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AS / Level – Business (9609) – [Essays] – PAPER 1 AATIK TASNEEM | AS / LEVEL: BUSINESS (9609) | 03041122845 1 SECTION 4 / [7 Essays] (O/N 2022, V2), Q7 (b) ‘Intellectual capital of an information technology business is its most important asset’. Evaluate this view. [12] Intellectual capital is defined as the amount by which the market value of a company exceeds its tangible assets. This is due to the collective knowledge and skills of a company. It includes Human Capital (well trained and knowledgeable employees), Structural Capital (databases and information systems) and Relational Capital (good links with supplier and customers). Intellectual capital is an important asset and plays a crucial role in the success of an IT business in the form of developing superior quality products and services. Through providing knowledge and know-how on how to develop software it helps to boost creativity, and innovation, which are essential for developing cutting-edge technologies and solutions. This is because for an information technology business intellectual capital includes the expertise of research and design staff, the relationships with local, national and international business which helps these companies to stay ahead of their rivals and develop superior software solutions and continuously innovate. Looking that this potential they are able to attract new clients and retain old customers which allow them to increase their sales. This results in a stable cash flow and boosts their revenue and profits. These high profits help these firms to attract investors and government funding which they use to retain their position by hiring good quality programmers which is their biggest asset but also sustain their culture of innovation which helps to retain competitive in the long-run. [EVAL] Therefore developing intellectual capital is a significant asset for an IT firm because the kind of business IT is it revolves around superior software and for that can only be built through intellectual capital. However, this depends on the resources available with the IT business. Since all activities for hiring good developers and getting building strategic partnerships requires massive investment therefore only if the IT firm is large enough to sponsor these activities will they be able to build this. Along with intellectual capital, marketing is also an important asset for an IT business. Through effective marketing an IT business differentiates its products and services in a highly competitive market and builds a brand name. As the IT sector involves rapid technological advancements and constant innovation is the norm, effective marketing strategies are essential for businesses to stand out and attract customers with these changes. These companies tend to first research the market and understand the need of their clients for example what kind of software solutions are required and then design an effective targeting marketing mix accordingly. This allows IT businesses to focus on specific set of software that customers require, set appropriate prices for their services, communicate the unique features and offer strong customer relations services. All these activities combined leads to increased customer loyalty and retention and acts as a USP for the business and helps them to stay ahead of market trends, identify new opportunities, and adapt to changing customer needs, ultimately driving growth and success in the industry. [EVAL] Therefore only building intellectual capital is not enough for an IT firm as a business more than just the product it also involves dealing with clients and promoting products where marketing plays an important role. However, this depends on the quality of market research because marketing relies of that data. Unless the IT company can ensure authentic up to date information designing and running these campaigns would be significantly difficult and won’t produce the desired results.
AS / Level – Business (9609) – [Essays] – PAPER 1 AATIK TASNEEM | AS / LEVEL: BUSINESS (9609) | 03041122845 2 FINAL EVAL (1) Overall intellectual capital is the most important asset for an IT firm because of the nature of their business. Any company that involved in selling technology needs to first ensure that the product is superior and for that intellectual capital plays the biggest part. (2) However, this depends on what type of IT business is under consideration and what is their target market. For IT firms selling really high- tech solutions like cybersecurity or ERP systems for corporate clients ensuring the quality of the system hold the highest priority due to the sensitive nature of the industry. (3) On the other hand, if an IT company deals with online computer training or online course teaching solutions that offer more B2C solution then the priority is more towards the marketing as the nature of their product is not so technical rather it is the ability to match client’s preferences and continuous advertising is more important since the product would have several competitors offering similar features and the only way to stand out would be through effective marketing. (4) Overall, for an IT company all of all its elements are important but different assets perform different functions. Where intellectual capital develops superior products and builds a competitive edge marketing helps to ensure that consumers see it that way helps to capitalize on it.
AS / Level – Business (9609) – [Essays] – PAPER 1 AATIK TASNEEM | AS / LEVEL: BUSINESS (9609) | 03041122845 3 (O/N 2023, V3), Q6 (a) Analyse two ways in which operations contributes to added value in a business. [8] Added value is the difference between the price of a finished good and the cost of the inputs in making it. Added value can be achieved in different ways building a car in an innovative way or building the brand of a business One way to add value in a business is through the efficient production process, where raw materials are transformed into finished products in a manufacturing business. This can be achieved by sourcing high-quality materials and implementing high quality machinery from reliable suppliers, ensuring that the end product meets or exceeds customer expectations. For example, in the automotive industry, a manufacturing business adds value by using good quality suppliers, advanced robotics and assembly line techniques to produce new cars. These robots can work quickly and precisely, leading to a more efficient production process and a higher-quality end product. This makes the product more attractive to the clients and the company is able to charge premium on their product because of it. This leads to increasing the profit margins through which the business can continue to sustain buying these expensive raw materials and purchase high quality machinery to ensure the same quality. [However] focusing heavily on the efficiency of the production process in a manufacturing business is the potential loss of flexibility and customization. While an efficient production process can lead to cost savings and faster output, it may limit the ability to quickly adapt to changing customer demands or market trends. For example, if a manufacturing business relies heavily on automated assembly lines to produce standardized products, it may struggle to quickly reconfigure its production process to accommodate custom orders or changes in product specifications. This lack of flexibility could result in missed opportunities to meet customer needs and compete effectively in dynamic markets. Another way to add value in a business is through effective marketing operations that promote the business's reputation for quality and establish a unique selling proposition (USP) to differentiate it from competitors. This can be achieved by developing compelling marketing campaigns that highlight the business's commitment to quality, reliability, and customer satisfaction. For example, a technology company may focus its marketing efforts on showcasing its innovative products and excellent customer service, establishing itself as a leader in the industry. By effectively communicating these qualities to consumers, the business can create a strong brand image and cultivate customer loyalty. This loyalty allows the company to charge a high price of its products without losing sales. This results in more revenue and more profits. [However] focusing too heavily on marketing operations to add value is the risk of overselling or misrepresenting the business's products or services. While effective marketing can enhance the business's reputation and attract customers, if the marketing messages create unrealistic expectations or mislead consumers about the true value of the offerings, it can lead to dissatisfaction and damage the brand's reputation in the long run. For example, if a company promotes its products as being of the highest quality but fails to deliver on this promise, customers may feel deceived and be reluctant to purchase from the company again. This can result in a loss of trust and credibility, ultimately undermining the business's ability to add value through its marketing efforts.
AS / Level – Business (9609) – [Essays] – PAPER 1 AATIK TASNEEM | AS / LEVEL: BUSINESS (9609) | 03041122845 4 (F/M 2019, V2), Q5, a (a) Analyse two benefits to a business of using capital intensive processes. [8] Capital intensive production process involves employing more quantity of capital equipment like machinery, IT systems building etc. as compared to labor input. This method is more appropriate for industries that choose batch or flow production where the goods need to be produced in bulk and there is some sort of standardization. One benefit of using a capital-intensive production process is the consistency in the quality of work, which is particularly advantageous for standardized products. Capital-intensive processes often involve the use of advanced machinery and technology, which can perform tasks with a high degree of precision and reliability. For example, in the manufacturing of smartphones, capital-intensive production processes can ensure that each device is assembled to the same high standard, with consistent performance and quality across the entire product line. This consistency not only enhances the brand's reputation for reliability and quality but also reduces the likelihood of defects or errors in the final product, leading to higher customer satisfaction and loyalty. This results in an increase in sales which leads to a higher market share specially in competitive markets resulting in more revenue leading to more profits. One benefit of using a capital-intensive production process is the ability to maintain continuous production, often 24/7, leading to high output levels. This is particularly advantageous for flow production, where a steady and uninterrupted flow of goods is required. For example, in a steel manufacturing plant that utilizes automated machinery, production can continue around the clock, ensuring a consistent supply of steel products. This results in higher output per hour compared to labor-intensive methods, which allows them to gain economies of scale like buying raw materials in bulk which leads to lower unit costs. This efficiency can help businesses remain competitive by offering products at a more competitive price point while maintaining profitability as a result more sales along with a higher profit margin than the industry rivals. This additional profit allows the company reinvest to maintain these machines and continue to expand and maintain this competitive edge over a long period of time.