May 2021 Multi Marketing Case Study

Unit 1: Business Organization & Environment

Unit 1.1: Intro

Primary Sector business organization (tertiary/quaternary sector → selling a service; knowledge)?

• Economic activity is generally divided into three main sectors, along with the recent addition of a fourth one: primary sector, secondary sector, tertiary sector, and quaternary sector. Each sector describes a circumstantial type of work that occurs in order to generate value. A business in the primary sector refers to the extraction of raw materials from the earth. This process builds the premise in which the following sectors are composed. The secondary sector is composed of businesses that utilize these raw materials extracted by businesses in the primary sector and produce products that are then used for sale, whether this is to other businesses or directly to the consumers. The tertiary sector refers to any business that sells a service, and the quaternary sector is arguably related to the tertiary sector; focuses on knowledge/specialization. (DM)

Unit 1.2: Types of organisations

Family Partnership - Private Limited Company

• Rachel, Javed and Aarvan formed MM as a partnership, which involves the creation of a business by two or more individuals, all called partners. This type of organization (partnership) is generally governed by partnership agreements, which define the ownership interests of the different partners, as well as how major decisions will be made by the partnership. Both sole proprietorships and partnership share a main disadvantage which consists of the possibility that the partners’ personal assets may be seized in order to pay for any losses or debts the business faces. This refers to the fact that those involved in a partnership are subject to unlimited liability, which means that they are held personally liable/responsible for any loss the business may make. However, unlike a corporation and similar types of organizations, partnerships are much easier to get started as it is less formal with less legal formalities and obligations; likely the reasoning for the decision to form MM as a partnership. (DM)
• In 2017, MM was converted to a private limited company by the partners Rachel, Javed and Aarvan. They all became majority shareholders in the business with each of them owning 25% of the business’ sales. The remaining quarter is owned by their respective families. The small number of shareholders within the business and partial ownership shared with their families are all qualities of a private limited company, in contrast to a publicly listed company. The current state of the business being a private limited company allows for the conversion to a publicly listed company if they wish to access large amounts of capital. This is done using an initial public offering (IPO) which refers to the sale of a company’s shares; going public for the first time. However, along with the greater access to capital, publicly listed companies are in turn then required to publish their financial statements and accounts and make it all available to the public, along with potential competitors. (DM)

Unit 1.3 Ethical objectives

(Lines 55-63)

Ethical objectives are business actions that are morally correct. An ethical business acts morally towards workers, customers, shareholders, and the natural environment. MM has set ethical objectives even for the choice of its customers. There are some advantages associated with being ethical, which are:

• improved corporate image (acting ethically and in a socially responsible way, MM can benefit by enhancing the corporate image and reputation of the business)
• Increased customer loyalty ( customers are more likely to be loyal to a business who acts ethically)
• Cost cutting (socially responsible businesses can benefit from avoiding litigation cost- expenses associated with legal action taken against the business)
• Improved staff morale and motivation ( people are more likely to be proud of the business they work for if it acts ethically and is within the law. This improves productivity and employee loyalty)

In context to the offer made by country x (which is not ethically responsible), I will analyse the disadvantages of ethical behavior

• Lower profits (MM may have to decline a lucrative business offer made by country x, as MM has set ethical objectives. This will reduce in lower sales and lower profits)
• Stakeholder conflict (Claire- the manager of MM, feels that the company should accept this offer but however Reachel believes that it is against their ethical objectives. Thus, this situation could lead to a stakeholder conflict.) (VR)

Unit 1.4: Stakeholders

Stakeholder analysis [pg. 47-54]:

        Stakeholder conflict can possibly arise as a result of Rachels and Aarvans differences in how they want to expand and grow their business. Rachel is more cautious and wants to grow the business slower with less risk while Aarvan is really enthusiastic about the “high risk, high reward” direction and suggests that if they want to gain more they need to make difficult decisions.

        As this is a partnership, Rachel might want to consider taking Aarvans route of growing the business; high risks may be taken comfortably thanks to the limited liability nature of a partnership. Yet the problem still exists with Rachel being managing director, only she can make a final decision. (MD)

• A stakeholder is any individual or group that affects an organization or is affected by it. External stakeholders exist outside the organization whilst internal stakeholders exist within the organization.

• Internal stakeholders: within the organization: include managers, employees, and usually shareholders. MM’s examples of internal stakeholders include Rachel, Javed, and Aarvan are all internal stakeholders as well as shareholders because they are all also owners of the company. They all invested in the business with the expectation/in order to receive a return on their initial investment. Since MM is a PLC, other shareholders are not considered as external stakeholders because they are also not involved in the day-to-day running of the company.
• External stakeholders generally have less influence compared to internal stakeholders. Some examples of external stakeholders include, but are not limited to customers, suppliers, governments, unions, banks and competitors. Their interests generally revolve around the company performing well and producing a high quality product. Suppliers are an example of external stakeholders because they operate outside of the business however they rely and succeed on the other business’ success. MM’s customers expect a high quality product as well as good customer service; an essential factor. (DM)

Unit 1.6: Internal and external growth

MM is looking to take over Satvi Films (SF), a film studio in India, so that the company can produce its own advertisements for radio, TV and cinema without having to outsource the work. MM would need to pay $100 million to pay for the film studio. (Lines 144-147)

A take over of a company is considered external growth. A takeover is a term often used to describe the process that results in either a merger or an acquisition. A takeover involves one form offering to buy the shares from other shareholders of another firm, usually at a lower price that exceeds their value in the stock market.

(OW)

Unit 2: Human Resource Management

Unit 2.1: Functions and evolution of human resource management

• Clare is the manager of the Public Service Department. Her drive and enthusiasm inspired some in her team which resulted in a 50% revenue increase by the department over the last 12 months. Customer satisfaction is very high and some of the marketing strategies designed by Clare’s team have won awards. Clare needs to be autocratic when it is needed. An autocratic leadership style is characterised by a domineering and possibly tyrannical approach. Very strong and rule oriented. Clare is ambitious and has interest in environmental issues.
• When the government asked the company to produce an advertising campaign to encourage people to use less plastic, Clare wanted the campaign to be bigger and better than any other and wanted it done ASAP. Staff complained about her unrealistic deadlines and her bullying, when she heard the complaints she was rude, cut pay raises, and threatened them with less interesting work. Aarvan, Clare’s manager, has organized a meeting to discuss and decide Clare’s future.

• In 2016 MM decided to open an office in Bengaluru which is the IT capital of India, they decided to do this partly because of political events. This is called offshoring, it is when a company relocates a manufacturing operation to a foreign country without giving up control or ownership of the operation. Some reasons to do this may include:

- Attracting professional talent that is rare in the home country

- Make an entry into emerging markets in order to maintain global perseverance

- Offer consumers a lower price for products and services

- Benefit from lower corporate taxes in the country where the company chose to offshore.

(OW)

Unit 2.2: Organizational structure

Organizational structure and a corresponding chart indicates and allows for analysis of the flow of communication, responsibility and reporting within an organisation.

• MM’s organizational chart (Figure 1) displays a flat or horizontal organizational structure. A flat or horizontal organizational structure is generally characterized with few levels of hierarchy. Typical for organizations for a flat structure are a short chain of command and a wide span of control. This type of structure is commonly used by small businesses and is therefore not suitable for large organizations with many employees and ongoing projects. Figure 1 is MM’s organizational chart and clearly exhibits a flat/horizontal structure. These types of organizations usually have limited management, however, there is an informal hierarchy based on seniority; Rachael has the “managing director” title and is in charge. This hierarchy allows for a shared decision making process, empowering employees. (DM)

Unit 2.3: Leadership and management

Leadership styles in tackling the HRM problem: autocratic leadership

• Autocratic leadership is characterised by a domineering and strong, rule-oriented approach; very rule oriented. Decisions are made with very little or no outside input whereas they rely on their own instincts and ideas to make decisions. An autocratic leader retains all authority; a disadvantage of this leadership style is that although Clare’s autocratic leadership was successful and inspiring people in the team as well as yielding a 50% increase in revenue in 12 months, other employees may not welcome the ideas. This leadership style allows for very little room for innovation and creativity for the employees, where it rather follows a “top-to-down” approach. This explains some of the MM employees frustration with Clare, as she is said to instill unrealistic deadlines, bully the employees, and did not address their complaints. These disadvantages could ultimately lead to a high turnover rate and lead to a less motivated workforce. (DM)

Unit 2.4: Motivation

There are many different motivational theories that are based on the premise that there are different ideas on why people work. Motivation amongst the employees is based on numerous factors such as the type of leadership or the success of the business they are working for. Claire’s new autocratic leadership strategy has made noticeable improvements in some regards such as inspiring employees with her infectious drive and enthusiasm, which has resulted in a 50 % increase in revenue by the department over the last 12 months. Customer satisfaction is also very high as a result of new policies Claire has set in place. Success achieved in the workplace and improvements made against competitors is a source of motivation for employees because they feel pride when they are taking part in the process. However, this style can be very demanding and she can tend to set unrealistic expectations, which is in result draining and demotivating for her staff. Application of motivational theories → (Herzberg, Maslow?) (DM)

Motivation is a key factor to a businesses success. One important part of motivation is appropriate employee relationships. Claire, the company’s marketing manager is a very ambitious leader. However, Claire has reportedly been setting unrealistic deadlines as well and ‘bullying’ the employees, resulting in the staff requesting Claire’s dismissal. Even though Claire helped increase the revenue by 50% over the past 12 months, her unethical behaviour towards staff might cause low employee motivation levels which lead to worsen performance. (IM)

Due to finance problems, Javed believes that MM needs to reduce its costs. One of the three ways Javed came up with is delaying a plan pay rise for MM’s employees. Such delays might result in employee frustration and a potential lack of motivation, as well as decreased productivity. (IM)

Unit 2.5: Organisational culture

Role cultures- exist in highly structured organizations with formal rules and procedures. Job roles are clearly stated in formal job descriptions and there is clear accountability. Power is devolved depending on the formal position that the individual holds in the organization. (IM)

Unit 2.6:Employer and employee relationships

        (Line 86- The HRM problem)

Due to a new project dealing with India’s government request to design and implement an advertising campaign, which Clare is leading there have been some problems with her and the project amongst the company and the team that is working on the project.

Reasons

• Different interest
• Unrealistic deadlines
• Poor communication
• Her style of leadership-autocratic (being rude to her employees)

Results in

• Demotivation of the workforce
• Poor results

Possible approaches

• Employee participation  (Employees can be motivated to take part in decision making)
• Conciliation and arbitration (The third party can help them resolve dispute- owners of the company or professionals in the field)

        (VR)

Unit 3: Finance & Accounts

MM’s start-up was financed mainly by loans from parents and friends as well as by crowdfunding on social media. The case study defines crowdfunding as “a way of raising finance by asking a large number of people for a small amount of money each. It often takes place online.” Crowdfunding is generally efficient and displays many advantages such as it being a very fast way to raise money whilst avoiding any fees in advance. Also, crowdfunding through social media, a strategy that MM took advantage of, is also an apparently valuable form of marketing as well as gathering finance. This ties into a further advantage that derives from the fact that the project was advertised on social media; it is therefore subject to further expert feedback. This also allows possible future investors to be able to track progress of the business/project. Social media crowdfunding is also a good idea because it can be used to determine people’s reactions and is also then subject to feedback. Disadvantages that arise as a result of MM’s social media crowdfunding as a source of finance is that although it may be faster, it is not always easier than other more traditional methods and sources of finance. Building up interest on a platform will be a challenge and failing to do so may be damaging to the reputation of the business. It is also vital to patent or copyright project ideas to avoid them getting stolen. Overall advantages and disadvantages of crowdfunding through social media: (DM)

(DM)

Unit 3.7

Cash flow forecast is a prediction of the future cash inflows, outflows and net cash flow for a specific time period. This is important because cash flow forecasts are used to determine and identify possible issues in the future with their liquidity position. This prediction (forecast) of their liquidity position based on past data and identification of problems will allow for more efficient allocation of resources in order to maximize profits. In terms of MMs position, cash flow forecasts suggest that the opening of an Indian branch of the company would reduce its profits for a year. This has led them to the assumption that they need to reduce costs in order to combat this issue discussed in lines 104-108. (DM)

Cash inflow = amount of cash flowing into or earned by the business from sales, debtors and other non-core activities. Also called receipts.

Cash outflow = amount of cash paid out by the business for core operations such as raw materials, creditors, electricity, rent, etc.

Net cash flow = is the difference between the total cash inflows and total cash outflows. Typically companies try and head for a positive net cash flow as this would imply they do not have any problem with liquidity.

Opening balance = refers to the amount of cash the farm has in the bank at the beginning of the month.

Closing balance = refers to the amount of cash the company has at the end of the month. It is the sum of the opening balance and the net cash flow, which then becomes the opening balance for the next month.

Closing balance = opening balance + net cash flow for the month

(OW) <3

Unit 4: Marketing

Unit 4.1 

Unit 4.2 Marketing Planning

Sales Forecasting

Target market and marketing objective?

Position map is either a premium product or bargain product as we are not aware of MM’s prices. They have high quality work. It is important for MM to be located in both areas as their objective is to help corporations reach their customers through marketing strategies, meaning that they work with small and big businesses. Regardless, quality is high as that is their USP. This high quality work also goes in hand with their fast response to customers. Naturally attract customers but also retain current ones. Governmental contracts are very beneficial as it naturally obtains a lot of attention and so their USP could attract more customers. USP naturally also motivates employees but could cause problems as seen with the Clare situation. Differentiation apart from the product quality (innovative solutions), can also be seen with their customer service as they are the fastest to respond to customers and always treat them very well.

Unit 4.3

Sales forecasting - quantitative management technique used to predict a firm's level of sales over a given time period. Javed and Rachel had a meeting to discuss cash flow forecasts and provisional accounts, identified signs of increasing costs, even though profits for 2020 were high compared to previous years. (IM)

Unit 4.4

Unit 4.5 The 4 P’s

Price - Cash flow forecasts that indicate that the opening of an Indian branch of the company will reduce the profits for a year. (104) However, if the costs of operating the branch turned out to be higher than planned, or sufficient revenues were not achieved, it would take longer to recover target levels of profit. They found that, although profits for 2020 were high compared with previous years due to some new contracts, there were signs of increasing costs. (104-108) This liquidity issue has resulted in MM and Javed thinking that they need to reduce their costs. In order to reduce the costs, it was suggested to implement the following strategies: delay a planned pay rise for employees, reduce the high payments made to the owners, and reduce expenditure on marketing MM’s services. (110)

(DM)

Place - MM is originally based in London, where they all met at university. This location is extremely relevant as London provides many advantages such as it being a world centre for media and creative activities, and its location means it is easy to access other and larger markets and businesses. Opening an office in India, more specifically in Benglaru, which is known to be the IT capital of India, contributes to their expectation of success. There are a myriad of advantages that come from the office there such as the lower cost, the fact that the city is rapidly growing, and has a high concentration of high-tech businesses. A problem arises from the lack of infrastructure as it is still a developing nation. Predictions forecast that 2021, this region will account for30 % of MM’s business, but it is expected to account for 60 % by 2025. (125)

(DM)

Product - The company provides marketing services, which involve helping businesses reach customers through improving corporate branding and creating marketing strategies. Initially, MM advised customers on all issues relating to marketing and designed marketing strategies for them. It then outsourced the production work, which included making advertising campaigns, and managed and coordinated the various businesses involved. (BS)

Promotion - Multi Marketing’s business consists of providing marketing services such as creating marketing strategies and improving corporate branding (brand image).

The business had rapid growth for it’s first four years in operation thanks to their innovative use of social networks and rapid response to their customers which improved brand loyalty as well as their own brand image; these factors also spilled over to a strong word-of-mouth promotion from customers. (29) (MD)

(111) “Javed suggested that they should reduce expenditure on marketing MM’s services”

Conflict between Javed and Rachel on what strategy to adopt. One wants to reduce costs while the other one wants to search new suitable sources of finances.

(150) “There is evidence that economic activity in the major economies of the world is slowing down. Many businesses reduce their marketing spending in a recession, but owners of MM are convinced that this is actually the right time for businesses to increase their marketing activity)

Unit 4.7 International Marketing

Partly because of political events in the United Kingdom in 2016, the owners decided to open an office in Bengaluru, which means that the business would expand in international markets. The mode of entry into international markets adopted by MM is direct investment (refers to a business setting up overseas production or distribution facilities. For instance MM has shifted some of its departament to Bangalore.) One of the drawbacks of this method is the high cost of investment such as the need to rent or buy the premises.

The opportunities of expanding to international markets

• Increased customer base (the size of the market can be enlarged by catering to the new customers In Bangalore: India)
• Spreading risk (by operating in various international markets, MM is less exposed to the risk associated in one particular country- UK- ex. Political events there in 2016)
• Economies of scale (by operating on a larger scale, MM is likely to benefit from economies of scale- the case study mentions that basing in India will give MM growth potential= higher profits and lower cost)

        The implications of expanding to international markets

• Language and culture differences (some employees moved from UK to India= communication barriers.)
• Losing workforce present in the home country (there are better graphic designers in the UK than in India)
• Economic environment (state of economy in India- exchange rate, fluctuations) (VR)

Unit 5: Operations Management

Unit 5.1

Operations management, often referred to as production, is concerned with providing the right amount of goods and services at the right quantities and quality level in a cost effective way and timely manner.

The role of operations management impacts on all functional areas of a business. For example, a change in production methods can be caused by numerous reasons, including attempts to achieve greater efficiency, the use of just in time production or simply becauseof the growth of the firm. These changes,whatever the reasons, have a direct impact on the other functional areas of the organization.

Operations management consists of providing the right goods and services in the right quantities and at the right quality level in a cost-effective and timely manner (MM being a marketing service).

• Primary sector:

Unit 5.2

Job production?

Unit 5.3: Lean Production and Quality Management

Lean production is generally referred to as an umbrella term that covers strategies and a range of techniques that aims at reducing waste. Methods of lean production include Kaizen, Kanban, Andon, just in time, (JIT) just in case, (JIC) and total quality management. (TQM) Kaizen is relevant for MM because it displays that there is continuous imp        rovement being made. Lines 72-79 discuss Rachel’s reorganization plan for MM following the opening of the Bengaluru office. This change and plan for improvement regards the sales division, which is currently led by Aarvan, and is currently organized into 4 different groups: corporate, public service, charities, and international. Rachel has proposed the idea that the sales division should now be organized into the country of sale. (DM)

Unit 5.4: Location

There are many factors that influence the location of a business. MM was started using crowdfunding on social media and was originally based in London. This original location provides many benefits for the company because London is indeed a world centre for media and creative activities and allows for easy access to many large national and international businesses, particularly in European markets. However, some factors that affect location that have a large impact include labor and land costs, as well as other factors such as External economies of scale, transportation and other infrastructure, government assistance, and other international factors. Costs such as labor and land costs tend to be higher in London compared to the option of offshoring or relocating that has a lower minimum wage and lower land costs. If the more expensive location does not provide a significant advantage or if the business does not necessarily require the benefits of this location in London, it would be best to relocate. However, the advantages of the business starting in London mentioned above may be significant to the business. (DM)

Location Problem The team has to carefully examine the suitability of the land based on quantitative and qualitative reasons.

Factors in locating a business:

• Cost

• Land and labour (the factors that MM must have considered before relocating is that land in India is cheaper that in London.)

• The type of land or the type of area

• Threat = the deteriorating air quality and the traffic pollution and poor infrastructure

• Markets

• As Bangalore is known as the silicon valley of India with a concentration of high tech businesses, the business will benefit from high quality education and training facilities.
• Bangalore has its own film industry- MM will be close to its customers

• Infrastructure

• Threat= Challenge with roads and water connections
• Advantage= Baglore has good electronic networks (computers, telephones, and other digital communication)

• Familiarity with the area

• Advantage= Aarvan is from India, so he is familiar with the location and thus has some local knowledge about the city and maybe its customers. He may be well versed in local language
• Threat= the other two owners (Rachel and Javed from Israel and Jordan) may face an issue with Banglore

• Labour pool

• Advantage= Bangalore is a growing city of over 8 million people and there are a lot IT professionals available, therefore this can be an added advantage for MM)
• Advantage= the labour cost in India are also cheaper in comparison to the UK
• Threat= creative employees at MM (like graphic designers and artists) are better in London. London also provides more access to other larger markets. (VR)

Unit 5.5

Just-in-time production?

Unit 5.6

Unit 5.7

Is the HR problem considered a crisis?

Possible Assessment Questions with Answers

What are the current sources of finance for MM?

External: NGOs, Charities, Governments

Internal: Sales,

What sources of finance did MM have whilst starting the business?

External: Crowdfunding from people

Internal: Themself, Parents

(OW)