cost of sale:

Opening stock cost: 0

Production cost (£6 x 150) 900

Less closing stock cost: 0

Total cost of sale -900

Contribution 600

Less: fixed cost for the period (given in question) -300

Less: non-manufacturing costs (given in question) -100

Net profit for period 200

Notes:

There were no opening stock

Closing stock: There were none, as all units produced were sold

period 2

£000' £000'

Sales (£10 X 120) 1,200

Less cost of sale:

Opening stock cost: 0

Production cost (£6 X 150) 900

Less closing stock cost: (£6 X 30) -180

Total cost of sale -720

Contribution 480

Less: fixed cost for the period -300

Less: non-manufacturing costs -100

Net profit for period 80

Notes:

There were no opening stock

Closing stock: 150 UNITS WERE PRODUCED AND 120 WERE SOLD, LEAVING 30 AS CLOSING STOCK

period 3

£000' £000'

Sales (£10 X 180) 1,800

Less cost of sale:

Opening stock cost: (£6 x 30) 180

Production cost (£6 x 150) 900

Less closing stock cost: 0

Total cost of sale -1,080

Contribution 720

Less: fixed cost for the period -300

Less: non-manufacturing costs -100

Net profit for period 320

Notes:

The 30 units brought forward from period 2 now bwcome opening stock

Closing stock: There were none, as all units produced were sold

opening stock 30

production 150

180

sold -180

closing stock 0

period 4

£000' £000'

Sales 1,500

Less cost of sale:

Opening stock cost: 0

Production cost 900

Less closing stock cost: 0

Total cost of sale -900

Contribution 600

Less: fixed cost for the period -300

Less: non-manufacturing costs -100

Net profit for period 200

period 5

£000' £000'

Sales 1,400

Less cost of sale:

Opening stock cost: 0

Production cost 1,020

Less closing stock cost: -180

Total cost of sale -840

Contribution 560

Less: fixed cost for the period -300

Less: non-manufacturing costs -100

Net profit for period 160

period 6

Sales £000' £000'

Less cost of sale: 1,600

Opening stock cost:

Production cost 180

Less closing stock cost: 840

Total cost of sale -60

-960

Contribution

Less: fixed cost for the period 640

-300

Less: non-manufacturing costs

-100

Net profit for period

240

MARGINAL PROFIT STATEMENT FOR SIX PERIODS

period period period period period period

1 2 3 4 5 6

£000' £000' £000' £000' £000' £000'

Sales 1,500 1,200 1,800 1,500 1,400 1,600

Less cost of sale:

Opening stock cost: 0 0 180 0 0 180

Production cost 900 900 900 900 1,020 840

Less closing stock cost: 0 -180 0 0 -180 -60

Total cost of sale -900 -720 -1,080 -900 -840 -960

Contribution 600 480 720 600 560 640

Less: fixed cost for the period -300 -300 -300 -300 -300 -300

Less: non-manufacturing costs -100 -100 -100 -100 -100 -100

Net profit for period 200 80 320 200 160 240

VT-F4/Managing a Succesfull Business Project/Module Booklet/Harvard Referencing.pdf

@ICTM PAGE 1 OF 9

ICON COLLEGE OF TECHNOLOGY AND MANAGEMENT

Harvard Referencing and Citation Guidelines

Referencing:

points or numbering)

PRINTED/PUBLISHED SOURCES

Book: by one Author

@ICTM PAGE 2 OF 9

Reference List: Barker, R., Kirk, J. and Munday, R.J. (1988) Narrative analysis. 3rd ed. Bloomington: Indiana University Press. In text reference for the above examples:

Book: Translated Author (surname), Initials. (Year) Title of book. Translated from (language) by (name of translator) Place of publication: Publisher.

Canetti, E. (2001) The voices of Marrakesh: a record of a visit. Translated from German by J.A.Underwood. San Francisco: Arion.

Multiple Books by same Author published in the same year Author (surname), Initals.(Year a/b/c) Title of book. Place: Publisher.

Soros (1966a) mentioned in his …………… According to Soros (1966b) modern literature……….

@ICTM PAGE 3 OF 9

Chapter of edited book or Secondary reference for Book and Journal

When an author refers to another author’s work and the primary source is not available

References List:

N.B. You are advised that secondary referencing should be avoided wherever possible and you should always try to find the original work

Journal Articles

Boughton, J.M. (2002) The Bretton Woods proposal: an in-depth look. Political Science Quarterly, 42(6), pp.564-78.

Foreign Journal

Author (surname), initials. (Year) Title of article [square brackets] Journal title Edition Page number Language of translation (round brackets) References List:

Caballero, D. (2003) [Policing without borders] Cambi16. 1(668) pg. 24 (in Spanish)

Report

Author (surname), initials. (Year) Title of report (underline or italicise) Publisher Report code and number (in brackets) References List:

Dearing, R. (1996) Review of qualifications for 16 – 19 year olds: quality and rigour in A Level examinations. London: SCAA Publications (COM/96/467)

@ICTM PAGE 4 OF 9

Annual Report:

Corporate author, Year of publication. Full title of annual report (if available), Place of Publication: Publisher.

Hounsome, I. W. (2001) Factors affecting the design and performance of flexible ducts in trench reinstatements. Unpublished Ph.D. thesis. Napier University.

Newspaper

Article with author

Author (surname), initials. (Year) Article Title (underline or italicise) Name of Newspaper Date (day, month, year) Page number References List:

Ward, L. (2004) Diploma plan to reward lower and higher abilities. The Guardian.18th February, p.4.

Article without an author

Title of publication Year of publication (in brackets) Title of article (underline or italicise) Day and Month Page number References List:

The Guardian (2004) HSBC CEO has come down at last. 23rd November, p. 10.

@ICTM PAGE 5 OF 9

ELECTRONIC SOURCES

Electronic Book (e-book)

Author (surname), initials. (Year) Title of book (underline or italicise) Name of e-book supplier [Online] Available at: URL (Date accessed) References List:

Articles in Electronic Journal

Haliday, J. (2004) 'Ford dealers test custom cable ads', Advertising age,75 (42), pg. 6. Proquest [Online]. Available at: http://proquest.umi.com/ (Accessed: 23 November 2004).

Article in Internet Journal Database

Lloyd, J. (2001) Blessed are the pure in heart: globalisation. New Statesman, 23 April [Online]. Available at: http://www.findarticles.com/p/articles(Accessed: 23 November 2004).

Online Material in the Internet without Date

Author (surname), initials. (Year) Title of article (underline or italicise) [Online], issue [Online] Available at: URL of web page (Date accessed).

References List:

Lloyd, J. (No Date) Blessed are the pure in heart: globalisation [Online]. Available at: http://www.findarticles.com/p/articles (Accessed: 23 November 2004).

Online Material from Internet without Author’s Name

Name of the Organisation, (Year) Title of article (underline or italicise) [Online] Available at: URL of web page (Date accessed).

References List: Marks & Spencer (2010) Marks and Spencer’s Corporate Strategy [Online]. Available at: http://www.m&s.co.uk/corporate/ (Accessed: 23 November 2004)

@ICTM PAGE 6 OF 9

Images from the Internet

Author (surname), initials. (Year) Title of image (underline or italicise) [Online image] Available at: URL (Date accessed) References List:

Marshall, J. (2000) Cathedral clock. [Online image]. Available at: http://www.westminstercathedral.org.uk/art/art_cathclock.html (Accessed 23 November 2004).

OTHER SOURCES

References List:

Sanders, B. and William, B. (2001) Java in 2 semesters. (version 2) [computer programme] Microsoft Inc. New York.

Atlas

As for books, using the title page to find the information

References List: The times atlas of the world (2004) London: Times Books.

Video / Film Title of programme/film (underline or italicise) Year of distribution (in brackets) Director [Videocassette] Place of distribution: distribution company

References List All about Eve (1977) Directed by Joseph Mankiewiez [Film]. United States: Twentieth Century Fox.

@ICTM PAGE 7 OF 9

Television programme Title of programme (underline or italicise) Year of publication (in brackets) Name of channel Date of transmission (day/month/time)

References List

Coronation Street (2004) ITV1, 25 November. 19.00hrs.

Audiocassette/CD/DVD

Author (if available, if not use title first) Year of publication (in brackets) Title of recording (underline or italicise) [Audiocassette] Place of publication: publisher. References List

Buenos: world Spanish (1995) [Audiocassette or CD or DVD]. London: BBC Books.

QUOTATIONS AND CITING INSIDE THE TEXT

You can incorporate references and quotations in a number of ways. The following examples use the Harvard Referencing.

Short quotations of a sentence or two are enclosed with quotation marks (“…”) and included in the main text.

Short Quotation

In this example, you are making a direct quote. Up to two lines can be included in the body of the text and must include the page number.

Smith (2003, p. 11) states that “Harvard referencing has to be done accurately”

@ICTM PAGE 8 OF 9

Longer Quotation

This should be indented in a separate paragraph. If part of the quotation is omitted, then this can be indicated by three dots.

Citations (inside the text)  If the originator’s name occurs naturally in the sentence, the year of publication

should follow in brackets. Example Smith (2003) found that…or, In a recent study Smith (2003) argued that…

 If the author’s name would not naturally be included in the sentence add the author’s

name and year of publication in brackets i.e. Example

Management theories have become much more diverse (Anderson, 1996)

 For publications by two authors: Example

In a recent study (Smith & Jones, 2003) it was argued that…

 If you are referring to a particular page or section of a work and the author’s name

would naturally be included in the sentence the date and page numbers follow in brackets i.e.

Example

In a recent study Smith (1996, p.26) argued that….

@ICTM PAGE 9 OF 9

 If the author’s name will not normally be included in the sentence all information is given in brackets i.e.

Example

In a recent study (Smith, 1996, p.26) it was argued that…

 In cases where the name of the author cannot be identified, the item should be referred to by title:

Example

Figures in a recent survey (Tourism trends, 2003. p. 12) showed that…

 In cases where the date of an item cannot be identified, the item should be cited:

Example

The earliest report (Smith, no date, p. 231) showed that…

 If the author and date are unknown:

Example

 When you refer to a corporate publication e.g. a company report, use the Company

Name: Example

A survey (Tourism trends, no date) showed that…

The recession affected………..(Hanson Trust plc, 1990)

VT-F4/Managing a Succesfull Business Project/Module Booklet/Unit 6 Managing a Successful Business Project Assignment Brief - Feb 2018 NN.pdf

ICON COLLEGE OF TECHNOLOGY AND MANAGEMENT Pearson BTEC HND in Business (RQF)

Unit Level 4 Managing a Successful Business Project

Assignment Brief February 2018

Programme title TNA67 Pearson BTEC HND in Business

Unit number and title Unit 6 Managing a Successful Business Project

Unit Type Core

Unit Level and Credit Value

Level 4 15 Credit

Assessor (s) Mr Neil Coade, Dr A Akanga, Mr Andrew Appiah, Mr K Barimah, M Antony Dilleen, Mr Bekhzod Klichev

Issue Date 3 March 2018

Final assignment submission deadline

11-16 June 2018

Late submission deadline

18-23 June 2018

Resubmission deadline TBA

Feedback

Formative feedback will be available in class during the semester.

Final feedback will be available within 2 weeks of the assignment submission date.

General Guidelines

 The work you submit must be in your own words. If you use a quote or an illustration from somewhere you must give the source.

 Include a list of references at the end of your document. You must give all your sources of information.

 Make sure your work is clearly presented and that you use correct grammar.

 Wherever possible use a word processor and its “spell-checker”.

Internal verifier Prof Nurun Nabi

Signature (IV of the brief) *

[email protected] Date 1/3/18

Assignment Brief – continued

ICON College of Technology and Management Pearson BTEC HND in Business (RQF)

Unit 6: Managing a Successful Business Project (L4) Session: February 2018

Coursework Recommended Word limit: 3,000–4,000

This Unit will be assessed by assignment. You are strongly advised to read “Preparation guidelines of the Coursework Document” before answering your assignment. ASSIGNMENT

Assignment Context and Business Scenario

You have been employed as a Business Researcher by an organisation of your choice to investigate the design, development and implementation of a business project in the digital and customer sensitive business environment of 2017 and beyond. You are required to investigate the market and business environment and to understand

and develop a digital strategy that can support the competitive advantage created by a

project team. This will include project objectives, structure, size and scope, as well as the

impact of the digital strategy on key stakeholders.

KEY QUESTION

HOW BUSINESSES HAVE COPED WITH THE MAJOR CHALLENGES OF

DIGITAL DISRUPTION AND TRANSFORMATION

Digital technology had revolutionised the way we conduct business. Over the last decade it has

dramatically changed traditional business models and transformed business activities. The use

of digital mobile technology has provided businesses with a wealth of choice and opportunity.

This has enabled existing products to become profitable and innovative new products to be

developed, leading to increasingly diverse product portfolios. Its impact is evident at the core of

all key business systems:

Administration – cloud technology enables effective filing, storage and sharing of information.

Communication – social media and mobile technology allows businesses to connect.

Storage and Distribution – ‘The Internet of Things‘ is connecting and integrating systems

throughout business structures.

Production – Artificial intelligence and big data analytics are driving innovation and product

growth.

However, changes in the way we work are not without their challenges, as businesses have to

adapt and deal with change management, recruit and sustain creative talent, invest in new

technologies and respond to an ever-increasing competitive environment. This project will

provide the student with the opportunity to examine the impact of digital technology on how we

Assignment Brief – continued

conduct business and consider the implications of digital technology in the workplace and how it

is shaping the future workforce. It will enable researchers to explore both the challenges and

opportunities that rapid technological advances represent for businesses.

Milestones and interim feedback

The purposes of milestones are to monitor the progress of the project and to maintain momentum, making it more likely that the project will succeed. Each milestone should be a clear, achievable activity that the student aims to achieve by a particular time. Students should agree at least two milestones with their tutor. Examples of milestones include:

• Producing a first draft of findings

• completing all primary research

At each milestone, the tutor will liaise with the student to check whether it has been achieved and advise as necessary.

What you must do

The following tasks are required to be carried out: LO1: Establish project aims, objectives and timeframes based on the chosen theme. Devise project aims and objectives for a chosen scenario [P1] Produce a project management plan that covers aspects of cost, scope, time, quality, communication, risk and resources [P2] Produce a work breakdown structure and a Gantt chart to provide timeframes and stages for completion [P3] To achieve M1, Produce a comprehensive project management plan, milestone schedule and project schedule for monitoring and completing the aims and objectives of the project. To achieve D1 (LO1 & 2) critically evaluate the project management process and appropriate research methodologies applied. LO2: Conduct small-scale research, information gathering and data collection to generate knowledge to support the project. Carry out small-scale research by applying qualitative and quantitative research methods appropriate for meeting project aims and objectives. [P4]

To achieve M2, Evaluate the accuracy and reliability of different research methods applied. To achieve D1, (LO1 & 2) Critically evaluate the project management process and appropriate research methodologies applied.

Assignment Brief – continued

LO3: Present the project and communicate appropriate recommendations based on meaningful conclusions drawn from evidence findings and /or analysis. Analyse research and data using appropriate tools and techniques [P5]

Communicate appropriate recommendations as a result of research and data analysis to

draw valid and meaningful conclusions [P6]

To achieve M3, Evaluate the selection of appropriate tools and techniques for accuracy and authenticity to support and justify recommendations. To achieve D2 (LO3 & 4), Critically evaluate and reflect on the project outcomes, the decision making process and changes or developments of the initial project management plan to support justification of recommendations and learning during the project. LO4: Reflect on the value gained from conducting the project and its usefulness to support sustainable organisational performance. Reflect on the value of undertaking the research to meet stated objectives and own learning and performance [P7] To achieve M4, Evaluate the value of the project management process to meet the stated objectives and support own learning and performance.

Assignment Brief – continued

Assessment Criteria

Pass Merit Distinction

LO1 Establish project aims, objectives and timeframes based on the chosen theme.

P1 Devise project aims and objectives for a chosen scenario.

P2 Produce a project management plan that covers aspects of cost, scope, time, quality, communication, risk and resources.

P3 Produce a work breakdown structure and a Gantt chart to provide timeframes and stages for completion.

M1 Produce a comprehensive project management plan, milestone schedule and project schedule for monitoring and completing the aims and objectives of the project.

LO1 & 2

D1 Critically evaluate the project management process and appropriate research methodologies applied.

LO2 Conduct small-scale research, information gathering and data collection, generating knowledge to support the project.

P4 Carry out small-scale research by applying qualitative and quantitative research methods appropriate for meeting project aims and objectives.

M2 Evaluate the accuracy and reliability of different research methods applied.

LO3 Present the project and communicate appropriate recommendations based on meaningful conclusions drawn from the evidence findings and/or analysis.

P5 Analyse research and data using appropriate tools and techniques.

P6 Communicate appropriate recommendations as a result of research and data analysis to draw valid and meaningful conclusions.

M3 Evaluate the selection of appropriate tools and techniques for accuracy and authenticity to support and justify recommendations.

LO3 & 4

D2 Critically evaluate and reflect on the project outcomes, the decision- making process and changes or developments of the initial project management plan to support justification of recommendations and learning during the project.

LO4 Reflect on the value gained from conducting the project and its usefulness to support sustainable organisational performance.

P7 Reflect on the value of undertaking the research to meet stated objectives and own learning and performance.

M4 Evaluate the value of the project management process and use of quality research to meet stated objectives and support own learning and performance.

Assignment Brief – continued

Relevant Information Guide to student 1. Preparation guidelines of the Coursework Document

a. All coursework must be word-processed. b. Document margins must not be more than 2.54 cm (1 inch) or less than 1.9cm (3/4 inch). c. The assignment should be in a formal business report style using single spacing and font

size 12. d. Standard and commonly used typeface such as Arial should be used. e. All figures, graphs and tables must be numbered. f. Material taken from external sources must be properly referenced using the Harvard

referencing system. g. You should provide references using the Harvard referencing system. h. Do not use Wikipedia as a reference.

2. Plagiarism and Collusion

3. Submission

a. Initial submission of coursework to the tutors is compulsory in each unit of the course. b. Student must check their assignments on ICON VLE with plagiarism software Turnitin to

make sure the similarity index for there assignment stays within the College approved level. A student can check the similarity index of their assignment three times in the Draft Assignment submission point located in the home page of the ICON VLE.

c. All Final coursework must be submitted to the Final submission point into the unit (not to the Tutor). A student would be allowed to submit only once and that is the final submission.

d. Any computer files generated such as program code (software), graphic files that form part of the coursework must be submitted as an attachment to the assignment with all documentation.

e. Any portfolio for a unit must be submitted as a hardcopy to the Examination Office. f. The student must attach a tutor’s comment in between the cover page and the answer in the

case of Resubmission. 4. Good practice

a. Make backup of your work in different media (hard disk, memory stick, etc.) to avoid distress due to loss or damage of your original copy.

5. Extension and Late Submission and Resubmission

a. If you need an extension for a valid reason, you must request one using an Exceptional Extenuating Circumstances (EEC) form available from the Examination Office and ICON

Assignment Brief – continued

VLE. Please note that the tutors do not have the authority to extend the coursework deadlines and therefore do not ask them to award a coursework extension. The completed form must be accompanied by evidence such as a medical certificate in the event of you being sick.

b. Late submission will be accepted and marked according to the College procedure. It is noted that late submission may not be graded for Merit and Distinction.

c. All Late coursework must be submitted to the Late submission point into the unit (not to the Tutor). A student will be allowed to submit only once and that is the final submission.

6. Submission deadlines

Submission deadlines Online to the ICON College VLE Final Submission date: 11-16 June 2018 Late Submission date: 18-23 June 2018

Glossary:

Analyse: Break an issue or topic into smaller parts by looking in depth at each part. Support each part with arguments and evidence for and against (Pros and cons). Break something down into its components; examine factors methodically and in detail to recognise patterns by applying concepts and making connections to predict consequences. Apply: Use a particular method/technique to solve a problem Critically Evaluate/Analyse: When you critically evaluate you look at the arguments for and against an issue. You look at the strengths and weaknesses of the arguments. Conduct: To do or carry out, to organise and perform a particular activity Determine: Find a solution by argument, making clear your reasoning (e.g., determine the type of event that has occurred, based on the data provided”) (application) or “Determine the most appropriate course of action for the company, within the given constraints” (higher order skills). Demonstrate: Show that you can do a particular activity or skill. Provide several relevant examples or related evidence, which clearly support the arguments you are making. Explain: When you explain you must say why it is important or not important. Clarify a topic by giving a detailed account as to how and why it occurs, or what is meant by the use of this term in a particular context. Identify: When you identify you look at the most important points. Establish or indicate the origin, nature or definitive character of something

VT-F4/Managing a Succesfull Business Project/Module Booklet/Unit 6 Managing SBP SoW - Feb 18.pdf

Page 1 of 5

ICON COLLEGE OF TECHNOLOGY AND MANAGEMENT Pearson BTEC HND in Business (RQF)

Unit 6 Managing a Successful Business Project Scheme of Work

Session: February 2018

This unit is aimed at achieving the following learning outcomes: LO1 Establish project aims, objectives and timeframes based on chosen theme.

LO2 Conduct small-scale research, information gathering and data collection to generate knowledge to support the project.

L LO3 Present the project and communicate appropriate recommendations based on meaningful conclusions drawn from the

evidence, findings or analysis.

L LO4 Reflect on the value gained from conducting the project and its usefulness to support sustainable organizational

performance.

Programme Title: TNA67 Pearson BTEC HND in Business

Level:

Unit number and Title Unit 6 Managing a Successful Business Project

Unit Type Core

Level 4

Unit Level and Credit Value Level 4 15 Credit

Sessions Learning Outcomes Session Activities

Session 1 Lecture 2 hours Tutorial 2 hours

LO1: To introduce the Unit’s content and the Unit assessment

Introduction to the Unit learning outcome, Syllabus, and assignment briefing Reading, Academic Skill, citation and referencing, group formation.

Session 2 Lecture 2 hours Tutorial 2 hours

LO1: Establish project aims, objectives and timeframes based on a chosen theme.

Introduction to project terminology: Definition of project management and

systems; importance of integrating these

within an organisation. Origin, role and

principles of project management.

Sample activities: Developing competitive advantage within a firm: class exercise

Session 3 Lecture 2 hours Tutorial 2 hours

LO1: Establish project aims, objectives and timeframes based on a chosen theme. Topic: Avoiding Project Failure & Achieving Success

Management accounting systems:

Project systems, analysis and decision systems.

Sample activities: Question and answer activity on types of digital

technological disruption.

Group activity – Whether any or all of these project

ideas fit successfully into a project plan and why

Session 4: Lecture 2 hours Tutorial 2 hours

LO2: Conduct small-scale research, information gathering and data collection to generate knowledge to support the project. Topic: Project performance & management

Why information should be relevant to the user, up to

date, reliant and accurate

Why the way in which information is presented must

be understandable Differences types of research methods, data collection and material resourcing. Sample activities: Group activity – Relative merits and demerits of different types of research methods and reporting.

Page 2 of 5

Class discussion – Why should research information possess such attributes as relevance, reliability, timeless accuracy and understandability? Formative Feedback Brief tutor-led overview of assessment requirements Academic writing

Session 5: Lecture 2 hours Tutorial 2 hours

LO2: Conduct small-scale research, information gathering and data collection to generate knowledge to support the project. Topic: Project management Skills

What is meant by small-scale research project?

Difference between quantitative and qualitative

research. Sampling and field methods of research Applying techniques to student projects.

Session 6: Lecture 2 hours Tutorial 2 hours

LO2: Conduct small-scale research, information gathering and data collection to generate knowledge to support the project. Topic: Resource & Risk Management

Importance of Ethics and Ethical Statements in

research. Types of risks & risk management. Group activity – Comparison of digital security methods used within student projects.

Session 7 Lecture 2 hours Tutorial 2 hours

LO3: Present the project and communicate appropriate recommendations based on conclusions drawn from evidence, findings or analysis Topic: Project & Managing Change

Definition and meaning of managing change. The benefits of reducing high costs of technological change. Process and methods of managing change. Sample activities: Question and answer activity on limitations of the management of change and how managers may overcome these in applying the change and technological strategies.

Session 8 Lecture 2 hours Tutorial 2 hours

LO3: Present the project and communicate appropriate recommendations based on conclusions drawn from evidence, findings or analysis Topics: Decision Making in a Digital World

Preparing a project & budgeting.

Different types of budgets (e.g. capital and

operating). Alternative methods of budgeting.

Behavioural implications of budgets. Decision making & project planning Sample activities: Class question and answer activity – Discuss the difference between budgeting and project management monitoring & control

Group activity – Comparing and contrasting different project strategies. Formative Feedback Brief tutor-led overview of assessment requirements Academic writing

Session 9: Lecture 2 hours Tutorial 2 hours

LO3: Present the project and communicate appropriate recommendations based on conclusions drawn from evidence, findings or analysis Topics: Project Evaluation &

Evaluation of appropriate tools & techniques to support recommendations. Sample activities: Question and answer activity – what are the strengths weaknesses of your strategy for delivering digital change and value for money? Group discussion – How recommendations contained with project reports differ on the basis of value for money and

Page 3 of 5

Monitoring practical implementation challenges.

Session 10: Lecture 2 hours Tutorial 2 hours

LO4: Present the project and communicate appropriate recommendations based on conclusions drawn from evidence, findings or analysis Topics: Communication Strategies Knowledge Management

Using benchmarks. Key performance indicators (financial non-financial) and budgetary targets to identify variances and problems. Definition of communication strategies and potential challenges & outcomes. Sample activities: Group activity – Usefulness of knowledge management to improve the implementation of projects. Class discussion – progress and debate on project performance and individual tutorial support.

Session 11 Lecture 2 hours Tutorial 2 hours

LO4: Reflect on the value gained from conducting the project and its usefulness to support sustainable organizational performance. Topics: Project Learning & Practice

What are the characteristics and strengths of an effective project management team? How can these skills be improved to prevent and/or deal with problems? The development of strategies and systems which require effective and timely monitoring and control of new projects, Sample activities: Student debate – What skills set should an effective project manager possess? Are practical skills as important as conceptual and intellectual ones? Formative Feedback

Brief tutor-led overview of assessment requirements.

Open question and answer activity to address general

questions and concerns.

Review of academic requirements and submission format.

Session 12 Lecture 2 hours Tutorial 2 hours

Revision Session

Reserve class to cover any missing class and revision.

Session 13 Study week

Formative Feedback

Session 14 Final Assignment Submission

Page 4 of 5

Pearson Edexcel Standard Verifier (EE): Cheran Stevens Standard Verifier (EE): Visit Date: TBA Recommended Reading Costly, C., Elliot, G, and Gibbs, P. (2010) Doing Work Based Research: Approaches to Enquiry for insider researchers. London: SAGE Text Books: Adelman, C. (1993). Kurt Lewin and the Origins of Action Research. Educational Action Research. Vol 1:1, 7-24, DOI: 10.1080/0965079930010102 Anderson, D., & Ackerman Anderson, L. (2010). Beyond change management: how to achieve breakthrough results through conscious change leadership, San Francisco: Pfeiffer. Bailey, S. (2011), Academic Writing – A Handbook for International Students, London, Routledge Barrett, R. (2006) Building a Value driven organization.

Beerel, A. C. (2009). Leadership and change management, Los Angeles: Sage. 658.41 Burnes, B. (2014). Managing Change, 6/e, Prentice Hall. Burns, T. and Sinfield, S (2016), Essential Study Skills: The Complete Guide to Success at University, Los Angeles, SAGE. Cameron, E. and Green, M. (2009) Making Sense of Change Management, 2nd Ed., London: Kogan Page. Hayes, J. (2010). The theory and practice of change management, 3rd Ed., New York: Palgrave Macmillan. 658.406 Cole & Kelly (2015) Management, 8th Ed, Cengage. Hughes, M. (2010). Managing change: a critical perspective, London: CIPD. 658.406 Gray, D. (2009) Doing Research in the Real World. 2nd Ed. London. SAGE. Gido & Clements (2015) Successful Project Management, 6th Ed, Cengage. Kiechal, W. (2012), The Management Century, Harvard Business Review, November, Spotlight on HBR at 60, 62-75. Kotter, J. P. & Rathgeber, H. (2006). Our iceberg is melting: changing and succeeding under any conditions (1st St. Martin's Press ed.). New York: St. Martin's Press. Lick, U. (2011) Introducing Research Methodology: A beginners Guide to Doing a Research Project Saunders, M., Lewis, P. and Thornhill, A. (2012) Research Methods for Business Students. 6th. Ed.

Semler, R. (1993) Maverick. Warner Books

Sutherland, J. (2014) Scrum. The art of doing twice the work in half the time. New York: Crown publishers

Tripsas, M. & Gavetti, G. (2000), Capabilities, Cognition, and Inertia: Evidence from Digital Imaging, Strategic Management Journal, 21(10/11), Oct. – Nov., pp. 1147-1161.

Page 5 of 5

Journals: Harvard Business Review (available in ICON Library) Economist (available in ICON Library Journal of Management & Change available in Business Source Complete (from 2004) Journal of Organizational Change Management available in ABI/Inform Complete (1992-on) Emerald Management Plus (1994-on) Journal of Strategic Change available in Business Source Complete (1992 -1995) Strategic Change available in Business Source Complete (1996 to present – embargo 1 year) ABI/Inform Complete (1999 - 2005) News Papers The Financial Times Business http://www.ft.com/home/uk CITY A.M. Business http://www.cityam.com/ Pearson Resources: Student Portal: HN Global Please access HN Global for additional resources support and reading for this unit. For further guidance and support on presentation skills please refer to the Study Skills Unit on HN Global. Link to: https://www.highernationals.com/

http://www.ft.com/home/uk

http://www.cityam.com/

https://www.highernationals.com/

VT-F4/Managing a Succesfull Business Project/Support/Academic Writing 2.pdf

Academic writing skills

Writing, referencing & using electronic resources

“Care in the choice of one’s words is the respect that the mind

pays

to the instrument of its own being”

Agenda

• Writing

– What is academic writing

• Referencing

– Books

– Articles

– Others

• Electronic resources

Academic writing

• What is it all about?

Writing

• Academic writing is Formal

– No exaggeration (Not: extremely important)

– Impersonal (no use of “I am”)

– Direct to the meaning

– No final judgment!! Always allow for arguing and

accepting other opinions!!

WHAT DOES FORMAL WRITING

LOOK LIKE?

• Focus on the issue, not the writer Keeping

your writing objective and impersonal can make

it more convincing.

– It will be argued that the benefits of sales

promotion outweigh the disadvantages.

– I will argue in this assignment that ...

Choose words with precise

meanings

• Avoid words with vague meanings

– Compare:

• The writer looks at the issue

– with

• The writer examines the issue.

• The second option is more formal.

– Formal choices:

• He states … maintains … argues

– Informal choices:

• He says … talks about …

Add some style

• Writing is a very logical exercise, adding

style to it will enhance clearness and

power of convincing…

– Phrases for transition

– Phrases for emphasis

– Phrases for counterpoint

Phrases for transition

• Regarding

• Admittedly

• Consequently

• As a result

• Ultimately

• According to

• For this reason

Phrases for emphasis

• Moreover

• In fact

• Additionally

• For example

• In point of fact

• As a matter of fact

• Indeed

Phrases for counterpoint

• Conversely

• On the other hand

• However

• Nevertheless

• Notwithstanding

• Nonetheless

• Yet

• Despite

• Although

• Instead

Referencing

• What does referencing mean?

• Why should I include references in my

work?

• How do I reference my work?

What does referencing mean?

• When writing an academic piece of work

you need to acknowledge any ideas,

information or quotations which are the

work of other people. This is known as

referencing or citing.

Why should I include references

in my work?

• You should include references in order to:

– acknowledge the work of others

– provide evidence of your own research

– illustrate a particular point

– support an argument or theory

– allow others to locate the resources you have used

• And most importantly:

– avoid accusations of plagiarism

How do I reference my work?

• Your references should be consistent and

follow the same format. Various systems

have been devised for citing references,

but most Schools use the Harvard system

Referencing while writing

• References will be cited in your work in

two places: -

– 1) Where a source is referred to in the text

(Citation)

– 2) In a list (the Bibliography/List of references)

at the end of the assignment.

Citing references in the text

• Citing the author in the text

• Whenever a reference to a source is

made, its author's surname and the year

of publication are inserted in the text as

in the following examples...

Citing references in the text Cont.

– Dogs were the first animals to be

domesticated (Sheldrake, 1999).

• If the author's name occurs naturally in the

sentence the year is given in brackets .>>

– Sheldrake (1999) asserts that dogs were the

first animals to be domesticated.

Using direct quotes

• If you quote directly from a source you must

insert the author’s name, date of publication

and the page number of the quotation.

– ‘The domestication of dogs long predated the

domestication of other animals.’ (Sheldrake, 1999,

p.5).

• The page number should be given at the end of

the quote, in separate brackets if necessary, as

in the example below.

– Sheldrake (1999) asserts that the ‘domestication of

dogs long predated that of other animals.’ (p.15).

Citing works by more than one

author

• If your source has two authors you should

include both names in the text.

– Anderson and Poole (1998) note that a

‘narrow line often separates plagiarism from

good scholarship.’ (p.16).

Citing works by three or more authors

• If there are three or more authors you should

include the first named author and then add ‘et

al.’ in italics followed by a full stop. This is an

abbreviation of ‘et alia’ which means ‘and others’

in Latin.

– In the United States revenue from computer games

now exceeds that of movies (Kline et al., 2003).

Citing works by the same author written

in the same year

• If you cite two or more works written in the same year by the same author, then you must differentiate between them in both the text and your List of references by listing them as a,b,c etc.

– Natural selection can cause rapid adaptive changes in insect populations (Ayala, 1965a) and various laboratory experiments have been conducted to assess this theory (Ayala, 1965b).

Citing secondary sources

– Sheff (1993) notes that Nintendo invested heavily in advertising (cited in Kline et al.,2003, p.118).

Writing a Bibliography or List of

references

• The List of references appears at the end of

your work and gives the full details of everything

that you have cited in the text in alphabetical

order by the author’s surname

Printed books

• Printed books should be referenced using the following format and punctuation.

– Author/editor’s surname and initials.,

– (Year of publication).

– Title of book: including subtitles. (in italics or underlined)

– Edition. (if applicable)

– Place of publication: (followed by a colon)

– Name of publisher.

• Reference to a book with one author

– Sheldrake, R., (1999). Dogs that know when

their owners are coming home: and other

unexplained powers of animals. London:

Arrow Books.

• Reference to a book with two authors

– Anderson, J. and Poole, M., (1998).

Assignment and thesis writing. 3rd ed.

Chichester: John Wiley & Sons.

Print journals and newspapers

• Print journals should be referenced using the following format and punctuation. – Author's surname, initials., (or Newspaper title where

there is no author,)

– (Year of publication).

– Title of article.

– Name of journal. (in italics or underlined),

– Date of publication (if applicable e.g. 18 June)

– Volume number (in bold) (if applicable)

– (Part/issue number), (if applicable)

– Page numbers.

Example

• Britton, A., (2006). How much and how

often should we drink? British Medical

Journal. 332 (7552), 1224-1225.

• Britton, A., (2006). How much and how

often should we drink? British Medical

Journal. Vol. 332, No. 7552, pp.1224-1225

E-journal article accessed via

website on the open Internet

• Britton, A., (2006). How much and how often

should we drink? British Medical Journal. 332

(7552), 1224-1225. [online] Available

from:http://bmj.bmjjournals.com/cgi/content/full/3

32/7552/1224 [Accessed 2 June 2006].

http://bmj.bmjjournals.com/cgi/content/full/332/7552/1224

Websites, web pages

e.g. University of London)

– (Year of publication).

– Title. (in italics or underlined)

– Edition. (if applicable, e.g. update 2 or version 4.1)

– [online]

– Place of publication: (if known)

– Name of publisher. (if known)

– Available from: <URL>

– [Accessed (enter date you viewed the website)].

References

– Holland, M., (2005). Citing references. [online] Poole:

Bournemouth University. Available from:

<http://www.bournemouth.ac.uk/academic_services/d

ocuments/Library/Citing_References.pdf> [Accessed

2 June 2006].

– University of Westminster, (2007). Harry Potter fans to

cast spell over Westminster. [online] London:

University of Westminster. Available from:

<http://www.wmin.ac.uk/page-14428> [Accessed 24

July 2007].

VT-F4/Managing a Succesfull Business Project/Support/Academic Writing Skills 1.pdf

Dr Marco Angelini,

UCL Transition Programme

With thanks to Dr Colleen McKenna for kind

permission in reproducing her material in this

presentation

Approaches to critical reading and writing

Outline for today

 Introduction

 Considering your writing practices

 Reading as part of writing

 Writing as part of thinking

 Planning

 Organising written work

 Looking at text

 Finding time to write

What type of writer are you?

The diver

The patchworker

The architect

The grand planner

Identifying your writing style

Previous writing experiences …

Reading as part of writing

Critical reading (and how it benefits your writing)

 Helps you determine what is and

what is not a robust piece of

research and writing in your field

 Helps you identify where existing

research has left a gap that your

work could fill

 Attention you pay to writing of others

helps you become more self-aware

of your own written work:

– Sufficient evidence to back up claims;

argumentation/reasoning; becoming

alert to your assumptions and how they

affect your claims

 Wallace and Wray, 2006

Critical reading?

How do you go about

reading an academic text

in your field?

Critical reading? Some possible approaches

How do you go about reading an

academic text?

 Use parts of the text: abstract,

contents, index, sub-headings,

graphs, tables, introduction and

conclusion

 Skim to get the gist of the argument

 Read with questions in mind

Critical reading? Some possible approaches

 Make notes/mind map/ use

highlighter

 Write a summary in your own words

 Write a brief critical response

 Keep note of bibliographic details

Critical reading/ critical writing

Handout – p. 12-13 Wallace and Wray

 As a critical reader, one evaluates

the attempts of others to

communicate with and convince

their target audience by means of

developing an argument;

 As a writer, one develops one's own

argument, making it as strong and

as clear as possible, so as to

communicate with and convince

one's target audience.

– Wallace and Wray, 2006

Free writing

 Way of using writing as a tool for

thinking

 Allows you to write without

constraints.

To do it –

Write continuously, in complete

sentences, anything that occurs to

you.

Free writing

Please write down EITHER

1. An idea / theme from your field

2. Use the topic:

‘what I enjoy about writing…’

Use a free writing technique to write

anything at all that occurs to you

about this topic.

This writing will not be shown to

anyone else.

Planning (Sharples)

 Plans should be flexible

 Through the writing process a deeper

understanding of topic is gained – thus,

planning is increasingly out of step as

writing develops:

– “The act of writing brings into being ideas

and intentions that the writer never had at

the start of the task or that could not be

expressed in any detail.”

Plans

 Free writing

 Notes/sketches

 Idea lists

– Ideas on post-it notes

 Mind map

 Skeleton paper with

sub-headings

 Outline

 Draft text

 Adapted from

Sharples, 1999

 What techniques do you use to

develop ideas in your writing

and/or signpost an argument?

Developing/sustaining argument

 ‘proving’ the thesis statement or

controlling argument

 Signposting argument (Giving the

reader cues; anticipating/referring

back)

 Using words which signal transition or

development – “However”,

“Nevertheless”, “Thus”, “Therefore”,

“Despite”

 Illustrating theoretical positions with

concrete examples

 Generalising from a particular set of

findings if possible

 Using subheadings

 Using/responding to counterarguments

and examples

 Anticipate next paragraph at end of

previous one

Signposting and making transitions

 Links between paragraphs – pick up point from the end of a paragraph at the start of next one.

 Conjunctions to express different kinds of meaning relations

– Temporal: when, while, after, before, then

– Causative: because, if, although, so that, therefore

– Adversative: however, alternatively, although, nevertheless, while

– Additive: and, or, similarly, incidentally

 Signposting through pronouns - this, these, those, that, they, it, them

 Adverbs: Firstly, secondly, etc

 Illustrative: For example, in illustration, that is to say,

Signalling conclusions

Citation

Examples of Citing

• The hip bone is confirmed to be connected to the thigh bone (Funny Bones, 1989).

• The cytoskeletal network acts like the strong bars within a scaffolding (Alberts et al., 1998)

• Slavic-Smith (2006) postulated three classifications for nucleoli in neurons

• It was shown in 2006 by Take That, that a successful comeback tour was possible [1].

Bibliographies

 Alberts, Bray, Johnson, Lewis,

Raff, Roberts & Walter. Essential

Cell Biology, 1st Edition, Garland,

1998

 Dickson, B (2002) Molecular

Mechanisms of Axon Guidance.

Science 298 1959-1964

 [1] www.bbc.co.uk/news

Writing tips

 Write a sentence for each paragraph you want

to write – you can then move them about easily

to form thread of argument

 Index tag the main points you want to use in

your references, so they can be found easily

while writing

 Write the introduction last

 Write the conclusion first

 Read what you have written aloud to see if it

sounds right

 Find best environment for you – when and

where do you work best

 Take a break before trying to do your final check

 Use a writing checklist

Making time for writing

 Write throughout the course

 Do free writing as frequently as

possible

 Snack and binge writing (Rowena

Murray)

 Writing groups

 Don’t wait until you feel ‘ready’ to

write…

Writing for learning

 Read regularly in the field. Find writers whose work you admire and study what and how they do things.

 View writing as part of a process rather than a product

 Find models of good writing in your discipline – analyse it; ask what works and what doesn’t; consider writing style; vocabulary; techniques – metaphor; explanation; signposting

 Reflect on your own writing practices

 Keep a notebook or learning journal

 Explore free writing

To sum up…

1. Asked ‘what type of writer are

you’? What are your writing

practices?

2. What are your approaches to

reading? How might you link

reading and writing?

3. Free writing as a means of

generating ideas

4. Thought about structure of the

essay at the paragraph level and

the overall level

5. Tried to relate these ideas back

to the outline.

Reference

Academic Writing Skills

Presentation - UCL https://www.ucl.ac.uk/transition/study-

skills.../Academic_Writing_Skills_11.pptx

VT-F4/Managing a Succesfull Business Project/Support/L1 Project Management - Barimah.pdf

16/10/2017

Unit 6 Managing a

Successful Business

Project L1: Project Management

Lecturer: Kofi Barimah

Learning Outcomes

1. Establish project aims, objectives and time frames based

on the chosen theme

2. Conduct small-scale research, information gathering and data

collection to generate knowledge to support the project

3. Present the project and communicate appropriate

recommendations based on meaningful conclusions drawn

from the evidence findings and/or analysis

4. Reflect on the value gained from conducting the project and

its usefulness to support sustainable organisational

performance

2 Lecturer: Kofi Barimah

16/10/2017

Learning Objectives

1. Project management and what it involves

2. Key stages of project management

3. Advantages of using project management and its

importance

3 Lecturer: Kofi Barimah

Explaining a Project

• What is a project?

• Association for Project Management (APM) defines a project as:

• ‘An endeavour in which human material and financial resources are organised in a novel way to deliver a

unique scope of work of given specification often within

constraints of cost and time to achieve beneficial

changes defined by quantitative and qualitative

objectives’

4 Lecturer: Kofi Barimah

16/10/2017

Explaining a Project

• The Project Management Institute also defines a project as:

• ‘A project is a temporary endeavour undertaken to create a unique product, service or result.’

• Project characteristics:

• A definite start and endpoint

• It uses a defined set of resources

• It pursues a defined goal (creates something unique)

5 Lecturer: Kofi Barimah

Explaining a Project

• Projects vary in size

• Small projects can be planned and managed by one same person

• Larger projects may

• involve thousands of people working on many sites

• require a dedicated group in order to manage and coordinate the activities

6 Lecturer: Kofi Barimah

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Explaining a Project

• A project may be contrasted to a process:

• A process occurs continually and has a relatively low risk associated with it eg manufacturing a product

• A project occurs once and has a relatively high level of risk eg an introduction of a computerised integrated

manufacturing (CIM) System to improve the

manufacturing process

• The CIM will involve a selection, implementation, and testing of the new system which is a project

7Lecturer: Kofi Barimah

Explaining a Project

• There are two broad categories of projects:

• Delivery physical objects (engineering projects), such as bridges, buildings, refineries, reservoirs

• Delivery of intangible items (management projects), such as restructuring the organisation, an exhibition,

developing an IT system, marketing campaign, moving

offices

8Lecturer: Kofi Barimah

16/10/2017

Defining Project

Management • The PMI defines project management as:

• ‘Project management is the application of knowledge, skills, tools and techniques to meet project

requirements.’

• PM involves planning, organising, motivating, and controlling resources to achieve specific goals

• An effective PM much achieve project goals and objectives within time and cost, scope and quality

constraints

9Lecturer: Kofi Barimah

Defining Project

Management • Project scope is the totality of the outputs, outcomes, and

benefits and the work required to produce them

• Successful project management depends upon various factors:

• Clearly defined goals;

• Competent project manager;

• Top management support;

10Lecturer: Kofi Barimah

16/10/2017

Defining Project

Management • Competent project team members;

• Sufficient resource allocation;

• Adequate communication;

• Control mechanisms;

• Responsiveness to clients; and

• Project staff continuity

11Lecturer: Kofi Barimah

Key Stages in Project

Management

12Lecturer: Kofi Barimah

16/10/2017

Key Stages in Project

Management: Environment • The environment influences the way the project will be executed

• The environment is also the main determinant of the uncertainty inherent in the project

• It is important consider project stakeholders as part of the environment:

• They are likely to have different views of a project’s objectives and management

• To prevent objections and problems later

• The dimensions of the environment are outlined on the next slide

13Lecturer: Kofi Barimah

Key Stages in Project

Management: Environment Project environment

14Lecturer: Kofi Barimah

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Key Stages in Project

Management: Definition • Three different elements are needed to define projects –

objectives, scope and strategy

• Objectives define the end state project management is trying to achieve in terms of cost, time and quality

• Scope defines the exact range of the responsibilities taken on by project management in terms of what the

project will do and who is responsible for what

• Strategy defines how project management is going to meet its objectives by defining phases and milestones

15Lecturer: Kofi Barimah

Key Stages in Project

Management: Definition Project definition

16Lecturer: Kofi Barimah

16/10/2017

Key Stages in Project

Management: Planning • There are four distinct reasons for planning projects

• To determine the cost and duration of the project;

• To determine the level of resource that will be needed;

• To allocate work and determine how the project will be monitored;

• To assess the impact of any changes to the project

17Lecturer: Kofi Barimah

Key Stages in Project

Management: Planning Project planning stages

18Lecturer: Kofi Barimah

16/10/2017

Key Stages in Project

Management: Planning • Identifying activities involves breaking down project

activities into distinct tasks

• Estimating time and resources may not be exact but an idea of when resources will be required

• Identifying relationships and dependencies determines:

• activities one before others and those done together,

• duration of the project - critical path analysis

19Lecturer: Kofi Barimah

Key Stages in Project

Management: Planning • Identifying constraint schedule involves comparing project

requirements with available resources in order to isolate

any constraints

• The process of project control involves:

• monitor the project in order to check on its progress

• assess the performance of the project by comparing progress with the project plan

• intervene to make the changes to bring it back to plan

20Lecturer: Kofi Barimah

16/10/2017

Key Stages in Project

Management: Network Analysis

• Network analysis is the use of project planning techniques such as Gantt Charts, Critical Path Analysis (CPA) or Project Evaluation and Review Technique (PERT) in project planning

• There are three basic rules in drawing CPA charts:

• an event cannot be reached until all activities leading to it are complete

• no activity can start until its tail event is reached

• no two activities can have the same head and tail events

21Lecturer: Kofi Barimah

Key Stages in Project

Management: Network Analysis

Decorating a

Room

Lecturer: Kofi Barimah

16/10/2017

Key Stages in Project

Management: Network Analysis Decorating a Room

23Lecturer: Kofi Barimah

Key Stages in Project

Management: Network Analysis

24Lecturer: Kofi Barimah

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Key Stages in Project

Management: Network Analysis

Using 'dummy' activities to clarify relationships

25Lecturer: Kofi Barimah

Key Stages in Project

Management: Network Analysis

Using ‘dummy’ activities to describe a relationship that could

not be expressed any other way

26Lecturer: Kofi Barimah

16/10/2017

Key Stages in Project

Management: Network Analysis Class Activity: Road construction activities

Activity Duration (Days) Preceeding activities

A 5 -

B 10 -

C 1 -

D 8 B

E 10 B

F 9 B

G 3 A,D

H 7 A,D

I 4 F

J 3 F

K 5 C,J

L 8 H,E,I,K

M 4 C,J

Lecturer: Kofi Barimah

Advantages and Importance

of Project Management • PM enforces a scientific approach to the task of managing

the projects

• PM ensures a successful execution of projects within the constraints of time, scope and quality

• PM provides a structure to the art of project management

• Projects are complex, and chaotic when being implemented. The planning and organising in PM help

manage the complexity

28Lecturer: Kofi Barimah

16/10/2017

Advantages and Importance

of Project Management • PM identifies, manages and controls the risk that the

project would not achieve its objectives

• PM helps to ensure that the project achieves quality by managing time and resources and controlling their use in

line with the project plan

• Projects occur in a dynamic environment, which is in a state of continuous change. For example changing prices

and economic policies. PM minimises the impact of

change on the project

29Lecturer: Kofi Barimah

VT-F4/Managing a Succesfull Business Project/Support/LECTURE 1 3 MARCH.pptx

RESOURCES AND CAPABILITIES LECTURE 1

Prepared by Neil Coade

LEARNING OUTCOME: Establish project aims, objectives and timeframes

Based on chosen theme

By the end of the session should be able to understand:

What is a Project.

What is the life cycle of a Project.

How to define the attributes of a Project

Understand the links between capabilities, resources and competitive advantage.

Understand the working of the V.R.I.O framework.

Understand the basic concepts supporting digital technology.

WHAT IS A PROJECT

A PROJECT IS AN ENDEAVOUR TO ACCOMPLISH A SPECIFIC OBJECTIVE THROUGH A UNIQUE SET OF INTERRELATED ACTIVITIES AND THE EFFECTIVE UTILIZATION OF

RESOURCES

ATTRIBUTES : DEFINE A PROJECT

CLEAR OBJECTIVE

BENEFITS & OUTCOMES

INTERDEPENDENT ACTIVITIES: TASKS

UTILIZES RESOURCES

SPECIFIC TIMEFRAME OR FINITE LIFE SPAN

UNIQUE OR ONE-TIME ENDEAVOUR

PROJECT HAS A SPONSOR OR CUSTOMER

DEGREE OF UNCERTAINITY & RISK

FACTORS CONSTRAINING PROJECT SUCCESS

RESOURCES RISK CUSTOMER SATISFACTION SCOPE	QUALITY STAKEHOLDERS SCHEDULE BUDGET

BALANCING ACT

PROJECT LIFE CYCLE

1. INITIATING PHASE

PROJECT IDENTIFICATION

PROJECT SELECTION

PROJECT AUTHORIZATION: PROJECT CHARTER

PROJECT LIFE CYCLE

2. PLANNING PHASE

DEFINING SCOPE OF PROJECT

IDENTIFYING RESOURCES

SCHEDULE DEVELOPMENT

BUDGETING

RISK ANALYSIS

=BASELINE PLAN / STARTING POINT

PROJECT LIFE CYCLE

3. PERFORMANCE PHASE

PROJECT PLAN EXECUTED

ACTIVITIES ARE IMPLEMENTED

FOCUS ON PROJECT DELIVERABLES

ACHIEVING PROJECT OBJECTIVES

MONITOR PROGRESS

SCHEDULING

Contd.

BUDGETING : ACTUAL / FORECASTED

ACCEPTABLE CRITERIA / PROJECT OBJECTIVES

PROJECT CHANGES DOCUMENTED

APPROVE CHANGES

INCORPORATE CHANGES INTO UPDATED BASELINE PLAN.

PROJECT LIFE CYCLE

4. CLOSING PHASE

PROJECT EVALUATIONS ARE CONDUCTED

LESSONS LEARNT & UNDERSTOOD

LESSONS DOCUMENTED

PROJECT REVIEW COMPLETED

PROJECT DOCUMENTS ARE ARCHIVED

IMPROVEMENTS CONSIDEREDFOR FUTURE PROJECTS

Analyzing Resource & Capabilities

STRATEGY

THE FIRM

Goals and values

Resource and Capabilities

Structure and Systems

THE INDUSTRY ENVIRONMENT

Competitors

Customers

Suppliers

The Firm-Strategy Interface

The Environment-Strategy Interface

The Links Among Resources, Capabilities and Competitive Advantage

STRATEGY

INDUSTRY KEY SUCCESS FACTORS

COMPETITIVE ADVANTAGE

ORGANIZATIONAL CAPABILITIES

RESOURCES
TANGIBLE Financial Physical Organizational	INTANGIBLE Innovation Reputation Culture	HUMAN Skills/know-how Capacity for communication and collaboration Motivation/Talents/Trust

Adapted from Grant (2002)

3–14

The VRIO Framework: Value and Rarity

Four fundamental questions of VRIO

Value: do the resources and capabilities add value?

Necessary for a competitive advantage

Rarity: how rare are the valuable resources and capabilities?

Valuable, but common parity, not advantage

Valuable and rare can lead to temporary advantage

If everyone has it, you can’t make money from it

3–15

The VRIO Framework: Imitability

Easier to imitate tangible resources/capabilities than tangible ones

Two ways to imitate - direct duplication and substitution

Direct duplication - most difficult

Substitution - less challenging, but not easy

Why is imitation so difficult?

Hard to acquire in a short time what competitors have developed over a long time

Events earlier in time affect future events

Difficult to identify causal determinants of performance

3–16

The VRIO Framework: Imitability (cont’d)

Valuable, rare, but imitable resources/capabilities = temporary advantage

Only valuable, rare and hard-to-imitate resources/capabilities = sustained competitive advantage

3–17

The VRIO Framework: Organization

The Question of Organization

How is a firm organized to develop and leverage the full potential of its resources and capabilities?

Using complementary assets effectively

Managing social complexity effectively

Invisible relationships can add value - make imitation more difficult

HOW TO EVALUATE SUCCESS

PROFIT

MARKET SHARE & SALES

SHARE PRICE

STAKEHOLDER STRATEGY

WINDOW OF OPPORTUNITY

ATTRACTIVE OR UNATTRACTIVE BATTLEGROUND

SUPERIOR PROFIT POTENTIAL

Contd.

GOOD FIT WITH EXISTING COMPETENCIES

GOOD FIT WITH INFRASTRUCTURE

LOW EXIT COSTS

FUTURE COST ADVANTAGES

CORPORATE IMAGE

COHERENCE WITH GROUP STRATEGY

STRENGTHEN LONG TERM MARKET PRESENCE

CORPORATE SOCIAL RESPONSIBILITY

A COMPANY’S SENSE OF RESPONSIBILITY TOWARDS THE COMMUNITY AND ENVIRONMENT IN WHICH IT OPERATES.

EXPRESSED THROUGH:

WASTE & POLLUTION REDUCTION PROCESSES

CONTRIBUTION TO EDUCATIONAL & SOCIAL PROGRAMMES

EARNING ADEQUATE RETURNS ON EMPLOYED RESOURCES

CARROLL’s PYRAMID C.S.R

Philanthropic Responsibilities

Ethical Responsibilities

Legal Responsibilities

Economic Responsibilities

BASIC CONCEPTS

BE A GOOD CITIZEN

BE ETHICAL

OBEY THE LAW

BE PROFITABLE

ARGUMENTS

COMPANIES THAT ARE RESPONSIVE TO A RANGE OF STAKEHOLDERS WILL BENEFIT FROM GOODWILL, ATTRACT HIGH QUALITY EMPLOYEES AND DEVELOP A GOOD REPUTATION.

BUSINESS HAS VALUABLE RESOURCES THAT CAN BE USED TO TACKLE SOCIAL PROBLEMS.

BUSINESS HAS A LACK OF ACCOUNTABILITY IF IT GOES WRONG.

DAVIS : STATED THAT SOCIAL POWER AND SOCIAL RESPONSIBILITY GO HAND IN HAND “ IRON LAW OF RESPONSIBILITY”

WARTICK & COCHRAN

SOCIAL RESPONSIVENESS: THE APPROACH TO REALISING SOCIAL RESPONSIBILITY……

REACTIVE: McDonalds: VEGGIE BURGER in 1990’s.

DEFENSIVE: TABACCO FIRMS

ACCOMMODATIVE: EMPLOYMENT LEGISLATION in EUROPE.

PROACTIVE: TOYOTA: Prius Model.

STAKEHOLDERS

BROADER TERM INCLUDES A FOCUS ON

AND INCLUDES

PHILANTHROPY & VOLUNTEERING

TYPES OF STAKEHOLDERS

COMMUNITY

GOVERNMENT

EMPLOYEES

TRADE UNIONS

SHAREHOLDERS

CUSTOMERS

BANKS

CREDITORS

MANAGEMENT

INVESTORS

SUPPLIERS

VT-F4/Managing a Succesfull Business Project/Support/MSBP - Lecture 1.pdf

Lecture 1: Introduction of the Unit

Prepared by: Dr Gilbert Zvobgo

ICTM

 Aim of Session: To introduce the Unit’s content and the Unit

assessment

 1. Ground Rules

 2. Going over the Assignment Brief, including the assessment

criteria of the Unit

 3. Going over the Scheme of Work so that students see how

they could allocate their time wisely.

 4. Going over the Unit Specification so that students have an

overview of the syllabus (also available on ICON VLE).

 5. Library visit to help students check available books in their

Unit and to suggest those they want the College to purchase.

 6. Ask students to register with HN Global at:

Pearson Resources: Student Portal: HN Global (RQF)

https://www.highernationals.com/

 7. Help students understand the importance of academic

skills, academic writing, and referencing (citation and

references).

VT-F4/Managing a Succesfull Business Project/Support/MSBP - Lecture 10 Reflections and Perceptions.pdf

Slide 1.1

Learning Outcome: Reflect on the value gained

from conducting the project and its usefulness to

support sustainable organisational performance

Reflective Diaries & Perceptions

Slide 1.2

By the end of the session you should understand

How to develop a perception of your research efforts

How to interpret the results of your diaries & log book.

Slide 1.3

Table 1.1 A taxonomy for considering the ‘relevance gap’ in relation to managerial

knowledge Source: Developed from Hodgkinson et al. (2001)

Theoretical and

methodological rigour Practical relevance Quadrant

Higher Lower Pedantic science

Lower Higher Popularist science

Lower Lower Puerile science

Higher Higher Pragmatic science

Slide 1.4

Figure 1.1 Basic and applied research Source: Authors’ experience; Easterby-Smith et al. (2012); Hedrick et al. (1993)

Slide 1.5

Slide 1.6

Box 1.4 Checklist of questions to ask yourself when making reflexive diary entries

 What has gone well in relation to each experience?

– Why has it gone well?

 What has not gone well in relation to each experience?

– Why has it not gone so well?

 What adjustments will/did I make to my ongoing research

following my reflection?

– Why will/did I make these adjustments?

 (Looking back) how could I have improved on these

adjustments?

– Why?

 What have I learnt in relation to each experience?

 How will I apply what I have learnt from each experience to

new situations?

VT-F4/Managing a Succesfull Business Project/Support/MSBP - Lecture 10.pdf

Slide 12.1

Lecture 10: Analysing Quantitative Data

Learning Outcome 3: Present the project and communicate appropriate

Recommendations based on meaningful conclusions drawn from

Evidence, findings and /or findings.

Slide 12.2

By the end of this session you will be able to:

- Analyse research and data using appropriate tools and

- techniques

- Communicate appropriate recommendations as a result

- of research and data analysis and to draw valid and

- meaningful conclusions.

Slide 12.3

Figure 12.1 Defining the data type

Slide 12.4

Table 12.1 A simple data matrix

Id Variable 1 Variable 2 Variable 3 Variable 4

Case 1 1 27 1 2 1

Case 2 2 19 2 1 2

Case 3 3 24 2 3 1

Slide 12.5

Slide 12.6

Figure 12.3 Bar graph (data reordered) Source: Adapted from Eurostat (2014) © European Communities, 2014. Reproduced with permission.

Slide 12.7

Figure 12.4 Histogram Source: Adapted from Harley-Davidson Inc. (2014)

Slide 12.8

Figure 12.5 Pictogram Source: Adapted from Harley-Davidson Inc. (2014)

Slide 12.9

Figure 12.6 Line graph Source: Adapted from Harley-Davidson Inc. (2014)

Slide 12.10

Slide 12.11

Figure 12.7 Distribution of values

Slide 12.12

Figure 12.8 Annotated box plot

Slide 12.13

Figure 12.9 Multiple bar graph

Slide 12.14

Figure 12.10 Percentage component bar graph

Slide 12.15

Figure 12.11 Stacked bar graph

Slide 12.16

Figure 12.12 Scatter graph

Slide 12.17

Figure 12.13 Annotated frequency polygon showing a normal distribution

Slide 12.18

Figure 12.14 Type I and Type II errors

Slide 12.19

Figure 12.15 Values of the correlation coefficient Source: Developed from earlier editions; Hair et al. (2006)

VT-F4/Managing a Succesfull Business Project/Support/MSBP - Lecture 11.pdf

Slide 7.1

Learning Outcome: Conduct Small Scale Research

information gathering and data collection to

generate knowledge to support the project

Selecting Samples

Slide 7.2

By the end of the session you should understand

How to develop a sampling approach

How to interpret the results of your sampling efforts.

Slide 7.3

Figure 7.1 Population, target population, sample and individual cases

Slide 7.4

Figure 7.2 Sampling techniques

Slide 7.5

Figure 7.3 Choosing a probability sampling technique Note: Simple random sampling ideally requires a sample size of over a few hundred

Slide 7.6

Table 7.3 Extract from random number tables Source: Appendix 3

78 41 11 62 72 18 66 69 58 71 31 90 51 36 78 09 41 00

70 50 58 19 68 26 75 69 04 00 25 29 16 72 35 73 55 85

32 78 14 47 01 55 10 91 83 21 13 32 59 53 03 38 79 32

71 60 20 53 86 78 50 57 42 30 73 48 68 09 16 35 21 87

35 30 15 57 99 96 33 25 56 43 65 67 51 45 37 99 54 89

09 08 05 41 66 54 01 49 97 34 38 85 85 23 34 62 60 58

02 59 34 51 98 71 31 54 28 85 23 84 49 07 33 71 17 88

20 13 44 15 22 95

Slide 7.7

Figure 7.4 Phases of multi-stage sampling

Slide 7.8

Figure 7.5 Choosing a non-probability sampling technique

VT-F4/Managing a Succesfull Business Project/Support/MSBP - Lecture 2.pdf

Lecture 2: Business Technology

Business Processes

Prepared by Neil Coade

LEARNING OUTCOME : Establish project aims, objectives and timeframes

based on the chosen theme

By the end of the session should be able to understand:

What are the key developments in technology today

What is Moore’s Law

Understand Digital as a Route to Market

Understand the challenges involved in using technology

and improving performance within a contemporary

business

ADVANCES IN FUNDAMENTAL PHYSICS

HAVE CREATED A

QUALITATIVELY NEW SITUATION FOR

ITS RELATIONSHIP

WITH TECHNOLOGY.

SECURE FOUNDATIONS ALLOW US TO

PERCEIVE

BOTH LIMITATIONS AND OPPORTUNITIES

CLEARLY.

BRILLIANT PROSPECTS

LIE AHEAD, BUT ALSO DANGERS.

WE TODAY, ACCURATE, COMPLETE

EQUATIONS ADEQUATE TO PROVIDE

THE FOUNDATION OF

NUCLEAR PHYSICS, MATERIALS SCIENCE,

CHEMISTRY AND

ALL FORMS OF ENGINEERING

ISSUES 1. AI

2. DATA-DRIVEN WORLD

3. EMPOWERED

PEOPLE

4. MEGATECH vs. MEGA-

INEQUALITY

5. WORK vs. MACHINES

6. LESSONS FROM

INDUSTRIAL

REVOLUTION

TECHNOLOGY AND

SECTORS

FARMING & FOOD

HOSPITALITY

HEALTH CARE

ENERGY

MANUFACTURING

PERSONAL

TECHNOLOGY

RETAILING

BEYOND MOORE’S LAW

EXTRAORDINARY ADVANCES IN

MICROPROCESSING POWER HAVE

ENABLED A REVOLUTION IN

COMPUTING. INFUTURE, THE

REVOLUTION WILL HAVE TO

CONTINUE BY OTHER MEANS

SKYLAKE CHIP by INTEL 1.5-2

BILLION TRANSISTORS IN EACH

AND INVISIBLE TO HUMANS

VIRTUAL REALITY : BEING THERE !

AUGMENTED REALITY : GOOGLE GLASS

OCULUS : FACEBOOK START UP

INCREMENTAL AND GREAT LEAPS FORWARD

2017 AND

BEYOND

Digital as a PRODUCT

- Big Data

Digital as DISRUPTIVE

Innovation.

- Google

- Bit coin

- Uber / Airbnb

- Linkedin

Digital as

ROUTE to

MARKET

- AMAZON

- AGGREGATORS

- NETFLIX

- e- Bay

- Spotify

- Monster

- Crowd-funding

PERFORMANCE OBJECTIVES

DEPENDABILITY

SPEED

COST

RESPONSE

QUALITY

Zara

Design

• 3 teams – designers, market specialists and buyers

• Seasonless-cycle

Manufacturing

• Fastest in industry, with a ‘catwalk to rack’ time of 15 days

• 50% of products produced in Spain

Distribution

• Supported by highly automated warehouses close to production centres

Retail

• Garments rarely in store more than 2 weeks

• Avoids customers delaying purchases

• Encourage store revisits

‘Supply chain management is the management of the interconnection of

organizations that relate to each other through upstream and downstream

linkages between the processes that produce value to the ultimate consumer in

the form of products and services.’

What is Supply Chain Management?

Activities in the Supply Chain

Raw

materials

extractors

Raw

materials

manufactu

rers

Component

manufactur

ers

Final

product

manufactu

rers

Wholesalers Retailers Final

customers

Recycling

Physical distribution and Warehousing

The operationPurchasing functionSuppliers

Request for

products

and services

Demand from

customers

Supply to customers

Request

for

quotations

Prepare

purchase

order

Prepare quotation for specification, price, delivery,

etc.

Requests

Select

supplier(s) Quotations

Produce

products

and services

Order Receive

products

and services

Deliver

Liaison between

purchasing and the

operation

Purchasing brings together the

Operation and its Suppliers

Single-sourcing

The practice of obtaining all of one type of product,

component or service from a single supplier, as opposed

to sourcing from multiple organisations.

Multi-sourcing

The practice of obtaining the same type of product,

component or service from more than one supplier in

order to maintain market bargaining power or

continuity of supply.

Sourcing strategies

Single-sourcing

Advantages • Potentially better quality through Supplier Quality Assurance

• Strong relationships

• Greater dependency leads to more commitment

• Improved communication

• R&D co-operation

• Scale economies

• Better confidentiality

Disadvantages • More vulnerable to disruptions if supply failure happens

• Individual supplier more affected by volume fluctuations

• Supplier may exert upward pressure on prices

if there’s no alternative supplier

Multi-sourcing

Advantages • Competitive tendering to drive down price

• Can switch sources in case of supply failures

• Can tap into wide sources of knowledge and expertise

Disadvantages • Hard to encourage commitment by supplier

• More effort to communicate

• More difficult to obtain scale economies

• Suppliers less likely to invest in new processes

Short-term ability to supply Longer-term ability to supply

• Range of products or services

provided

• Potential for innovation

• Quality of products or services • Ease of doing business

• Responsiveness • Willingness to share risk

• Dependability of supply • Long-term commitment to supply

• Delivery and volume flexibility • Ability to transfer knowledge as

well as products and services

• Total cost of being supplied • Technical capability

• Ability to supply in the required

quantity

• Operations capability

• Financial capability

• Managerial capability

Factors rating alternative suppliers

‘Partnership’

supply

management

C h a ra

c te

r o f

in te

rn a l o p e ra

ti o n s

a c ti

v it

D o

n o th

in g

D o

e v e ry

th in

im p o rt

a n t

D o

e v e ry

th in

Transactional –

many suppliers

Close –

few suppliers Type of inter-firm contact

Virtual

spot

trading

Long-term

virtual

operation

Vertically

integrated

operation

Traditional supply

management

Types of supply relationship

Attitudes

Actions

Trust

Joint problem

solving

Joint co-

ordination of

activities

Joint

learning

Long-term

expectations

Sharing

success

Multiple

points of

contact

Few

relationships

outside

Information

transparencyDedicated

assets

Closeness of

relationship

Process partnership relationships

Source: Lee (2004)

Building the Triple A supply chain

AGILE ADAPTABLE ALIGNED

Objectives

 Respond to short-term changes

in demand or supply quickly

 Handle external disruptions

smoothly

Methods

 Promote flow of information with

suppliers and customers

 Develop collaborative relationships

with suppliers

 Build inventory buffers by

maintaining a stockpile of

inexpensive but key components

 Have a dependable logistics system

or partner

 Draw up contingency plans and

develop crisis management teams

Source: Lee (2004)

Building the Triple A supply chain

AGILE ADAPTABLE ALIGNED

Objectives

 Adjust supply chain’s design to

meet structural shifts in markets

 Modify supply network to

strategies, products and

technologies

Methods

 Monitor economies all over the

world to spot new supply markets

 Use intermediaries to develop

fresh suppliers and logistics

infrastructure

 Evaluate needs of ultimate

customers not just immediate

customers

 Create flexible product designs

 Determine where companies

products stand in terms of

technology cycles and product life

cycles

Source: Lee (2004)

Building the Triple A supply chain

AGILE ADAPTABLE ALIGNED

Objective

 Create incentives for better

performance

Methods

 Exchange information and

knowledge freely with vendors

and customers

 Lay down roles, tasks and

responsibilities clearly for

suppliers and customers

 Equitably share risks, costs and

gains of improvement initiatives

0 Time

Sales from

store

Consumers

0 Time

Store’s orders to

wholesaler

Time

Wholesaler’s

orders to

manufacturer

Manufacturer’s

orders to its

suppliers

0 Time

Retail

Store

Whole-

saler

Manu-

facturer Supplier

Time

• Tendency of supply chains to amplify relatively small changes at the

demand side of a supply chain such that the disruption at the supply end of

the chain is much greater

The Bullwhip effect

• Changes in demand affect production/stock levels of wholesaler,

manufacturer and suppliers along the supply chain

• Where there is the provision of products or services from one to the other,

it can lead to miscommunication, unclear of customer expectations

Information-sharing

Efficient distribution of information throughout the chain can reduce demand

fluctuations along the chain by linking all operations to the source of demand

Channel alignment

Adopting the same or similar decision-making processes throughout the chain

to coordinate how and when decisions are made

Operational efficiency

Eliminating sources of inefficiency or ineffectiveness in the chain; of

particular importance is ‘time compression’, which attempts to increase the

throughput speed of the operations in the chain

Reducing the Bullwhip effect to

improve supply chain management

The more complex your network of suppliers, manufacturers and distributors, the more likely you can gain operational efficiencies by attending to inventory

Source: Lee and Billingron (1992, p. 66; 72)

Supply Chain Management

14 pitfalls

1 No supply chain metrics Independent and disconnected individual sites

Incomplete metrics

Performance measure not tracked

No attention to measures tracked

2 Inadequate definition of Inadequacy of line-item fill rate measure

Customer service No measures for response times

No measures for lateness

No measures for backorder profile

3 Inaccurate definition of Delays in providing delivery information

Customer service Inaccurate delivery information

Source: Lee and Billingron (1992, p. 66; 72)

Supply Chain Management

14 pitfalls

4 Inefficient information Inadequate linkage among databases at different sites

systems Proliferation of operating systems for the same function

at different sites

Delays and inaccuracies of data transfer

5 Ignoring the impact of No documentation or tracking of key sources of

uncertainties uncertainties

Partial information on sources of uncertainties

6 Simplistic inventory Stocking policies independent of magnitudes

stocking policies of uncertainties

Static stocking policies

Generic and subject

7 Discrimination against No service measures of internal customers

internal customers Low priority for internal orders

Inappropriate incentive systems

Jockeying for priority among different internal divisions

Source: Lee and Billingron (1992, p. 66; 72)

Supply Chain Management

14 pitfalls

8 Poor coordination No coordination among supplying divisions to

complete an order

No system information among multiple supplying divisions

Independent shipment plans

9 Incomplete shipment No consideration of inventory and response time effects

methods analysis

10 Incorrect assessment Omission of obsolescence and cost of rework

of inventory costs No quantitative basis for inventory holding cost assessment

11 Organisational Independent performance measures and incentive systems

barriers at different sites

Barriers between manufacturing and distribution

Source: Lee and Billingron (1992, p. 66; 72)

Supply Chain Management

14 pitfalls

12 Product-process design without No consideration of manufacturing and

supply chain consideration distribution in product-process design

No consideration in design for customisation and

localisation

Organisational barriers between design and the

supply chain

13 Separation of supply chain Chain decisions without consideration of

design from operational inventory and response time efficiencies

decisions

14 Incomplete supply chain Focus on internal operations only

of inventory costs Inadequate understanding of operational

environment and needs of immediate and

ultimate customers

EDI

Shares information between the various parties in the supply chain:

suppliers, customers, banks share information.

Advantages

Quick access to information, better customer service, reduced paperwork,

better communications, increased productivity, improved tracing and

expediting cost efficiency, competitive advantage and improved billing

Trend

Move from traditional EDI systems in the 1970s run by value-added

networks (VANs) using proprietary standards to more Internet-based EDI

systems

Electronic Data Interchange (EDI)

Lean – stresses the elimination of waste

JIT – emphasises the idea of producing items only

when they are needed

Synchronization – aims to meet demand

instantaneously, with perfect quality and no waste All three concepts overlap in operational use and in the

context of production flow and delivery

they are hard to separate

Economic forces for global coordination* Economies of scale

Economies of scope

Factor costs

Cultural and political forces for local differentiation Cultural differences

Government demands: from the host government

Pressure for localization

Technological competitive forces for worldwide innovation Increased R&D costs

Shortening life cycles

Converging needs and preferences of consumers

STRATEGIC MANAGEMENT OF DISTRIBUTION

The basic aim is to manage the supply chain, manufacturing and

distribution as effectively and efficiently as possible.

LOGISTICS

VT-F4/Managing a Succesfull Business Project/Support/MSBP - Lecture 3.pdf

Lecture 3 :Systems Approach, Data, Knowledge Management & Research

Prepared by Neil Coade

LEARNING OUTCOME 1 : Establish project aims, objectives and timeframes based on the chosen theme LEARNING OUTCOME 2: Conduct small scale research, information gathering and data collection to generate knowledge to support the project.

By the end of the session should be able to understand:

• What are the key developments in knowledge management.

• What is Data & Information.

• Understand how to structure research thinking.

• Understand the challenges involved in using analysis

and improving performance research projects.

Facts Selected or

created facts

Meaningful facts

Larger, longer-living structures of

meaningful facts

DATA CAPTURE INFORMATION KNOWLEDGE

Data Vs Knowledge

http://youtu.be/qjGRySVyTDk

Data vs Wisdom

• Data isn’t Information

• Information isn’t Knowledge

• Knowledge isn’t Wisdom

http://youtu.be/wUZxSf_P2r0

Knowledge = Information x Thinking

K = I x T or

Knowledge is information which has been structured

Cabrera, D (2012) www.thinknation.com

Information

Is data or content

• received through our senses

• from everything ever read, heard etc

Structuring information makes it actionable ie knowledge

Four universal ways that information is structured: DSRP

K= I x T

T =

structuring of

information

= {D, S, R, P}

K= I x {D, S, R, P}

– Distinctions (context) • Identity

• Other

– Systems (structures of things) • Whole

• Part

– Relationships • Affect

• Effect

– Perspectives • Subject

• Object

http://youtu.be/uJPI1qu9bE4

Distinctions

Perspectives

Systems

Relationships

http://www.youtube.com/watch?feature=player_detailpage&v=27XAhBu4XjE

Distinction

Making

Organizing

Systems

Interrelating Perspective

Taking

Distinction

Making

A distinction (a whole)

is an organization of

identity parts and other

parts

A distinction is a

relationship between

identity and other

Every distinction

involves a

perspective in order

to establish an

identity

Organizing

Systems

An organization is a

distinction between

parts and whole and

between what is

internal and external to

the Whole

Organizing is relating

parts to their whole

and creating nested

relationships with

wholes as parts

within still larger

wholes

Organizations contain

numerous

perspectives

including the whole

itself and each of its

parts

Interrelating A relationship is a

distinction between the

causes of one object

and the effects on

another.

A relationship (a whole)

is an organization of

cause parts and effect

parts

A relationship is

made up of a

quadratic set of

perspectives based

on bidirectional cause

and effect (feedback)

Perspective

Taking

A perspective is a

distinction between the

view of a subject

(identity) and the

objects viewed (other)

A perspective (a whole)

is an organization of

subject view (part) and

viewed object (part)

A perspective is a

relationship between

a subject view and an

viewed object

RESEARCH SOURCES

Reference Works Broadcast & World Wide Web Books Academic Journals Newspapers Policy & Law Conference Papers Documents in Use Shared Communication Material

NEGOTIATING ACCESS TO CONTRIBUTORS

Establish Contact Details

Prepare an outline of the Study

Clear any official channels by formally requesting permission

Discuss the study with Gatekeepers

Anticipate potentially sensitive issues

Discuss the study with likely participants / go through the study outline with a group or individuals.

Strategy For Access

Allow Time

Use Existing Contacts

Provide a clear account of access needed

Overcome organizational concerns

Highlight possible benefits to the organization

RESEARCH PROCESS

O Topic & Research Problem O Research Design & Plan O Data Collection & Measurement O Data Analysis & Interpretation O Presentation of Findings & Report Writing

TASK :

Divide into groups of 3 or 4 people and spend 30 minutes to conduct the following task:

Identify the Research Onion Diagram ( based on Saunders et al diagram, 2009 )

1. Explain how this diagram could be applied in your research project.

2. Outline the difference between the following terms:

a) Ontology b) Epistemology c) Axiology d) Objectivism e) Positivism f) Realism g) Interpretivism

VT-F4/Managing a Succesfull Business Project/Support/MSBP - Lecture 4.pdf

Learning Outcome: Conduct Small Scale Research

information gathering and data collection to generate knowledge to support the project

Lecture 4 : Project Analysis

Prepared by Neil Coade

By the end of this session you should be able to understand

• The nature of the competitive environment

• To Analyse the broad macro-environment of organisations in terms of political, economic, social, technological, environmental and legal factors (PESTEL)

• To Consider the nature and degree of environmental turbulence.

• Clearly Identify key drivers in this macro-environment and use these key drivers to construct alternative scenarios with regard to environmental change.

• To Use Porter’s five forces analysis in order to define the attractiveness of industries and sectors and to identify their potential for change.

Organisation as a System

USING PESTEL Analysis

• Apply selectively –identify specific factors which impact on the industry, market and organisation in question.

• Identify factors which are important currently but also consider which will become more important in the next few years.

• Use data to support the points and analyse trends using up to date information

• Identify opportunities and threats – the main point of the exercise!

PESTEL FRAMEWORK

The PESTEL framework categorises environmental influences into six main types:

political, economic,

social, technological,

environmental legal

Provides a comprehensive list of influences on the possible success or failure of particular strategies.

ISSUES

• Political Factors: Government policies, taxation changes, foreign trade regulations, political risk in foreign markets, changes in trade blocks (EU).

• Economic Factors: Business cycles, interest rates, personal disposable income, exchange rates, unemployment rates, GDP trends.

• Socio-cultural Factors: Population changes, income distribution, lifestyle changes, consumerism, changes in culture and fashion.

• Technological Factors: New discoveries and technology developments, ICT innovations, rates of obsolescence, increased spending on R&D.

• Environmental (‘Green’) Factors: Environmental protection regulations, energy consumption, global warming, waste disposal and re-cycling.

• Legal Factors: Competition laws, health and safety laws, employment laws, licensing laws, IPR laws.

• With a neighbour, think about your chosen organisation and carry out a brief environmental assessment. Consider:

• The PESTLE factors

• Make a judgement about the nature of the environment using Ansoff’s idea

SCENARIO

Detailed and plausible views of how the environment might develop in the future based on key drivers of change (about which there is a high level of uncertainty.)

• Build on PESTEL analysis .

• Do not offer a single forecast of how the environment will change.

• An organisation should develop alternative scenarios (2–4) to analyse future strategic options.

• Identify most relevant scope of study – relevant product/market and time span.

• Identify key drivers of change – PESTEL factors that have most impact in the future but have uncertain outcomes.

• For each key driver select opposing outcomes where each leads to very different consequences.

• Develop scenario ‘stories’ - coherent and plausible descriptions of the environment that result from opposing outcomes

• Identify impact of each scenario on the organisation and evaluate future strategies in light of the anticipated scenarios.

• Scenario analysis particularly useful in industries with long planning (e.g. the oil industry or airlines.)

FINANCIAL SYSTEM 2020 Scenario

Porter: Five Forces

Building Scenario’s

• Apply at the most appropriate level – not necessarily the whole industry. E.g. the European low cost airline industry rather than airlines globally.

• Note the convergence of industries – particularly in the high tech sectors (e.g. digital industries - mobile phones/cameras/mp3 players).

• Note the importance of complementary products and services (e.g. Microsoft windows and McAfee computer security systems are complements). This can almost be considered as a sixth force.

READING

Ansoff, H. (1965) Corporate Strategy, New York, McGraw- Hill

Brandenburger, A. and Nalebuff, B. (1966) The Right Game, Harvard Business Review, July–August

Johnson, G. Scholes, K. and Whittington, R (2011) Exploring Strategy, 9th edition. London: Prentice Hall

Porter, M. E. (1980) Competitive Strategy. New York: Free Press

Senior, B. and Swailes, S (2010) Organizational Change, 4th

Edition, FT Prentice Hall

Stapleton, A. (2005) B713 Fundamentals of Strategic Management, Milton Keynes, Open University

VT-F4/Managing a Succesfull Business Project/Support/MSBP - Lecture 5.pdf

Learning Outcome: Conduct small scale research,

information gathering and data collection to generate knowledge to support the project

Lecture 5 Industry Life Cycle

• Prepared by Neil Coade

By the end of the session should be able to understand:

• What is an Industry Life Cycle

• How to construct analytical frameworks

• Examine the affect of government policy on business research and practices.

Nominal & Real

 Nominal variables are variables measured in monetary

units.

 Real variables are variables measured in physical units.

Real & Nominal Interest Rates

Example:

You borrowed $1,000 for one year. Nominal interest rate

was 15%. During the year inflation was 10%. What was

the real interest rate?

Real Interest Rate = (15% - 10%) = 5%

• So if the government wants to keep lower real interest rates of 5%, it will have to either:

• Reduce the rate of inflation or

• Allow the value of the currency to depreciate.

Example: Constructing Tourism Price Index

1. Define the population for whom the index is intended- index

for golfers, skiers

2. Expenditure survey must be conducted to establish spending

patterns.

3. A `basket`of goods must emerge(and services) that lists the

items bought by the tourists.

4. Relative importance of each item can be guaged from

expenditure survey, and items weighted accordingly.

Example

• For example, if an expenditure survey showed Japanese

tourists consume 10 times more beer than wine, then beer

would be assigned a weighting 10 times more than wine.

• If beer and wine both rise in price 20 percent, the effect of

wine on the TDPI would be less than the beer effect.

• Total expenditure on basket of goods is recorded.

• The amount is then converted to an index number with base

100, by using a multiplier, and this becomes the base year

reading . E.g. If expenditure total is $50, a multiplier of 2 is

needed to convert the result to 100.

• The basket of goods is priced at regular intervals with

expenditure totals being converted to an index number using

the multiplier established in the base year.

Government Policy to Counter

Inflation • Government Counter inflationary policy will Affekt the

economic environment of leisure and tourism organizations.

• Cost push inflation may be tackled by a high exchange rate policy.

• This may be good for tackling inflation but it makes the exports of firms less competitive.

• Wage increases may be managed with impositions of policy to curb pay increases.

Impact on Employee Relations

• This may cause deterioration in industrial relations.

• Deflationary policy may be used to tackle demand pull inflation

• increase taxes to reduce consumer spending, or

• Increase interest rates to curb consumer borrowing.

• Many Central banks now set national interest rates at a level to control inflation.

READING

Ansoff, H. (1965) Corporate Strategy, New York, McGraw- Hill

Brandenburger, A. and Nalebuff, B. (1966) The Right Game, Harvard Business Review, July–August

Johnson, G. Scholes, K. and Whittington, R (2011) Exploring Strategy, 9th edition. London: Prentice Hall

Porter, M. E. (1980) Competitive Strategy. New York: Free Press

Senior, B. and Swailes, S (2010) Organizational Change, 4th

Edition, FT Prentice Hall

Stapleton, A. (2005) B713 Fundamentals of Strategic Management, Milton Keynes, Open University

VT-F4/Managing a Succesfull Business Project/Support/MSBP - Lecture 6.pdf

Learning Outcome: Present the project and communicate appropriate recommendations based on meaningful conclusions drawn from the evidence findings and /or analysis

• Lecture 6 Disruptive Technology

• Prepared by Neil Coade

By the end of this session you should be able to understand

• What is disruptive technology

• How an organization's capabilities define it’s disabilities

• What is blue ocean strategy.

• What is the difference between assumptions & reality

Disruptive Technology

It transforms a product that historically was so expensive and complicated that only few people with lot of money and lot of skill had access to it. Disruptive innovation makes it so much more accessible and affordable that a much larger population have access to it.” Clayton Christensen

• Creating independent organisation with different cost structure and different customers

• Companies depend on customers and investors for resources

• Small markets do not solve the growth needs of large companies

• An organisation’s capabilities define its disabilities

• Markets that don’t exist cant be analysed

• Technology supply may not equal

• Giving responsibility to an organisation to commercialise the disruptive technology to an organisation whose size matched the size of the market

Markets that don’t exist cant be analyzed

•Discovery based planning – assume the forecasts are wrong

An organisation’s capabilities define its disabilities

• Process and values – where the organisations capabilities reside

• New Tools developed by these companies

Crossing the Chasm Technology vs. Product Life Cycle

• The same attributes that make disruptive technologies worthless in mainstream markets become strong selling points in emerging markets – as disruptive technologies tend to be simpler, cheaper, more reliable and convenient. Therefore, Christensen suggests three strategies to deal with performance oversupply:

• 1.Move upmarket: command a premium for better performance.

• 2.Move with the customer, introduce new, disruptive technologies.

• 3.Market to convince the customer that they need better performance.

Blue Ocean Strategy

 How to create uncontested market space and make the competition irrelevant.

 Go where profits and growth are – and where the competition is

 Data: 150 strategic moves, more than 30 industries, over 100 years (1800‐2000)

Blue Ocean Strategy Bottom of the Pyramid

Bottom of the Pyramid Assumptions

• The poor have no purchasing power and do not represent a viable market

• The poor are not brand conscious

• The poor are hard to reach

• The poor are unable to use and not interested in advanced technology

REALITY

• Although low income the sheer scale of this market makes it interesting. Additionally the poor often pay a premium for access to many goods and services e.g. borrowing money, clean water

• Evidence suggests a high degree of brand and value consciousness.

• By 2015 there are likely to be nearly 400 cities in the developing world with population over 1 million and 23 with over 10 million

• Experience with PC kiosks, low cost mobile phone sharing and access to Internet suggests that rates of use are fast

Prahalad Interview

• http://www.economist.com

• /blogs/schumpeter/2010/08/ck_prahalad_speaks

http://www.economist.com

VT-F4/Managing a Succesfull Business Project/Support/MSBP - Lecture 7.pdf

Slide 11.1

Learning Outcome: Conduct Small Scale

Research

information gathering and data collection to

generate knowledge to support the project

Collecting primary data

using questionnaires

Slide 11.2

By the end of the session you should understand

How to develop a questionnaire

How to interpret the results of your research efforts.

Slide 11.3

Figure 11.1 Types of questionnaire

Slide 11.4

Box 11.1 Focus on student research Source: Screenshot created by SurveyMonkey.com, LLC (2014) Palo Alto, Reproduced with permission

Slide 11.5

Table 11.2 Data requirements table

Research question/objective:

Type of research:

Investigative

questions

Variable(s)

required

Detail in which

data measured

Relation to

theory and

key concepts

in the

literature

Check

measurement

question

included in

questionnaire



Slide 11.6

Figure 11.2 Stages that must occur if a question is to be valid and reliable Source: Developed from Foddy (1994) Constructing questions for Interviews and Questionnaires. Reproduced with permission from Cambridge University Press

Slide 11.7

Question 9 Ranking question example 1 Source: This question was generated using Qualtrics software, Version 595160.546s of the Qualtrics Research Suite. Copyright © 2014 Qualtrics. Qualtrics and all other Qualtrics

product or service names are registered trademarks or trademarks of Qualtrics, Provo, UT, USA. http://www.qualtrics.com. The authors are not affiliated to Qualtrics.

Slide 11.8

Box 11.6 Focus on student research – Use of a prompt card as part of a structured

interview

Slide 11.9

Question 12 Ranking question example 2 Source: This question was generated using Qualtrics software, Version 595160.546s of the Qualtrics Research Suite. Copyright © 2014 Qualtrics. Qualtrics and all other Qualtrics

product or service names are registered trademarks or trademarks of Qualtrics, Provo, UT, USA. http://www.qualtrics.com. The authors are not affiliated to Qualtrics.

Slide 11.10

Figure 11.3 Structure of a covering letter or email

Slide 11.11

Box 11.17 Focus on management research – Cumulative questionnaires returned by

Intranet and post Source: Unpublished data; details of research from Saunders, 2012

VT-F4/Managing a Succesfull Business Project/Support/MSBP - Lecture 8.pdf

Slide 12.1

Lecture 8 Analysing quantitative

data

Learning Outcome 3: Present the project and communicate appropriate

Recommendations based on meaningful conclusions drawn from

Evidence, findings and /or findings.

Slide 12.2

By the end of this session you will be able to:

- Analyse research and data using appropriate tools and

- techniques

- Communicate appropriate recommendations as a result

- of research and data analysis and to draw valid and

- meaningful conclusions.

Slide 12.3

Figure 12.1 Defining the data type

Slide 12.4

Table 12.1 A simple data matrix

Id Variable 1 Variable 2 Variable 3 Variable 4

Case 1 1 27 1 2 1

Case 2 2 19 2 1 2

Case 3 3 24 2 3 1

Slide 12.5

Slide 12.6

Figure 12.3 Bar graph (data reordered) Source: Adapted from Eurostat (2014) © European Communities, 2014. Reproduced with permission.

Slide 12.7

Figure 12.4 Histogram Source: Adapted from Harley-Davidson Inc. (2014)

Slide 12.8

Figure 12.5 Pictogram Source: Adapted from Harley-Davidson Inc. (2014)

Slide 12.9

Figure 12.6 Line graph Source: Adapted from Harley-Davidson Inc. (2014)

Slide 12.10

Slide 12.11

Figure 12.7 Distribution of values

Slide 12.12

Figure 12.8 Annotated box plot

Slide 12.13

Figure 12.9 Multiple bar graph

Slide 12.14

Figure 12.10 Percentage component bar graph

Slide 12.15

Figure 12.11 Stacked bar graph

Slide 12.16

Figure 12.12 Scatter graph

Slide 12.17

Figure 12.13 Annotated frequency polygon showing a normal distribution

Slide 12.18

Figure 12.14 Type I and Type II errors

Slide 12.19

Figure 12.15 Values of the correlation coefficient Source: Developed from earlier editions; Hair et al. (2006)

VT-F4/Managing a Succesfull Business Project/Support/MSBP - Lecture 9 Access Ethics.pdf

Slide 6.1

Learning Outcome: Learning Outcome: Conduct

Small Scale Research

information gathering and data collection to

generate knowledge to support the project

Access and

Research Ethics

Slide 6.2

By the end of the session you should understand

How to obtain access to complete your research efforts.

How to develop an ethics statement to support your research strategy.

Slide 6.3

Table 6.1 Strategies that may help you to gain access

• Ensuring you are familiar with the organisation or group before making contact

• Allowing yourself sufficient time

• Using existing contacts and developing new ones

• Providing a clear account of the purpose of your research and the type of

access required

• Overcoming organisational concerns about granting access

• Identifying possible benefits to the organisation of granting you access

• Using suitable language

• Facilitating replies when requesting access

• Developing access incrementally

• Establishing your credibility

Slide 6.4

Figure 6.1 Ethical issues at different stages of research

Slide 6.5

Figure 6.2 The nature of consent

Slide 6.6

Box 6.16 Focus on student research – Consent form

VT-F4/Managing a Succesfull Business Project/Support/MSBP - Lecture 9 Secondary Data.pdf

20/11/2017

Slide 8.1

Learning Outcome: Conduct Small Scale Research

information gathering and data collection to

generate knowledge to support the project

Using Secondary Data

Slide 8.2

By the end of the session you should understand

How to use secondary data in research projects

How to interpret the results of your research efforts.

20/11/2017

Slide 8.3

Slide 8.4

Section 8.4 Advantages and disadvantages of secondary data

Advantages

• Fewer resource requirements

• Unobtrusive

• Longitudinal studies feasible

• Comparative/contextual data

• Unforeseen discoveries

• Permanence of data

Disadvantages

• Original purpose does not match

your need

• Access difficult/costly

• Aggregation/definition unsuitable

• No control over data quality

• Initial purpose affects how data

presented

20/11/2017

Slide 8.5

Figure 8.2 Evaluating potential secondary data sources

Slide 8.6

Box 8.8 Focus on student research – Using a social networking site as a source of

20/11/2017

Slide 8.7

Box 8.9 Focus on student research – Assessing the suitability of online multiple-

source longitudinal data Source: Eurostat (2014) Copyright European Communities, 2014. Reproduced with permission

Slide 8.8

Box 8.9 Focus on student research – Assessing the suitability of online multiple-

source longitudinal data (Continued) Source: Eurostat (2014) Copyright European Communities, 2014. Reproduced with permission

VT-F4/Managing a Succesfull Business Project/Support/MSBP - Lecture 9 Topic.pdf

Slide 2.1

Learning Outcome: Conduct Small Scale Research

information gathering and data collection to

generate knowledge to support the project

Formulating and clarifying

the research topic

Slide 2.2

By the end of the session you should understand

How to develop your research topic

How to interpret the results of your initial research thinking.

Slide 2.3

Box 2.2 Attributes of a good research topic

Capability: is it feasible?

 Is the topic something with which you are really fascinated?

 Do you have, or can you develop within the project time frame, the necessary

research skills to undertake the topic?

 Is the research topic achievable within the available time?

 Will the topic still be current when you finish your project?

 Is the topic achievable within the financial resources that are likely to be

available?

 Are you reasonably certain of being able to gain access to data you are likely to

require for this topic?

Slide 2.4

Box 2.2 Attributes of a good research topic (Continued)

Appropriateness: is it worthwhile?

 Does the topic fit the specifications and meet the standards set by the

examining institution?

 Does your topic contain issues that have a clear link to theory?

 Are you able to state your research question(s), aim and objectives clearly?

 Will your proposed research be able to provide fresh insights into this topic?

 Does your topic relate clearly to the idea you have been given (perhaps by an

organisation)?

 Are the findings for this topic likely to be symmetrical: that is, of similar value

whatever the outcome?

 Does the topic match your career goals?

Slide 2.5

Table 2.1 More frequently used techniques for generating and refining research ideas

Rational thinking Creative thinking

Examining your own strengths and

interests

Keeping a notebook of your ideas

Examining staff research interests Exploring personal preferences using

past projects

Looking at past project titles Exploring relevance to business using the

literature

Discussion Relevance trees

Searching existing literature Brainstorming

Scanning the media

Slide 2.6

Figure 2.1 Grand, middle-range and substantive theories

Slide 2.7

Case 2 Gantt chart

VT-F4/Managing a Succesfull Business Project/Support/MSBP - Lecture 9.pdf

Slide 4.1

Lecture 9 Understanding research philosophy

and approaches to theory

development

Slide 4.2

Slide 4.3

Slide 4.4

Figure 4.3 Four paradigms of organisational analysis Source: Developed from Burrell and Morgan (1982) Social Paradigms and Organisational Analysis. Reproduced with permission of Ashgate Publishing Company

Slide 4.5

Figure 4.4 Critical realist stratified ontology Source: Developed from Bhaskar (1978)