Explain the term ‘market research’.
CAMBRIDGE
A level and AS level
Year Examined
February/March 2017
Topic
Market Research
👑Complete Model Essay
What is Market Research?
Market research is the systematic gathering, recording, and analysis of data related to a specific market, including customers, competitors, and the overall market environment. It is a critical business function that provides insights for informed decision-making across various aspects, such as product development, pricing, distribution, and promotion.
The Corporate Objectives of a Bank and How They Might Change
Banks, particularly those operating as public limited companies (PLCs), often prioritize profit maximization as a primary corporate objective. This objective drives their pursuit of growth, market share expansion, and the development of new products and services. Additionally, PLCs may prioritize offering competitive salaries and bonuses to attract and retain talent, further fueling their pursuit of profitability.
However, a bank's corporate objectives are not static and can be influenced by a multitude of internal and external factors.
External Forces Driving Change
- Government Regulations: Stringent regulations, particularly in the wake of financial crises, can significantly impact a bank's objectives. For instance, new regulations might require banks to curtail risky lending practices or enhance their capital adequacy, potentially increasing costs and impacting short-term profitability.
- Increased Competition: The emergence of ethical banks, credit unions, and social enterprises can challenge traditional banking models. To remain competitive, banks might need to reconsider their emphasis solely on profit maximization and explore more ethical and sustainable banking practices.
- Government Influence: Governments, especially those with shareholdings in banks, can exert influence over corporate objectives. They might urge banks to prioritize lending to small and medium enterprises (SMEs), support specific sectors, or even withdraw from highly profitable but controversial activities. These actions may sometimes clash with a bank's profit-maximization goals.
- Economic Conditions: Shifts in the economic climate, such as a recession, can compel banks to adopt a more social role. Governments might encourage banks to ease lending restrictions and inject liquidity into the economy, even if it means temporarily accepting higher risks.
Internal Forces Driving Change
- New Leadership: A change in senior management can bring about a shift in corporate objectives. New leaders may prioritize different values, such as sustainability or social responsibility, leading to a realignment of the bank's mission and operations.
The Importance of Adaptability and Flexibility
In today's dynamic and interconnected world, banks cannot afford to be rigid in their objectives. The ability to adapt to changing internal and external pressures is crucial for survival and long-term success. Banks that fail to respond to evolving customer expectations, new market entrants, or regulatory changes risk becoming obsolete. Embracing flexibility and proactively adjusting strategies will be key for banks navigating the complexities of the modern financial landscape.
Conclusion
Market research plays a crucial role in informing the strategic decisions banks make in response to evolving circumstances. By gathering and analyzing data on market trends, customer preferences, and the competitive landscape, banks can make more informed decisions about their products, services, and overall business strategies. In conclusion, adaptability and a willingness to re-evaluate and adjust corporate objectives in light of market research findings will determine which banks thrive in the long term.
Source Note: This essay draws on general knowledge of business principles and market dynamics. Specific examples and case studies would strengthen the analysis further.
Explain the term ‘market research’.
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A-Level Business Studies Essay Guide: Corporate Objectives of a Bank
This guide will help you write a strong A-Level Business Studies essay on the changing corporate objectives of a bank. The essay should focus on how internal and external forces influence these objectives and the consequences of failing to adapt.
Understanding Corporate Objectives
Corporate objectives are the long-term goals that a company aims to achieve. They provide direction and a framework for decision-making. For a bank, these objectives might include:
- Maximizing profits: This is a core objective for most businesses, including banks.
- Growth: Banks may seek to expand their market share, customer base, or geographic reach.
- Reducing competition: Banks may strive to gain a competitive advantage through innovation, cost-cutting, or strategic alliances.
- Developing new products/services: Banks must adapt to changing customer needs and technological advancements by offering innovative financial solutions.
- Paying employees significant salaries/bonuses: Attracting and retaining talented employees is crucial for a bank's success.
- Expanding into new markets: Banks may seek to diversify their operations and reach new customer segments.
- Manipulating markets and ignoring regulations: This is unethical and unsustainable, but unfortunately, some banks engage in such activities.
Factors Influencing Corporate Objectives
The corporate objectives of a bank can change significantly due to both internal and external forces.
Internal Forces:
- New senior managers: New leadership may bring different priorities and visions for the bank's future.
- Changes in organizational structure: Mergers, acquisitions, or internal restructuring can impact objectives.
- Shifting corporate culture: A change in the bank's culture could lead to a greater emphasis on social responsibility or sustainability.
External Forces:
- Government regulations: New regulations can impose significant changes on a bank's operations and require a shift in focus. For example, stricter lending requirements or increased capital reserves might impact profitability.
- Economic changes: Recessions, booms, and other economic fluctuations can lead banks to adjust their lending policies and risk appetites.
- Increased competition: The emergence of new competitors, such as ethical banks, credit unions, or social enterprises, can force banks to re-evaluate their strategies and objectives.
- Societal pressures: Growing public concern about ethical practices and social responsibility can influence banks to prioritize sustainability or community involvement.
- Technological advancements: The rise of fintech companies and digital banking can disrupt the industry and require banks to adapt their offerings and operating models.
- Government shareholdings: If a government holds a stake in a bank, it may exert influence on the bank's objectives, potentially leading to a greater focus on social responsibility or public service.
Consequences of Failing to Adapt
Banks that fail to adapt to changing internal and external forces risk falling behind their competitors and facing negative consequences, including:
- Loss of market share: Banks that stick to outdated strategies may see customers switch to more innovative or responsive competitors.
- Reduced profitability: Inability to adapt to new regulations or market trends can lead to increased costs and decreased revenue.
- Reputational damage: Banks that fail to address ethical concerns, environmental impact, or societal expectations can suffer reputational damage.
- Increased regulatory scrutiny: Failure to comply with regulations can lead to fines, penalties, or even legal action.
- Loss of investor confidence: Banks that are perceived as unresponsive to change may experience a decline in investor confidence and lower share prices.
- Potential failure: In extreme cases, failure to adapt to a changing environment can lead to a bank's financial collapse.
Essay Structure & Tips
To write a strong essay on this topic, structure your work as follows:
**Introduction:** * Define "corporate objectives" in the context of a bank. Briefly mention the key objectives. * Introduce the main argument: Corporate objectives of banks are dynamic and influenced by internal and external forces. **Main Body:** * **Paragraph 1:** Discuss the key corporate objectives of a bank and provide examples. * **Paragraph 2:** Analyze the internal forces that can influence corporate objectives. Provide specific examples. * **Paragraph 3:** Analyze the external forces that can influence corporate objectives, providing specific examples. * **Paragraph 4:** Explain the consequences of failing to adapt to changing internal and external forces. Use examples from real-world scenarios. **Conclusion:** * Summarize the main points of the essay. * Reiterate the importance of adaptability and flexibility for banks in today's dynamic environment. * Offer a forward-looking perspective on how banks can best manage and adapt to change.General Tips for Writing the Essay
* **Use clear and concise language.** * **Support your arguments with evidence and examples from real-world banks.** * **Include relevant business theories and frameworks.** * **Use strong evaluative language, such as "However," "Therefore," and "On the other hand."** * **Proofread carefully for grammar and spelling errors.**By closely following this guide and incorporating the provided tips, you can write a well-structured and insightful essay on the changing corporate objectives of a bank for your A-Level Business Studies exam.
Extracts from Mark Schemes
Explain the term ‘market research’.
Answers could include:
- • corporate objectives of a bank (if a PLC) might well be to maximise profits; grow; reduce the competition; develop new products/services; pay employees significant salaries/bonuses; expand into new markets; manipulate markets and ignore regulations.
- • these objectives may change for a number of reasons: new government regulations may require significant change; to curtail marginal potentially unethical activities so costs may increase.
- • competition might increase from more ethical banks, credit unions; social enterprise.
- • may be urged to pay more attention to small and medium enterprises.
- • if a government has a shareholding, a bank may be required to withdraw from some highly profitable activities and pay more taxes or be subject to extra taxes.
- • new senior managers may have different views on what the corporate objectives should be.
- • the economy may change requiring a bank to play a much more social role in pumping money into an economy through a more liberal lending policy.
Strong and evaluative answers will recognise that the corporate objectives of a bank may change as a result of internal and external forces and that banks that fail to be adaptive and flexible may well fail.