Knowing what your customers want is key to the success of any business. This is particularly true for so called “pound” shops; their customers are focused on value and price.
The importance of this is perhaps reinforced by the tale of two retailers who operate within the value market. Poundland has gone from strength to strength, as shown in earlier blog articles, and is set to open at least 30 new stores over the next 12 months.
InStore, on the other hand decided that their customers should move upmarket - and replaced the familiar £-stretcher fascia with the less familiar InStore fascia.
Our final Biz Quiz for 2008/2009. We return in the first week of September 2009!
The recession is creating a growing amount of spare productive capacity across many different markets and industries. From container ships to hotels and from steel plants to airlines, the fall in demand has lowered capacity utilisation and put a big squeeze on profits. That pressure on profit margins comes not just from weaker revenues. Keep in mind that many businesses have a large fixed cost component such as the overhead costs of operating a network. Thus when output is contracting, the average fixed costs of production increase.
Declining demand and rising productive slack inevitably cause a fall in planned investment spending - economists term this a negative accelerator effect. BBC news reports that British Airways is cutting capital spending in response to the slump in demand and mounting losses. “The airline said it had cut spending by 20% to £580m ($952m) from £725m, and had lengthened its schedule of orders for 12 Airbus A380 aircraft.”
Further evidence for the reverse accelerator affect comes from Japan where Japanese firms cut their capital spending by a record level in the first quarter of 2009. In contrast Stagecoach is increasing investment in a fleet of greener buses.
This is a story that will never end, to the great amusement of people with a slightly immature sense of humour. I might even be describing myself. In a globalised marketplace, words, terms or phrases that make perfect sense in their own language can be unintentionally crazy, daft or rude when they cross over into other cultures.read more...»
The BBC has confirmed that the new series of Dragons’ Den will air on Wednesday 15th July at 9pm on BBC2
This is a cracking starter/ plenary activity that goes down great this time of year.read more...»
Taking advantage of the sweltering temperatures outside whilst I write this, here is a mini case study in quality control…read more...»
A fantastic example of investment appraisal and capacity utilisation in this article in the Guardian, which describes the risks and returns of the new U2 tour.read more...»
I am still looking to fill a vacancy for September. Do get in touch if you are interested.
Calling all Business Studies and Economics teachers: If you are looking for a job from September I would be very interested to hear from you. I have a vacancy in the department for a full time teacher. We offer GCSE, A Level and IB Economics and Business Studies.
Email me directly if you are interested and would like further details, I would be delighted to hear from you (firstname.lastname@example.org).
The school website.
Franchises are now a common feature of the business curriculum, and the textbooks generally paint a very positive picture of how they work. But things can, and do, go wrong. Here’s a great example….read more...»
Fascinating evidence from the Office of National Statistics about what happened to firms inventories during the first three months of 2009. Data form the ONS estimates that the value of stocks held fell by £5.4bn during the quarter - a significant reduction. Students might consider why this happened. There will be a variety of causes:
- Deiberate attempts to reduce finished goods stocks by converting them into cash (perhaps by offering lower prices or promotional discounts)
- Closure (temporary or permanent) of production capacity
- Delays in ordering new raw materials and components as a way of conserving cash
Inflation has many important costs and consequences for both society and business. However a stable and low level of inflation also provides some upsides for business.read more...»
There are two main causes of inflation:
• Demand-pull (when there is excess demand), and
• Cost-push (when costs rise)
Inflation is a sustained increase in the average price level of a country. The rate of inflation is measured by the annual percentage change in the level of prices.read more...»
A great article on Sainsbury’s strategy to accelerate its growth plans. I used this article as an example of what Internal and External constraints their can be on a businesses Marketing Objectives, but it could also be used for the impact on Operations, HR or Finance.read more...»
Mission statements: an exercise in public relations or a key part of providing the direction that management and employees need as they go about their business? The debate about the relevance and usefulness of mission statements has raged for many years.read more...»
Corporate strategies are essentially about what the business wants to achieve. Business strategy is the gameplan for how those corporate objectives are to be achieved.read more...»
Objectives play a key role in business management. They provide the measurable statements of what a business wants to achieve, from the top (corporate) level of the firm right down to the detailed functional activities of the business.read more...»
The government is taking the East Coast rail line that runs from London to Edinburgh and which has been operated by National Express into public ownership. National Express has struggled with falling revenues and higher costs that have contributed to rising losses on the line. In a press release, National Express said that higher hedged fuel costs added £11 million of cost in the first half of 2009, while increased pension costs cost the business a further £3 million.read more...»
First it was the banks. Now it is strategic transport businesses. The government has this morning nationalised the East Coast raiway line, previously operated by National Express.read more...»
The research theme for students taking AQA A2 Business Studies Unit 4 (BUSS4) in January 2010 has been announced. The theme is…Emerging Markets.read more...»
The ten small businesses which are being followed by the BBC month-by-month throughout 2009 are remaining defiantly optimistic, with most of them reporting confidence ‘marks out of ten’ at the same level as May, and three of them more optimistic this month. Many seem to benefit from being in a niche market with very specialised products meaning they can really focus on their customers. They talk of expanding sales and taking on more staff, and some increased interest in UK products and producers. The hotel on the Isle of Wight is benefitting from sterling’s weakness this year causing an increase in holidays in the UK.
Several have changed their cost structures and looked for ways to strengthen their cash flow, for example by reducing reliance on credit for payments, and are hanging on and managing to break even while they hope for increased business in the near future, and there are concerns about how they will cope when interest rates rise again. There is still difficulty for those businesses which are related to the housing market, as solicitors or suppliers of joinery, and the most consistent worries remain those related to finance – lack of credit from the banks, lack of mortgages available to potential buyers, and poor credit ratings given to any relatively new small business regardless of their history.
Tonight’s edition of the Money Programme looks worth watching, or recording – on at 22.00 on BBC2 (unless Wimbledon overruns by two and a half hours again, presumably!).
‘Recession bites into our eating habits’ looks at the changes in supermarket and food spending over the last year, as food prices have risen by 8% and consumers seems to be cutting back on luxuries and shifting to inferior goods – a good illustration of income elasticity of demand, and the effects of falling consumer confidence.read more...»
Six thousand complaints within a week has forced Masterfoods to do a U-turn on its decision to use ingredients which contain traces of animal enzymes.
Is this a business responding to the wishes consumers?read more...»
The latest edition of The Biz Quiz, our weekly quiz on the business news, is now available.
Do you know your dongs from your ringgits? And what currency do they use in Belarus? Try this starter quiz to test your knowledge on foreign currencies.read more...»
Deliberate Creativity is one of the topics on Edexcel’s new GCSE Business Specifications (Unit 1 Section 2) that many of us won’t have taught before. However, I think it’s one of the most exciting topics because it can be used to engage the students in thinking, which is why I intend to start the course by delivering that section.
Professor Dennis Sherwood believes that people can be taught to be creative by using the technique of deliberate creativity. The idea is quite simple - look at what you know, and think about how it could be changed.
TV quizzes are an excellent example of how this has led to the development of new quiz shows. When ITV launched “Who Wants To Be A Millionaire?” how did the BBC respond to it’s success?read more...»
Many thanks to Patrick Neill at Bideford College for providing an example of a terrific enterprise activity that has worked really well with his students…read more...»
Many thanks to Alison Elmes for sharing this experience in the classroom last week…read more...»
The Times ‘Ideas at Work’ section has a feature today about how to build a winning team in business. The first point questions whether you actually need a team, or simply a group of individuals working on separate tasks but reporting to the same supervisor. On the assumption that the business needs something a bit more than that, much of the advice centres on long term strategic planning, which should be a central part of human resource management – allowing time for team dynamics and bonding to evolve, having a team which is small enough to be co-ordinated and setting clearly defined roles with a decisive leader. There are two vital aspects of recruitment that reflect points made by Mike Southon, the Beermat Entrepreneur, at last week’s Business Studies National Teacher Conference; getting a mix of people and talents rather than several matching talents, and bringing in a ‘deviant’ – someone who is prepared to take a different view and question the normal status quo, but without acting as a ‘team destroyer’. To quote Lynda Gratton, Professor of Management Practice at London Business School, “You want people to challenge each other, but you don’t want winners and losers — people stop talking to each other.”
A big hat tip to Mark Mitchell for showcasing this classic Hale & Pace clip as a way of introducing the topic of customer service…read more...»
This business remains one of the biggest in the world and you could (if you really wanted) do a whole Business course just looking at the automotive industry. The problem for me is keeping up with the current rate of change – I still can’t quite believe that General Motors (GM) has gone bankrupt.read more...»
Will King, the CEO of King of Shaves who spoke about his battle to break into the shaving products market at the Economics conference last week, was on BBC Radio 5’s Wake up to Money yesterday – you can listen to the programme or download the podcast from here. King of Shaves is raising a further £5m capital to fund its growth plans – as Geoff reported on the Economics blog last week, King of Shaves is launching successfully in Japan and now looking towards the United States. However at this time when all the news is full of stories of businesses which cannot raise money from the banking system, Will King has come up with a different approach which follows his hugely successful strategy of using the web and viral marketing.
We’re hard at work on a new series of resources to support the new GCSE Business units.read more...»
An indepth video from BBC Newsnight (8mins) looks at the decline of the local newspaper. Changing trends in media consumption, the recession and the growing dominance of the BBC are all highlighted as potential reasons why local newspapers may struggle to survive. Packed full of excellent material for more experienced business students - how can the local newspapers respond?
Teen-Trepreneur is the new board game launched last week by Sabirul Islam - the young entrepreneur featured at our Business Teacher National Conference. Sabirul told some of the story behind the new game, which has been designed with the help of young business and enterprise students.
Teen-Trepreneur retails for £24.99 (including VAT) looks terrific and you can now order the game directly from Sabirul via this online form:
A player’s guide to Teen-Trepreneur can also be downloaded in pdf format here:
We just managed to squeeze in a Biz Quiz picture quiz at the Business Teacher National Conference today. Here is the puzzle - can your students name the people featured?
Here are the answers:
From left to right:
Top row: Dick Fuld (Lehman Bros) | Robert Peston (BBC) | Andy Hornsby (Halifax Bank) | Declan Curry (BBC Working Lunch)
Bottom row: Yasmina Siadatan (The Apprentice 2009) | Michelle Mone (Ultimo Bras) | Claire Robertson (Wellworths) | Mary Portas (Queen of Shops)
Students often think of entrepreneurs as people who have set up their own successful business. Perhaps that’s because many of us use well-known entrepreneurs, who happen to run their own business as examples. This may be understandable, since it helps students to relate to what entrepreneurship is about, but is it accurate?
The new specifications are quite clear about the sort of skills and qualities that are usually found in entrepreneurs, and they don’t mention “business owner” as one of them.
This begs the question “can employed staff be entrepreneurs?”.read more...»
Sainsbury’s continue to seek ways to improve their green credentials, and to cut the amount of wasteful packaging on their goods. The Sunday Times reported that they introduced ‘milk-in-a-bag’ – polythene bags containing 2 litres of milk which can be transferred to a jug-style holder, and which have 75% less packaging than the rigid plastic bottles. Their next move has been to take some own-brand cereal out of cardboard boxes, and on Friday they introduced their own brand of Rice Pops in recyclable plastic packets similar to those used for crisps.
Kelloggs say they are considering doing the same, although Nestle have no plans to do so at present. A problem with the plastic bag for cereal is keeping it from being crushed either on the way to the supermarket or on the way home – but we manage to do this with packets of crisps, so presumably we can manage it for cereals as well. Reducing the volume of packaging is certainly to the advantage of the supermarkets, as it cuts the space used per pack in it’s delivery lorries so fewer lorries are needed, cutting both their costs and their carbon emissions.read more...»
Fresh off the digital presses - the latest edition of the Biz Quiz
Rachel Bridge (Enterprise Editor of the Sunday Times) joined us at the Business Teacher conference on Friday and briefly described her new series which is tracking three new business start-ups…read more...»
BT is following the lead of several other employers in an attempt to find ways to keep staff on the books even though they are not needed during the downturn. Their creative solution is to ‘lend’ their staff to competitors rather than make them redundant. This is part of a much wider cost cutting scheme, and involves offering ‘placements’ outside the company, initially on a voluntary basis, but BT have not ruled out making them compulsory if too few people volunteer. While the new company would pay their salary, staff remain members of the BT pension scheme. The scheme seems to mirror the way that a Premiership football club will lend players to other clubs for all or part of the season as part if the player’s ‘career development’ – the new club pays the wage, but there is an understanding that the player is expected to return to the ‘parent’ club at the end of the period.read more...»
Last year it was Fraser Doherty. This year, its Sabirul Islam. Two young (very young) entrepreneurs who captivated and inspired our wonderful audience of Business teachers at the British Library.read more...»
Some current affairs questions from the last seven days for Business students around the world…read more...»
EU legislation can be a difficult topic to deliver to a GCSE Business class, but it remains an important element of the new Edexcel specifications.
I recently came across this useful BBC article which got a great discussion going about The Working Time Directive.read more...»
If you’ve been looking at motivation in the workplace this year, chances are you’ve talked about Elton Mayo, who is best remembered for writing about experiments done in a telephone parts factory in the 1920s and 30s. The results of the Hawthorne study lead to an extremely influential idea: that the very act of being experimented upon changes subjects’ behaviour. However, new analysis of the experimental data suggests this may be the wrong conclusion.read more...»
Some interesting changes seem to be taking place in the “market” for GCSE Business courses…read more...»
There are some excellent examples of businesses that are significantly exposed to a downturn in demand from business travellers - British Airways is perhaps the best. However, you can now add Whitbread to that list…read more...»
This story is a must to use with A2 students looking for a relevant, topical strategy case…read more...»
Students who attended the BUS6 business strategy workshop in April spent an hour or so looking at the strategy of EMI, in the “Taking a Boardroom Approach” opening session. We looked at the strategic rationale for Guy Hands and Terra Firma deciding to buy EMI and at some of the cultural and commercial issues he faced when trying to turn the business around.
When students turned their BUS6 papers over today the chosen case study was…read more...»