Social class systems have important implications for

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different levels of social prestige. Social class systems have important implications for marketing. Different lifestyles correlate with different levels of social prestige, and certain products often become symbols of a type of lifestyle. (1)
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12 MNE3701/201 7 Reference groups Reference groups are those smaller groups that an individual allows to influence his or her behaviour. Individuals tend to accept group influence because of the benefits they perceive as resulting from it. These perceived benefits give the influencers various kinds of power, e.g. reward, coercive, referent, expert and legitimate power. (1) 8 Opinion leaders An opinion leader is a group member who plays a key communication role. Opinion leaders are knowledgeable, visible and exposed to the mass media. For example, department stores may use attractive students as models when showing campus fashions. (1) Question 2 2.1 Types of outside management assistance (7) Refer to pages 491 to 493 of Moore et al. 1 Business incubator A business incubator is an organisation that offers both space and managerial and clerical services to new businesses. (1) 2 Student counselling teams These teams consist of top-class and graduate students, under the direction of a faculty member. They work with owners of small firms in analysing and devising solutions to their business problems. The programme provides the students with a practical view of business management and supplies small firms with answers to their problems. (2) 3 Retired executives (SCORE) Small business owners can obtain free management advice from a group called Service Corps of Retired Executives (SCORE). SCORE is an organisation of retired business executives who serve as consultants to small business managers. (1)
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13 MNE3701/201 4 Small business development centres (SBDCs) Small business development centres provide direct consultation, continuing education, research assistance and export services. These centres also provide support to minority-owned firms. (1) 5 Management consultants Management consultants serve small businesses as well as large corporations. Obtaining the services of management consultants helps the entrepreneur to eliminate wasteful practices, reduce scrap and increase customer satisfaction. (1) 6 Entrepreneurial networks Entrepreneurs can gain management assistance from peers through networking (the process of developing and engaging in mutually beneficial relationships). (1) 2.2 Ratio analysis (3) Refer to page 605 of Moore et al. Current ratio : The measure of a firm’s relative liquidity, that is, its ability to meet its short-term obligations/payments. (½) If the ratio is positive, this means that the firm can meet its short-term obligations. Alternatively, the firm may be too liquid (i.e. resources “lying around” and not productively invested). (½) Debt–equity ratio : The measure of the fraction of a firm’s assets that are financed by debt. (½). The lower the debt amount, the lower the loan repayments and interest expenses. This has a positive effect on the firm’s cash flow and profitability. (½) Inventory turnover
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