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Defining Business
Needs
,1.The position of a product in its life cycle can affect the price that suppliers set. Is this
statement correct?
A. No, in market economy, the state decides the price of all goods and services
B. Yes, each stage in product life cycle requires different levels of investment in
promotion and distribution
C. No, customer's perception of value is the ultimate determinant of the suppliers'
price
D. Yes, it is always the only factor determining the price
Answer: B
Explanation:
A firm also has to look at a myriad of other factors before setting its prices. Those
factors include the offering’s costs, the demand, the customers whose needs it is
designed to meet, the external environment?such as the competition, the economy,
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and government regulations?and other aspects of the marketing mix, such as the
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nature of the offering, the current stage of its product life cycle, and its promotion and
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distribution. If a company plans to sell its products or services in international
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markets, research on the factors for each market must be analyzed before setting
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prices. Organizations must understand buyers, competitors, the economic conditions,
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and political regulations in other markets before they can compete successfully. [...]
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The costs of the product?its inputs?including the amount spent on product
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development, testing, and packaging required have to be taken into account when a
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pricing decision is made. So do the costs related to promotion and distribution. For
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example, when a new offering is launched, its promotion costs can be very high
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because people need to be made aware that it exists. Thus, the offering’s stage in
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the product life cycle can affect its price.
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Reference: - CIPS study guide page 90-91
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- 15.2 Factors That Affect Pricing Decisions C Principles of Marketing (umn.edu) LO
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2, AC 2.2
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2.A CPO is making a business case for acquiring a new computer system. He has set
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out objective, generated options, cost and benefit of each option and implementation
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plan.
Which of the following elements should be included in the business case?
A. Risk assessment
B. Operation management
C. Invitation to tender
D. Contract management
Answer: A
Explanation:
Before a project commences (either capital purchase or switching to a new supplier),
a business case should be developed. The business case outlines the why, what,
how, and who necessary to decide if it is worthwhile continuing a project.
,Basically, the following criteria can be applied to the assessment of a business case:
3. Objectives
This part describes why you are doing the project.
The business objective answers the following questions:
- What is your goal?
- What is needed to overcome the problem?
- How will the project support the business strategy?
4. Option identification and selection
Identify the potential solutions to the problem and describe them in enough detail for
the reader to understand.
For instance, if the business case and proposed solution makes use of technology,
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make sure to explain how the technology is used and define the terms used in a
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glossary. Since most problems have multiple solutions an option appraisal is often
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needed. This will explore the potential solutions and recommend the best option.
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When writing the initial business case the option appraisal is likely to contain a long
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list of options and will cover many possibilities. As the project continues a number of
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options will be rejected. The final business case may contain three to five options D
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the short list D that includes a do nothing or benchmark option.
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5. Benefits and limitations
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The benefits and limitations section describes the financial and non-financial benefits
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in turn. The purpose is to explain why you need a project.
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For instance, to:
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- Improve quality
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- Save costs through efficiencies
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- Reduce working capital
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- Generate revenue
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- Remain competitive
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- Improve customer service
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- Align to corporate strategy
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The business case should also include any limitations since these present potential
risk to the project.
6. Risk management
The risk assessment summarizes the significant project risks and opportunities and
how they are managed. The risks included should cover those that could arise from
your project or the organization’s ability to deliver change.
This section answers the following questions:
- What risks are involved?
- What are the consequences of a risk happening?
- What opportunities may emerge?
, - What plans are in place to deal with the risks?
- Every project should include a risk log.
When writing a business case, make sure this is included as it explains how risk and
opportunity are managed.
7. Implementation plan
The outline plan provides a summary of the main activities and overall timescale D
project schedule D for the project.
Ideally, the project should be divided into stages with key decisions preceding each
stage.
Use this section to answer the following questions:
- What is required?
- How is it done?
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- Who does what?
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- When will things happen?
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This outline plan lists the major deliverables and includes a brief project description
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plus accountabilities for each activity.
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In the scenario, the CPO has set out objective, generated options, cost and benefit of
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each option and implementation plan. In order to make the business case more
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compelling, he should reinforce it with risk management.
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Reference: CIPS study guide page 41-48
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LO 1, AC 1.3
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8.What is the document that defines the activities, deliverables and timelines a
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supplier must carry out during contract performance?
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A. Statement of work
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B. Project initial document
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C. Framework agreement
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D. Work instruction
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Answer: A
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Explanation:
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Statement of Work (SoW) is the document that captures and defines all aspects of
your project. You’ll note the activities, deliverables and the timetable for the project.
It’s an extremely detailed document as it will lay the groundwork for the project plan.
Project Initial Document is an important document and should precede any
specification writing project. It sets out the scope of the project and it is the team's
mandate from senior management Work instructions are also called work guides,
Standard Operating Procedures (SOPs), job aids or user manuals, depending on the
situation. In any case, the purpose of work instructions is to clearly explain how a
particular work task is performed.
Framework agreements are arrangements between one or more buyers and one or
more suppliers that provide the terms governing contracts to be established for a
