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Sound and Vision plc. Case Study

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Introduction

A2 past paper Sound and Vision Question 1 Decentralisation is where the authority for decision-making is delegated to subordinates in the organisational structure. There are different reasons why Sound and Vision plc. has a decentralised structure at the moment. One reason might be that it enables quicker decisions within the company by having separate profit centres. As a consequence the business can be more efficient which could lead to an increase in profitability. Furthermore they can respond quicker to customer needs and trends which might give them a competitive advantage. Another reason might be that a decentralised structure allows each manager of Sound and Vision to stock items according to the tastes of their local market, and bonuses are awarded based upon the profitability of their store. Therefore the decentralised structure can be seen as a motivation factor as well. The managers are therefore enriched and may see the store as their own business. As a result each store may be more efficient which could lead again to increased profitability. Question 2 Year Cash inflow Cash outflow Cash flow Interest rate NPV 0 (100) (100) 0 (100) 1 50 10 40 0,91 36,4 2 70 30 40 0,83 33,2 3 120 40 80 0,75 60,0 29,6 Payback: 3years / NPV: £29,6>£25 The Investment appraisal ...read more.

Middle

In general, doing a good market research results in a competitive advantage. However, it can be argued that they don?t need to invest a lot in advertising. The reason for this is that Sound and Vision plc. is already a big established business. Therefore customers will visit the stores on a regular basis and will quickly become aware of the change of the product range. This argument however ignores that they want to focus on a new age group. Furthermore they need to do a lot of advertisement for their new sales channel, the internet, in order to raise people?s awareness and to compete with established online retailers and supermarkets. Question 4 There are arguments for and against Amina?s proposed strategy. First of all, something needs to be done as in recent years, Sound and Vision plc?s profitability has fallen. Therefore Amina wants to enter the market of technology products which has a high market growth and could lead to high sales. Furthermore the idea of ?gaming zones? which gives customers the opportunity to play computer games, watch DVD?s and listen to music on MP3 players sounds very good as it might attract the new age group of 15 to 24 year olds. ...read more.

Conclusion

In addition, Amina wants to change the organisational structure by cutting the span of control into half which is a relatively narrow. The managers can tightly control their subordinates which improves the effectiveness. However, this comes at the expense of two additional levels of hierarchy. This makes it a very hierarchical organisation which generally is very inefficient as the communication flows up and down the hierarchy will suffer. Another argument could be that it is problematic to recruit younger staff. The idea of it is to emphasise the focus on the 15 to 24 year old target group. However, the employees need to be highly trained as they need to know as much as possible about the technological products the stores now offer. Right now Sound and Vision has a reputation of having knowledgeable staff. However, this can change through new inexperienced staff in a negative way. The success of the whole project will depend upon the advertisement strategy in order to attract customers. Another important factor will be whether Sound and Vision plc. picked the right partner with an attractive product and the right advise. In addition, it depends upon the market research. It needs to be good as they need to understand customer needs and behaviour in order to have a competitive advantage. ...read more.

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