The Boston Consulting Group (BCG) Matrix identifies four categories of products based on market

size and growth rate. It is a useful tool for evaluating whether a product is performing well and

whether it’s worth investing in. Organisations use this matrix to determine which products to invest

in and which ones to discontinue. (See p.130)

✅ Customer Lifetime Value (CLV) measures the total amount a customer is expected to spend over

their lifetime with a company, helping identify the most profitable customer segments.

🔗Other KPIs are not suitable for Dan’s needs:

Churn Rate: Measures customer loss over time.

Net Promoter Score: Measures customer satisfaction and loyalty.

Customer Retention Rate: Focuses on how many customers stay with the company but does not

indicate ROI.

For more insights on CLV, visit: 🔗Customer Lifetime Value - WallStreetMojo

(See LO 2.2, p.97)

An emergent strategy is one that has developed over time based on historical patterns of behaviour.

It is not planned; it has evolved based on how things have always been done. As a result, there isn't

forward planning, and it is not an effective way of creating change. Instead, the organisation must be

reactive to market changes. (See p.153)

Strategic stocking decisions change when external factors shift, such as a competitor going out of

business (leading to increased demand) or a vulnerability in raw material supply (e.g., a bad harvest).

Short lead times and low demand do not necessarily change stocking decisions but rather influence

how stock is currently managed. (See p. 159)

Operational staff would make the plan and pass this up to senior managers for approval. This is the

opposite of a top-down approach, where senior managers make the plan and tell the operational

staff what to do. (See p.187)

Demand smoothing attempts to influence customer behavior to balance demand fluctuations. Giant

Gyms wants more customers in November rather than in January, preventing seasonal peaks and

troughs.

🔗Note:

Lead Strategy = expanding capacity before demand increases

Capacity Expansion = increasing production ability

Optimal Capacity = achieving the best cost-to-production ratio

(See LO 1.3, p.55)

Overcapacity means the organisation has more production than demand, leading to waste and

inefficiency.

Customer orders will still be fulfilled (eliminating option B).

Under capacity (D) is incorrect, as overcapacity, not undercapacity, leads to excess stock.

(LO 2.2, See p.115)

While organisations generally try to fulfil customer demand, there are times when they strategically

choose not to. A common reason is maintaining a premium image—limiting supply can increase

desirability and justify a higher price. For example, luxury brands often limit product availability. (See

p.169)

Function 1: This function is a support activity responsible for ensuring other functions have the right resources to complete work. It has a complex structure with horizontal and vertical reporting lines, and each employee has clear objectives. 🔗Correct Answer: HR | Bureaucratic Explanation: Function 2: This function ensures that the Five Rights are achieved. It makes key strategic decisions that other departments follow. Power is centralised, and staff support other business areas as needed. 🔗Correct Answer: Procurement | Centralised Explanation: Function 3: Staff describe themselves as the "people that get stuff done". This is a Primary Activity in the Value Chain, responsible for turning raw materials into finished products. The function has a highly valued supply network, both upstream and downstream, with joint decision-making. 🔗Correct Answer: Operations | Symmetrical Explanation: Function 4: Although a Primary Activity, this function is not well-organised. It relies on trust-based relationships rather than formal contracts. Information is shared informally. It is responsible for warehousing and transportation. 🔗Correct Answer: Outbound Logistics | Social Explanation: Function 5: This function has a one-sided supply network. It is a Primary Activity and deals directly with customers. 🔗Correct Answer: Marketing and Sales | Asymmetrical Explanation: https://kxbjsyuhceggsyvxdkof.supabase.co/storage/v1/object/public/file-images/CIPS_L6M9/page_24_img_1.jpg