BDS COMPREHENSIVE ANSWERS AND QUESTIONS
SET A+
✔✔What is marketing research? - ✔✔The systematic gathering, recording and analysis
of data about problems relating to the marketing of goods and services.
✔✔Desk research vs field research? - ✔✔Desk research = gather/analyse EXISTING
secondary data. Field research = collect NEW primary information directly from
respondents.
✔✔What limitations/issues should you remember for market research? - ✔✔Cost;
historic data may not predict future behaviour; reliability of responses; existing data may
not be adaptable/relevant. Also ask whether a sample/test is representative.
✔✔What are the 4Ps of the marketing mix? - ✔✔Product; Price; Place; Promotion.
Trigger: develop/evaluate a marketing strategy for a product.
✔✔What additional Ps make the 7Ps for services? - ✔✔People; Process; Physical
evidence. Services are intangible and often produced/consumed at the same time, so
staff, systems and visible evidence matter.
✔✔What are the 4Cs to consider when setting price? - ✔✔Costs; Customers;
Competition; Corporate objectives.
Do not choose price in isolation.
✔✔What is price elasticity of demand (PED)? - ✔✔Measures price sensitivity. PED = %
change in quantity demanded / % change in price. Using absolute magnitude: <1 =
inelastic; >1 = elastic.
✔✔What does inelastic demand imply after a price rise? - ✔✔Quantity falls by a smaller
proportion than price rises, so revenue tends to rise. But contribution/profit may not
necessarily rise. Also consider long-term response and competitor price changes
, ✔✔Key advantages/risks of acquisition growth? - ✔✔Advantages: speed, existing
capabilities/customers, possible synergies, overcome barriers.
Risks: high entry price, culture clash, integration problems, inherited reputation/risks
and extra fixed/financing costs.
✔✔Franchising vs licensing? - ✔✔Franchising = right to exploit a business brand/model,
normally with central support, for fees/share of revenue. Licensing = right to exploit an
asset/IP, normally with less central support.
✔✔What is Lynch's expansion matrix? - ✔✔Method/location of growth: internal vs
external development, combined with home country vs new/overseas location. Do not
confuse with Ansoff: Ansoff = direction of growth (products/markets).
✔✔What are the four main organisational structures to recognise? - ✔✔Entrepreneurial;
Functional; Divisional; Matrix. There is no universally best structure: suitability depends
on strategy and circumstances.
✔✔Main advantages of decentralisation? - ✔✔Senior management can focus on
strategy; better local decisions from local expertise; motivation; faster/flexible response;
management training/career development.
✔✔Main disadvantages of decentralisation? - ✔✔Loss of central control;
dysfunctional/goal-incongruent decisions; poor decisions by inexperienced managers;
training costs; duplication; extra information/coordination costs.
✔✔Burns & Stalker: mechanistic vs organic? - ✔✔Mechanistic =
rigid/formal/hierarchical, suited to stable environments. Organic = fluid/flexible/flatter,
suited to dynamic environments. Trigger: does the structure fit the environment?
✔✔What are Mintzberg's six organisational building blocks? - ✔✔Strategic apex; Middle
line; Operating core; Technostructure; Support structure; Ideology.
✔✔What is ROI for a division? - ✔✔ROI = controllable profit / divisional capital
employed x 100. Relative measure, useful for comparing divisions, but can discourage
investment and is affected by accounting policies/asset age.
✔✔What is residual income (RI)? - ✔✔RI = controllable profit - (capital employed x
target % return). Absolute measure; often reduces dysfunctional decisions because a
project that earns above the required return increases RI.
✔✔What transfer pricing methods should you recognise? - ✔✔Cost plus; opportunity
cost; negotiated price; two-part tariff; dual pricing; market price. Consider goal
congruence, divisional performance/motivation and combined tax effects.
SET A+
✔✔What is marketing research? - ✔✔The systematic gathering, recording and analysis
of data about problems relating to the marketing of goods and services.
✔✔Desk research vs field research? - ✔✔Desk research = gather/analyse EXISTING
secondary data. Field research = collect NEW primary information directly from
respondents.
✔✔What limitations/issues should you remember for market research? - ✔✔Cost;
historic data may not predict future behaviour; reliability of responses; existing data may
not be adaptable/relevant. Also ask whether a sample/test is representative.
✔✔What are the 4Ps of the marketing mix? - ✔✔Product; Price; Place; Promotion.
Trigger: develop/evaluate a marketing strategy for a product.
✔✔What additional Ps make the 7Ps for services? - ✔✔People; Process; Physical
evidence. Services are intangible and often produced/consumed at the same time, so
staff, systems and visible evidence matter.
✔✔What are the 4Cs to consider when setting price? - ✔✔Costs; Customers;
Competition; Corporate objectives.
Do not choose price in isolation.
✔✔What is price elasticity of demand (PED)? - ✔✔Measures price sensitivity. PED = %
change in quantity demanded / % change in price. Using absolute magnitude: <1 =
inelastic; >1 = elastic.
✔✔What does inelastic demand imply after a price rise? - ✔✔Quantity falls by a smaller
proportion than price rises, so revenue tends to rise. But contribution/profit may not
necessarily rise. Also consider long-term response and competitor price changes
, ✔✔Key advantages/risks of acquisition growth? - ✔✔Advantages: speed, existing
capabilities/customers, possible synergies, overcome barriers.
Risks: high entry price, culture clash, integration problems, inherited reputation/risks
and extra fixed/financing costs.
✔✔Franchising vs licensing? - ✔✔Franchising = right to exploit a business brand/model,
normally with central support, for fees/share of revenue. Licensing = right to exploit an
asset/IP, normally with less central support.
✔✔What is Lynch's expansion matrix? - ✔✔Method/location of growth: internal vs
external development, combined with home country vs new/overseas location. Do not
confuse with Ansoff: Ansoff = direction of growth (products/markets).
✔✔What are the four main organisational structures to recognise? - ✔✔Entrepreneurial;
Functional; Divisional; Matrix. There is no universally best structure: suitability depends
on strategy and circumstances.
✔✔Main advantages of decentralisation? - ✔✔Senior management can focus on
strategy; better local decisions from local expertise; motivation; faster/flexible response;
management training/career development.
✔✔Main disadvantages of decentralisation? - ✔✔Loss of central control;
dysfunctional/goal-incongruent decisions; poor decisions by inexperienced managers;
training costs; duplication; extra information/coordination costs.
✔✔Burns & Stalker: mechanistic vs organic? - ✔✔Mechanistic =
rigid/formal/hierarchical, suited to stable environments. Organic = fluid/flexible/flatter,
suited to dynamic environments. Trigger: does the structure fit the environment?
✔✔What are Mintzberg's six organisational building blocks? - ✔✔Strategic apex; Middle
line; Operating core; Technostructure; Support structure; Ideology.
✔✔What is ROI for a division? - ✔✔ROI = controllable profit / divisional capital
employed x 100. Relative measure, useful for comparing divisions, but can discourage
investment and is affected by accounting policies/asset age.
✔✔What is residual income (RI)? - ✔✔RI = controllable profit - (capital employed x
target % return). Absolute measure; often reduces dysfunctional decisions because a
project that earns above the required return increases RI.
✔✔What transfer pricing methods should you recognise? - ✔✔Cost plus; opportunity
cost; negotiated price; two-part tariff; dual pricing; market price. Consider goal
congruence, divisional performance/motivation and combined tax effects.
