the implications of changes in market share and market growth

1. Business & Its Environment (AS 1.1‑1.5)

1.1 What is a Business?

• Enterprise: an organisation that combines resources to produce goods or services for profit.
• Types of enterprise: sole trader, partnership, private limited company (Ltd), public limited company (plc), cooperative.

1.2 Business Objectives

• Profit maximisation – primary aim for most private firms.
• Growth – increase market share, sales, or geographic reach.
• Survival – especially for start‑ups and SMEs.
• Market share – often expressed as a % target (e.g., “increase market share by 5 % in 12 months”).
• Corporate social responsibility (CSR) – ethical, environmental, community goals.

1.3 Stakeholders

Stakeholder	Interest
Owners / Shareholders	Return on investment, share price.
Managers	Achievement of targets, career progression.
Employees	Job security, wages, working conditions.
Customers	Value for money, quality, service.
Suppliers	Long‑term contracts, timely payment.
Government	Tax revenue, compliance with law.
Community / NGOs	Environmental impact, ethical behaviour.

1.4 External Environment – PESTEL (A‑Level 6.1)

• Political: tax policy, trade restrictions, stability.
• Economic: inflation, interest rates, consumer confidence.
• Social: demographics, lifestyle trends, cultural attitudes.
• Technological: R&D, automation, digital platforms.
• Environmental: sustainability, climate change legislation.
• Legal: health & safety, consumer protection, employment law.

2. Human Resource Management (AS 2.1‑2.3)

2.1 Purpose of HRM

• Recruit, develop, motivate and retain the right people to achieve organisational objectives.
• Ensure legal compliance and promote good employee relations.

2.2 Workforce Planning & Recruitment

1. Analyse current workforce (skills audit).
2. Forecast future needs (growth, new product lines).
3. Recruitment methods – internal (promotion, transfer) vs external (advertising, agencies, online).
4. Selection tools – CV screening, interviews, psychometric tests, assessment centres.

2.3 Motivation & Leadership Theories

Theory	Key Idea	Application
Maslow’s Hierarchy	Needs move from physiological → self‑actualisation.	Design reward packages that address multiple need levels.
Herzberg’s Two‑Factor	Hygiene factors prevent dissatisfaction; motivators create satisfaction.	Improve working conditions (hygiene) and provide achievement opportunities (motivators).
McGregor’s Theory X & Y	Assumptions about employee nature affect management style.	Adopt Theory Y approaches to foster autonomy.
Leadership Styles	Autocratic, democratic, laissez‑faire, transformational.	Match style to organisational culture and change requirements.

3. Marketing (AS 3.1‑3.3)

3.1 The Nature of Marketing – Markets

Purpose of Marketing

• Identify, create and satisfy customer needs profitably.
• Marketing objectives (e.g., “increase market share by 5 % in the next 12 months”) support overall business aims.

Core Economic Concepts – Demand & Supply

• Demand determinants: price, income, tastes, price of substitutes, demographics.
• Supply determinants: production cost, technology, input prices, number of sellers, regulation.
• Shifts in total market demand change market size → affect market‑share calculations.

Market Types

Dimension	Type	Key Characteristics	Implications for Marketing
Customer base	Consumer (B2C)	Individual buyers, emotional, short cycles	Branding, mass communication, price promotions
Customer base	Industrial (B2B)	Organisations, rational, long cycles, multiple decision‑makers	Relationship building, technical detail, after‑sales service
Geographic scope	Local / Regional	Limited area	Primary research, short distribution channels
Geographic scope	National / International	Wide reach, cultural & legal differences	Segmentation, adaptation of the 4 Ps

Product vs. Service Markets

• Product market: Tangible, can be stored (e.g., smartphones).
• Service market: Intangible, simultaneous production & consumption (e.g., banking). Greater focus on people, process, physical evidence.

Market Orientation

• Product orientation: Focus on engineering; assumes customers will buy what is produced.
• Market (customer) orientation: Starts with market research, then designs products to meet identified needs.

Segmentation & Targeting

Segmentation Base	Examples	Why It Matters
Demographic	Age, gender, income	Guides product design & pricing.
Geographic	Region, climate	Influences distribution & localisation.
Psychographic	Lifestyle, values	Shapes branding & communication.
Behavioural	Usage rate, loyalty	Supports pricing & loyalty programmes.

Customer Relationship Management (CRM)

• Systematic management of interactions with current & potential customers.
• Key activities: data collection, segmentation, personalised communication, after‑sales service.
• Critical for protecting/increasing market share in low‑growth markets.

Calculating Market Share

Formula

\[ \text{Market Share (\%)} = \frac{\text{Company’s Sales}}{\text{Total Market Sales}} \times 100 \]

Company	Sales (£m)	Total Market (£m)	Market Share (%)
Alpha Ltd	45	200	22.5
Beta plc	60	200	30.0
Gamma Co	95	200	47.5

Understanding Market Growth

Formula

\[ \text{Market Growth (\%)} = \frac{\text{Current Period Size} - \text{Previous Period Size}}{\text{Previous Period Size}} \times 100 \]

Implications of Changes in Market Share

1. Increasing Share
   • Economies of scale → lower unit costs.
   • Stronger brand reputation, greater bargaining power.
   • Ability to command premium pricing or introduce new lines.
2. Decreasing Share
   • Loss of scale → higher unit costs.
   • Brand erosion, possible price wars.
   • Reduced investor confidence.
3. Stable Share in a Growing Market
   • Revenue and profit can still rise because the pie is expanding.
   • Surplus cash can fund product development or market penetration.
4. Stable Share in a Declining Market
   • Revenue likely to fall; cost control becomes vital.
   • Strategic options: diversification, niche focus, exit.

Implications of Changes in Market Growth

1. High Growth
   • Attracts new entrants → intensified competition.
   • Favourable for firms with strong innovation & scalable production.
   • Potential for higher margins if share can be captured.
2. Low / Negative Growth
   • Competition over a shrinking customer base.
   • Cost‑leadership and efficiency become survival strategies.
   • Firms look for new markets, product diversification, or alliances.

Strategic Response Matrix (Market Growth vs. Share Change)

Market Situation	Typical Strategic Focus
High Growth + Increasing Share	Invest in capacity, aggressive promotion, product‑line extensions, penetration pricing.
High Growth + Declining Share	Re‑evaluate positioning, improve differentiation, consider acquisitions or partnerships.
Low Growth + Stable Share	Cost control, incremental product improvements, segmentation, loyalty programmes.
Low Growth + Decreasing Share	Restructuring, diversification, niche focus, possible market exit.

Linking Market Analysis to the Marketing‑Mix (4 Ps)

• Product: Share trends indicate need for new features, quality upgrades or line extensions.
• Price: High‑growth markets may allow premium pricing; low‑growth markets often require value‑pricing or discounts.
• Place: Geographic scope determines channel length, logistics and localisation.
• Promotion: Segmentation & CRM data guide media choice, messaging and promotional tactics.

3.2 Market Research (AS 3.2)

Primary vs. Secondary Research

• Primary: Data collected first‑hand (surveys, interviews, observation, experiments). Provides up‑to‑date, specific information but can be costly.
• Secondary: Existing data (published reports, government statistics, company records). Faster and cheaper but may be outdated or not perfectly relevant.

Sampling Techniques

Technique	When to Use	Advantages / Disadvantages
Random sampling	When the population is homogeneous.	Unbiased results; can be time‑consuming.
Stratified sampling	When distinct sub‑groups exist.	Ensures representation; more complex.
Convenience sampling	Exploratory research, limited budget.	Easy & cheap; high risk of bias.

Data Reliability & Validity

• Reliability: Consistency of results when the research is repeated.
• Validity: Extent to which the research measures what it intends to measure.
• Techniques to improve both: pilot testing, clear questionnaire design, triangulation of sources.

Quantitative vs. Qualitative Analysis

• Quantitative: Numerical data, statistical analysis, useful for measuring market size, share, price elasticity.
• Qualitative: Opinions, motivations, focus groups, depth interviews – valuable for product development and branding insights.

3.3 The Marketing‑Mix (AS 3.3)

Product

• Features, quality, branding, packaging, warranty, life‑cycle management.
• Tools: Product‑life‑cycle (PLC) diagram, Boston (Growth‑Share) Matrix.

Price

• Pricing objectives (profit‑oriented, sales‑oriented, status‑oriented).
• Methods: cost‑plus, target‑return, penetration, skimming, psychological pricing.
• Concept of price elasticity of demand – e = %ΔQ / %ΔP. Elastic (>1) → price changes cause large quantity changes.

Place (Distribution)

• Channel design – direct vs. indirect, intensive vs. selective vs. exclusive.
• Logistics: warehousing, inventory management, transportation.
• Location decisions – market proximity, cost, infrastructure.

Promotion

• Advertising, sales promotion, public relations, personal selling, direct/online marketing.
• Integrated Marketing Communications (IMC) – ensuring a consistent message across all media.
• Digital impact – SEO, social media, influencer marketing, data‑driven targeting.

4. Operations Management (AS 4.1‑4.3)

4.1 The Transformational Process

• Inputs (raw materials, labour, capital) → Transformation (manufacturing, service delivery) → Outputs (goods/services).
• Key performance indicators: productivity, utilisation, throughput time.

4.2 Efficiency & Productivity

• Productivity: Output ÷ Input (e.g., units per labour‑hour).
• Economies of Scale: Cost per unit falls as output rises (up‑to a point).
• Diseconomies of Scale: Costs rise when a firm becomes too large.

4.3 Operations Techniques

• Inventory Management – EOQ (Economic Order Quantity) formula, safety stock.
• Just‑In‑Time (JIT) – reduces inventory, relies on reliable suppliers.
• Outsourcing – focusing on core activities, reducing fixed costs.
• Capacity Planning – match capacity to demand forecasts.

5. Finance & Accounting (AS 5.1‑5.5)

5.1 Need for Finance

• Start‑up costs, working‑capital, expansion, research & development.
• Sources: internal (retained earnings), external – debt (bank loans, bonds) and equity (share issue).

5.2 Costing

Cost Type	Definition	Use
Fixed Costs	Do not vary with output (rent, salaries).	Break‑even analysis.
Variable Costs	Vary directly with output (materials, hourly wages).	Contribution margin calculations.
Full (Absorption) Costing	All production costs allocated to units.	External reporting.
Contribution (Variable) Costing	Only variable costs allocated; fixed costs treated as period costs.	Decision‑making, CVP analysis.

5.3 Break‑Even Analysis

Formula

\[ \text{Break‑Even Volume} = \frac{\text{Fixed Costs}}{\text{Price per unit} - \text{Variable Cost per unit}} \]

Graphical representation shows the point where total revenue = total cost.

5.4 Budgeting & Variance Analysis

• Operating budget – sales, production, overheads.
• Cash‑flow forecast – inflows vs. outflows over a period.
• Variance = Actual – Budgeted. Analyse favourable/unfavourable variances to control costs.

5.5 Financial Statements (A‑Level 10.1)

• Income Statement – shows profit or loss.
• Balance Sheet – snapshot of assets, liabilities, equity.
• Cash‑flow Statement – operating, investing, financing activities.

6. Business Strategy (A‑Level 6.2)

6.1 SWOT Analysis

Internal	External
Strengths – resources, brand, technology	Opportunities – market gaps, regulatory changes
Weaknesses – high costs, limited distribution	Threats – new entrants, substitutes, economic downturn

6.2 Porter’s Five Forces

1. Threat of new entrants
2. Bargaining power of suppliers
3. Bargaining power of buyers
4. Threat of substitutes
5. Rivalry among existing competitors

6.3 Ansoff Matrix

Market	Product
Existing	Existing – Market Penetration
Existing	New – Product Development
New	Existing – Market Development
New	New – Diversification

6.4 Blue‑Ocean Strategy

• Create uncontested market space (value innovation) rather than competing in saturated markets.
• Tools: Strategy Canvas, Four‑Action Framework (Eliminate‑Reduce‑Raise‑Create).

6.5 Scenario Planning & Crisis Management

• Develop best‑case, worst‑case, and most‑likely scenarios.
• Contingency plans – cash reserves, flexible supply chains, communication protocols.

7. Advanced Human Resource Management (A‑Level 7.1‑7.4)

7.1 Organisational Structures

Structure	Key Features	Advantages	Disadvantages
Functional	Departments by function (marketing, finance).	Specialisation, clear career paths.	Silos, slower decision‑making.
Divisional	Separate profit centres (product, region).	Flexibility, focus on markets.	Duplication of resources.
Matrix	Dual reporting – functional & project.	Efficient resource use, collaboration.	Complex authority, potential conflict.

7.2 Delegation & Communication

• Delegation – assigning authority & responsibility; requires clear objectives and monitoring.
• Communication channels – formal (reports, meetings) vs. informal (social networks). Effective communication reduces errors and improves morale.

7.3 Leadership Theories

• Trait Theory – inherent qualities (confidence, integrity).
• Behavioural – task‑oriented vs. people‑oriented.
• Contingency – effectiveness depends on situation (Fiedler’s LPC, Hersey‑Blanchard situational leadership).
• Transformational – inspires vision, encourages innovation.

7.4 HRM Strategy

• Hard HRM: People as resources, focus on performance metrics, workforce planning.
• Soft HRM: People as assets, emphasis on commitment, development, culture.
• Management by Objectives (MBO) – set clear, measurable goals jointly with employees.
• Impact of AI & IT – recruitment algorithms, HR analytics, remote working platforms.

8. Advanced Marketing (A‑Level 8.1‑8.2)

8.1 Price Elasticity of Demand

\[ E_d = \frac{\%\Delta Q_d}{\%\Delta P} \]

• Elastic (>1) – price cuts boost revenue.
• Inelastic (<1) – price rises increase revenue.
• Unit‑elastic (=1) – total revenue unchanged.

8.2 Product Development & Lifecycle Management

• Stages: Introduction, Growth, Maturity, Decline.
• Strategic actions per stage – e.g., heavy promotion in Introduction, price optimisation in Maturity.
• Use of Boston Matrix to allocate resources (Stars, Cash Cows, Question Marks, Dogs).

8.3 Sales Forecasting

• Quantitative methods – time‑series analysis, moving averages, regression.
• Qualitative methods – Delphi technique, market expert opinion.
• Forecast accuracy measured by Mean Absolute Percentage Error (MAPE).

8.4 The Marketing Plan (Full 4 Ps + Implementation)

1. Executive summary.
2. Situational analysis – market research, PESTEL, SWOT.
3. Marketing objectives – SMART (Specific, Measurable, Achievable, Relevant, Time‑bound).
4. Target market & positioning.
5. Marketing‑mix decisions (product, price, place, promotion).
6. Budget & control – set KPI’s, monitoring schedule.

8.5 International Marketing Entry Strategies

• Exporting, licensing, franchising, joint venture, wholly owned subsidiary.
• Factors influencing choice – control, risk, resource commitment, market knowledge.

8.6 Digital & AI Impact

• Data‑driven personalisation – recommendation engines, chatbots.
• Social media analytics for real‑time market insight.
• Programmatic advertising – automated buying based on audience data.

9. Advanced Operations Management (A‑Level 9.1‑9.3)

9.1 Location Decisions

• Factors – market proximity, labour availability, transport costs, government incentives.
• Techniques – factor‑rating method, break‑even analysis for multiple sites.

9.2 Quality Management

• Total Quality Management (TQM) – continuous improvement, customer focus.
• Benchmarking – comparing processes against best‑in‑class.
• Six Sigma – DMAIC (Define, Measure, Analyse, Improve, Control) to reduce defects.

9.3 Technology & Process Improvement

• Enterprise Resource Planning (ERP) – integrates finance, HR, production.
• Lean Production – eliminate waste (Muda), use of Kaizen, 5S.
• Computer‑Integrated Manufacturing (CIM) – automation, real‑time monitoring.

10. Advanced Finance & Accounting (A‑Level 10.1‑10.4)

10.1 Financial Statements – Interpretation

• Ratio analysis – profitability (ROE, gross margin), liquidity (current ratio), efficiency (inventory turnover), solvency (debt‑to‑equity).
• Trend analysis – compare figures over several periods.

10.2 Investment Appraisal

Method	Key Feature	Decision Rule
Pay‑back Period	Time to recover initial outlay.	Choose if pay‑back ≤ required period.
Average Rate of Return (ARR)	Average accounting profit / initial investment.	ARR ≥ required rate of return.
Net Present Value (NPV)	Present value of cash inflows – outflows.	Accept if NPV > 0.
Internal Rate of Return (IRR)	Discount rate that makes NPV = 0.	Accept if IRR > required rate.

10.3 Budgetary Control & Variance

• Flexible budgeting – adjusts for actual activity level.
• Variance analysis – price variance, efficiency variance, volume variance.
• Management response – investigate causes, corrective actions.

10.4 Strategic Use of Accounting Data

• Cost‑volume‑profit (CVP) analysis for pricing decisions.
• Activity‑based costing (ABC) to allocate overheads more accurately.
• Balanced Scorecard – financial, customer, internal process, learning & growth perspectives.

11. Summary Diagram (Suggested Visual)

12. Quick Revision Checklist

1. Define market share and market growth; know the formulas.
2. Identify how changes in each affect pricing, product, promotion and place.
3. Recall the 4 Ps and how they adapt to high‑growth vs low‑growth markets.
4. Master SWOT, Porter’s Five Forces, Ansoff Matrix and the Boston Matrix.
5. Be able to calculate break‑even, contribution margin and price elasticity.
6. Understand the main HRM theories, organisational structures and motivation models.
7. Know the key operations concepts – JIT, EOQ, quality tools.
8. Remember the major sources of finance and the basics of ratio analysis and investment appraisal.