LadyA
 PEST Analysis: A business tool used to assess the impact of the external
environment on the business activities or future activities.
(Note: In the test, choose 3 points from each section, namely, the first three since
they are the strongest). Mention if it’s a threat or opportunity, and take direct quotes
from the text). Add a conclusion in the end; LadyA should use the strengths obvious
in the PEST and address the weaknesses to reduce consequences.
Political
 Increase in the Hispanic population created a negative political
reaction in the US. “However, this demographic shift was
creating a negative political reaction in the US” (lines 63-4)
- Poor enforcement of government rules regarding copyrights
caused illegal downloading of ladyA music therefore
decreasing her revenue: “copyrighted material is usually
illegal” (line 94).
 Changing legal status from sole trader to Ltd (this involves a
long legal procedure). “She changed the business to a private
limited company” (line 90)
 The Corrocio family “was granted political asylum.” (Lines 34)
 Government agencies in the US helped entrepreneurs. “He
managed to obtain a small grant from a government agency
that helped entrepreneurs.” (lines 8-9), and“Because Alejandra
was not 18 years old yet, her parents had to sign the contract
on her behalf.” (lines 29-30)
 Singers had to pay tax in the States because of government
regulations, so she hired an accountant to manage her affaires.
“Alejandra needed an accountant to help her prepare … taxes”
(lines 35-36)
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Economic
Social
 Economic downturn began in 2008, and sales declined “a
problem made worse by the economic downturn that began in
2008” (line 103).
 Lower production costs in other countries, so outsourcing of
production of cosmetics resulted. “… outsourced to an
established manufacturer in Malaysia, where costs were much
lower” (line 114-15)
 It is assumed that immigrants in the US, such as many
Hispanics, earned less income than American citizens, which
would reduce their ability to spend on LadyA products.
 Increasing standards in living in South America makes it a
popular destination for singers to tour.
 In general, the South American market is expected to witness
high economic growth and increases in average income, which
will enhance their ability to buy her products and music.
 Option 2: Expansion to global market, where a range of
products are made “develop more products under the ladyA
brand and develop a global market” (147)
 Demographic changes: “the percentage of the American
population that was Hispanic was small, but it was rapidly
growing.” (line 62-3). Creates an opportunity for LadyA.
 Demographic changes (increase in Hispanic population) created
discontent by the US population.
 “The definition of a successful musician was also changing” in
the society, (line 102) so if she wants to maintain her market
share she must follow these trends.
 Hispanics are the early adopters of emerging technologies.
 Local charities help immigrants: “to help all adult immigrants
learn English.” (lines 11-2)
 Ruth wants Alejandra to be “less ethnic” (line 61) because
 Many female musicians, film stars and models “struggle to
remain popular in their forties” because the target market,
which is girls and younger women” prefer younger musicians
and stars.” (line 133-5)
 “Some English speakers did not like the name “Lady
Alejandra” (line 65)
 Solution: Option 1: “Move into the South American market,
which generally accept older female musicians and film stars”
like LadyA (line 139-40).
 Option 3: Consumers generally prefer firms that have CSR,
towards which LadyA is moving with this option. “She would
associate herself with a charitable cause... organizations” (line
154-58)
 The tastes of the target market, consisting of teenage girls and
young women, changes rapidly, meaning that the product life
cycle of musicians is short.
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Technological
 Online communication gained popularity; “She also began
communicating with her fans through various social
networking websites.” (line 108-9)
 The dominance of MP3 players, Smartphone’s, iPods, etc.
caused sales to decline due to receding royalties gained, and the
sale of CDs: “sales began to fall… with the emergence of other
technologies such as…” (lines 95-7)
 X “Technology was changing the music industry“ (line 93)
(sharing software online became possible)
 Revenues decreased because of video hosting websites;
musicians had to produce their own videos though “these
productions were expensive, but did not generate any direct
revenue” line 100-1)
 Option 2: using e-commerce to distribute the goods and gain
global audience; “other distribution channels… opportunities”
(150-52)
 Opportunity
 Threat
Direct quotations
The conclusion can be in the form of: LadyA should address the threats and
utilize the opportunities.
SWOT Analysis
This is a business tool used to assess the current position of the business by taking
internal factors, strength and weaknesses, and external factors, opportunities and
threats, into consideration, which also helps in decision making.
Strengths
Weaknesses
o Strong brand identity and a well
known brand that made her
popular for English speakers and
many Hispanics.
o Diverse streams of revenue such
as concerts, CDs, films and the
new product line (perfumes and
cosmetics).
o Reorganization of the business
and employing assistants to assist
in managing the business in
addition to improving her
o Being in her late 30s has put her
in the maturity stage approaching
the decline stage in the product
life cycle.
o Inconsistent style of leadership
cause employees not to no what to
expect from her, thus
demotivating them, leading to
lower efficiency. This caused
employee complaints to increase,
and they started to mock her.
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o
o
o
o
o
o
o
o 60% of outsourcing costs must be
paid in advance, hence, the cash
flow is affected negatively.
o She employed too many
employees towards the end, which
can be very costly.
o There is a pressure on profitability
due to social networks such as
producing her own videos on
video hosting websites, which
were expensive in terms of time
and money and didn’t generate
direct revenue.
leadership style especially when
she became mature, consistent,
and business orientated (she
became paternalistic style) has
decreased employee complaints.
Being on covers of popular and
high profile magazines, which has
strengthened her image in
addition to using above and below
the line promotion enhanced her
image and increased her revenue.
Her product line is available in a
nationwide chain in department
stores in the US.
Outsourcing of new product line
to benefit from reduced costs of
production.
The use of social networking and
websites brought her closer to her
fans.
LadyA still has full control over
the business though she
transferred to LTD to obtain
limited liability and security;
however she still owns 98% of the
shares.
LadyA got wealthy through time
so she will have internal sources
of finance such as her own
savings or retained profit to
expand which can be utilized for
expansion in the future.
LadyA is beautiful, has a Hispanic
origin, speaks two languages, and
has a powerful voice, which are
basic attributes to a successful
star.
o LadyA lacks penetration into
international markets.
Opportunities
Threats
o LadyA could expand her product
line such as clothing and
cosmetics and to go to
international markets with ecommerce to increase revenue
o The US community generally
doesn’t accept female singers
approaching their 40’s, hence
LadyA could lose her main source
of revenue
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o
o
o
o
o
o Demographic changes (increase in
the Hispanic population) created a
negative political reaction in the
US.
o File sharing and other
technological advancements will
severely reduce CD sales.
o Economic downfall (global
recession) that started in 2008 has
decreased the income of the
population, which might affect the
demand on concerts and other
LadyA products.
o It is assumed that immigrants in
the US such as the Hispanics
earned less income than American
citizens, which would reduce their
ability to spend on LadyA’s
products.
o Any fluctuations in the exchange
rate might put a threat on the cost
advantage of outsourcing in
Malaysia.
o Competition by younger
musicians and stars.
o Possible quality issues in the
outsourced factories in Malaysia.
stream.
Move to South American markets
which accept older female singers
where 439 million people reside
in.
LadyA could further explore the
opportunity of advancement in
technology such as the social
networking to promote her brand
and products as a low cost
alternative.
LadyA can use the same
distribution channels for
distributing the new product line.
Demographic changes in the US
showed that the Hispanic
population is rapidly growing
which is her ideal target market
especially USA’s ethnic groups.
Society respects people who are
associated with CSR objectives
hence LadyA will utilize this
opportunity by rebranding herself,
such as establishing NGOs for
charitable causes.
1. Define sole trader:
A sole trader is an unincorporated business (the business entity has no separate existence
from the owner) organization where one person owns and runs a private business and s/he
enjoys unlimited liability (he bears the financial risk of the business on his own, so if the
business went bankrupt, he can lose from his personal assets). In reference to the case,
Mr Carroccio started his shoe repair shop as a sole owner.
2. Identify two features\ characteristics for mr Carroccio to run as a sole
trader:
Mr. Carroccio will have unlimited liability which means that he bears the financial
risk of the business on his own, so if the business went bankrupt, he can lose from his
personal assets. Another feature is that the business will be owned by only one
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person, who might have one or two employees to assist him. Sole trader is also a type
of business that legally has no separate existence from its owner (unincorporated).
3. Explain two advantages and disadvantages for Mr Caroccio to run as a sole
owner:
Advantages:
a) Mr Caroccio will be his own boss in addition to having all the profits for
himself.
b) Mr Caroccio will have closer relationships with customers, plus it is easy to
set up due to minimal legal requirements.
Disadvantages:
A. Unlimited liability; Mr Caroccio will have to pay all the debts even from his
personal belongings if his business went bankrupt.
B. Mr Carrocio will have limited capital for starting up and expanding in the
future, it is also difficult to take bank loans. Chances of EOS are minimal as
the owner is working on a small scale, rather than in bulk.
4. What problems might Mr.Carroccio face when he started up as a sole
trader?
A. Finance: financing a new business like Mr.Carroccio is a problem. Because it
is new, banks will be hesitant to give him loans, especially as seen in the text,
lines 7-8; “as his cash flow forecasts were weak, he got turned down several
times for bank loans.” In addition, Mr.Carroccio had limited savings.
B. Poor cash flow was evident in his forecasted cash flow presented to the bank;
this can damage the business if it continues especially in the first year of
starting up, so Mr.Carroccio needs to implement policies to solve that, such as
encouraging customers to pay in cash and delaying payments for suppliers.
C. In Mr.Carroccio’s case, a difficulty arise because of language barriers they
have to deal with many people who do not speak Spanish, thus it is difficult
for Mr.Carroccio to communicate with those people. This problem is resolved
if he takes English courses like his wife (though he opened his shop in a
Hispanic market, yet he may still have locals who speak English)
D. Location might be a problem; everybody would like to start with a good
location but this might be costly especially since Mr.Carroccio does not have
a large capital, and good locations requires large sums of capital. However,
Mr.Carroccio started, as seen in line 7; in a “Spanish-speaking neighborhood
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in Miami”, because it might reduce the language barrier and Hispanic
immigrants would support him.
E. Developing customer base and brand loyalty; Mr.Carroccio will face a
difficulty in attracting customers as a new business and an immigrant (and the
US reaction to this demographic shift was negative – line 63 in the case
study); this can be resolved by opening around a Hispanic community. In
addition, he needs to offer good quality services, and after sales services to
make the customers loyal.
5. Why might a government give grants to small business like Mr.Carroccio’s?
A grant is a form of a gift (an amount of money) given to businesses like
Mr.Carroccio’s, which does not have to be repaid, and imposes no interest or tax
implications on Mr Carroccio. From the case, lines 8-9, governments like to help
entrepreneurs in starting up businesses. This also reduces unemployment in the
country and reduces the burden on the government to pay them benefits, especially if
the new business starts up in depressed areas (less fortunate areas with high
unemployment rates). However, the grant amount might not be enough (limited).
6. Analyze the effectiveness of grants as a source of finance for Mr Carroccio.
Firstly, grants do not form a burden on Mr Carroccio since they do not have to be
repaid. Additionally, governments sometimes help evaluating the business idea,
and receiving such a grant might give Mr Carroccio’s business more credibility as
the government trusted him.
However, there is likely to be high competition for government grants; there
would be many applicants. In addition the amount of the grant might be limited.
Also, the government will require research and planning for the business idea
which might be difficult for Mr Carroccio to do since he is entirely new to the
market.
To conclude, a grant was the only source of finance available to Mr Carroccio
since he cannot receive bank loans and does not have savings. “He got turned
down several times for bank loans.”
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7. What would Mr Carroccio be required to submit when applying for a bank
loan?
A. Cash flow forecast for the first six months: to know the situation of the cash
inflows and cash outflows. (see how business is doing in the first six months in
terms of liquidity)
B. For new business a comprehensive business plan would be required.
In general, any business will also be asked to submit: financial statements
such as balance sheet and profit and loss account (for an existing business) this is
to ensure that the business can repay the loan and see if it has collateral (for a
secured bank loan). Previous bank loan history for an existing business: this is to
see if the business used to pay back the loans or not.
8. Define college fund\special savings account:
It is when individuals like Mr.Carroccio put a certain amount of money regularly in
the bank in return for a certain interest rate, which will be accumulated to be used by
their children to attend university.
9. Define contract:
A legal document usually signed by two parties involved in a business activity in
order to protect the rights of both of them. Usually the contract is a reference in case a
dispute arises between the two parties. Alejandra has to strike up this contract to
protect her right with CD album producers. Parties who sign this contract have to be
above 18 (her parents had to sign the contract for her).
10. What was the target market of Lady Alejandra?
Alejandra and her agent identified the key sub groups in the market and aimed to
generate profit by meeting specific needs of these customers. In Alejandra’s case, her
target group is the Spanish-speaking market in the US.
The advantages of locating Alejandra’s target market are: there will be better
knowledge of the customer’s requirements, making it easier to satisfy them. Also,
Alejandra knows the Spanish-speaking market and their requirements, so she can
better target them.
In general, locating the target market is expensive because the business has to conduct
market research (primary and secondary).The accuracy of the results depends on
accuracy of data collected.
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11. Define copyright:
It is an important intellectual property right for the original inventor of a certain idea or
business. It creates a legal monopoly that protects published or unpublished original work
from unauthorized duplication, usually given for CDs, DVDs, books, etc (it is the same as
patent-but these are given to products, medicines…)In the case of Alejandra, it protects
her from others copying her CDs.
12. Why would businesses owners like Alejandra need to produce final
accounts?
Final accounts need to be produced by every business. They are financial statements that
inform stakeholders about the financial profile and performance of the business. The two
main financial statements are profit and loss accounts, which show how that profit or loss
was distributed at the end of a financial period. While the balance sheet shows what the
business owns (assets) and what it owes (liabilities) and how it has funded (capital
employed) its net assets.
Alejandra mainly needed to employ an accountant who would be able to produce such
statements as s\he is specialized in that, so that she will be able to be more aware about
the performance of her business, the taxes she needs to pay to the government, and how
to manage the money more effectively; for example in terms of liquidity, weighing up
between being effective and being safe on liquidity aspects.
In general, final accounts (published accounts) are used by several stakeholders:
A. The government: in order to know the profitability of the firm in order to pay
tax.
B. Banks: if ladyA needed a bank loan, the bank will need to see the balance sheet in
order to check if there are assets to use as collateral, or cash flow forecast in order
to see the ability of ladyA to repay the loan.
C. Potential investors: to see the profitability of the business to know whether or
not to buy their shares.
D. Shareholders: to see how much they’ll be getting in dividends.
E. Workers: to predict their future wages and possible raise. In addition to the
security of their jobs.
However, these accounts can be misleading sometimes due to:
A. Window-dressing: where firms try to make their accounts beautiful in the eyes of
the tax department so as to pay the least tax possible.
B. Sometimes the data or ratios constructed might be outdated or based on old
figures.
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C. In accuracy of the data itself. In addition to different firms use different formats
for these accounts.
D. Time lag: where the external environment can affect all the figures; hence the data
liability will be lost.
13. Using Maslow’s hierarchy of needs or other motivational theories, examine
the differences between Lady Alejandra and her parents’ ambitions.
Lines 37-8 indicate that Alejandra’s parents when they first entered the US were striving
to satisfy their basic needs such as food and shelter, so that they are barely in the first
level of Maslow’s hierarchy, which are physiological needs. They have moved to the
second level of the hierarchy, safety, family stability and employment, when they started
working for long hours, and once they started saving money for their daughter’s
education. Also, when Mrs. Corrocio got a job and health insurance and her husband
opened a shoe repair shop “with a profit from his job and Mrs. Corrocio’s wage, the
family eventually maintained an economically stable household” this goes under family
stability and employment. Level three was kind of reached when Alejandra’s parents
gave a priority to teaching Alejandra paid for extra dance lessons after school. This
shows that for them family comes first and how well connected they are. These three
levels can be related to achieving the hygiene factors in Herzberg theories, which- if not
in existence- will cause dissatisfaction, such as salary, working conditions, security, and
personal life. However, the motivators are not so evident in the Carrocio family, they are
more evident in LadyA herself.
As for Alejandra, the first level was achieved by her parents when she was a child. As for
level 2, she started earning income when she was 12 which put her kind of employment,
in addition, when Lady A married Rafaelo she wanted to start a family.
As for level 3, she achieved that when she was a child, being part of a family that cares
about her, yet when she started concentrating on her career “her parents did not want
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music to distract her from studies and wanted her to go to university, but she did not want
that and her parents were disappointed,” therefore for Alejandra, social needs did not
come first. Mainly this is because she wanted to achieve level 4, self esteem, “she
wanted to be a STAR” This is shown in lines 58 – 60 Alejandra agreed to a more
glamorous image. “Appearing on the cover of high profile fashion magazines” Line 71 
“they saw ladyA as shining success story of a Hispanic American.
As for level 5, line 72 lady A grew more popular she was earning millions of dollars as
being engaged in a creative look and image. This is achieved through above and below
the line promotion, as seen in “line 105-106”. If she chose option 3, the CSR would
enable her to achieve the self actualization level by reflecting morality in her business
(marketing tool, line 144) Also option 3 associating her with a charitable cause such as
malnutrition and homelessness or international trafficking of children and setting up non
profit organizations develops her image of a strong, mature, and compassionate woman.
However, this is debatable because some can argue this is only a marketing tool for her
rather than a genuine feeling.
As option 1, self actualization might be achieved in terms of the development of her
image and acceptance in the South American market rather than the US market where
pop-stars above 40 are rarely successful.
LadyA then achieved the hygiene factors, discussed above; in addition, she achieved
motivators, such as achievements, self esteem, advancement, recognition, and
responsibility; which were achieved through her life career.
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14. What strategies should LadyA adapt to extend her product life cycle?
The product life cycle is a theoretical model that describes the stages a product
goes through from the beginning to the end (it plots time vs. sales revenue
showing the different stages R&D intro, Growth, Maturity and decline).
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As seen in the diagram, extending the plc means avoiding the decline stage and trying to
lengthen the plc of a certain product, this can be achieved by several policies which can
be related the Ansoff Matrix such as the following:
1
https://www.google.jo/search?q=product+life+cycle+extension+diagram&rlz
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A. Price alterations: increasing the price if ladyA believes her products are
inelastic. However, if she still believes that her products are elastic she needs
to reduce the price to increase sales.
B. Conduct an aggressive promotional campaign in which she can inform and
persuade her customers to buy the product ( line 106 : she used above the line
and below the line )
C. Develop a good brand identity “Alejandra had an identity partly based upon
her youthful and innocent look, her powerful .......” also, in option 3 she is
rebranding herself as being a corporate responsible social person “she would
associate herself with a charitable cause...”
D. Produce new line of products (line 72) or modify its existence products. (Line
56 ) Also in line 110 she started offering her own product line of perfumes. If
she chose option2, clothing, accessories, shoes and handbags line would be
launched. This would allow her to extend her product life cycle. ALSO, IN
LINE 94 technology “was changing the music industry” so she started
producing her own videos and uploading them to her own websites.
E. Market development, ladyA can enter new market or target new market
segments, (south Americans ) line 61  “needed to be less ethnic” to attract
American population. Option 1 if she moved into South American
MARKETS targeting mainly Spanish speaking markets in the US.
15. Define brand identity and discuss the factors which have contributed to the
branding of Lady A.
Brand identity is: the visible elements of a brand, such as colours, logotype, name
and symbol, which together identify and distinguish the brand in a customer’s
mind.
As for the factors which have contributed to the branding of lady A, to start with,
changing her name from lady Alejandra, in order to “being less ethnic” (line 61),
this will help her to be more global and to avoid the negative political reaction in
the US due to the expansion of the Hispanic population in the US. It was changed
to lady A, they changed her identity from being “youthful and innocent look, her
powerful voice and her Hispanic heritage” to a woman with a more glamorous
image, changing her appearance and appearing on the cover of high end
magazines.
The change in her clothing style, hiring full time hair dresser, and making sure
she’s always in the media and the news by having more concerts, being on
magazine covers, and making more music videos should all contribute to
maintaining that new image. She also employed a band, and an event manager, so
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as to be ensure her uniqueness. Additionally, being able to produce her own music
videos differentiates her from other singers and emphasizes her image as a strong
woman with a powerful voice.
Producing a whole product line such as perfumes and cosmetics will, for sure,
enhance her brand identity and brand awareness. In addition, it will ensure the
spreading of the brand on a bigger scale.
16. Distinguish between revenue and costs in reference to ladyA business.
Revenue is defined as income earned from selling goods or services from
business activities, it can be calculated by the following formula: TR = Price x
Quantity. For lady A, her source of total revenue comes from concerts, CD
albums, magazine covers, and music videos. Also from her product line that
included perfumes and cosmetics (line 110).
This revenue can be increased if she follows option 2, and started a clothing
range.
Cost is defined as the money paid by the business to perform its activities- which
can be fixed costs, which are costs that don’t change with the level of output, in
ladyA’s case might be the salaries of her employees, for example her accountant.
The other type of costs is variable costs which are costs that change with the level
of output; an example in ladyA is the payment for temporary employees who will
be needed “to help set up the venue on stage”.
17. How is workforce - planning beneficial for the smooth running of LadyA’s
business?
Workforce planning is the analysis process of what an organization is going to
need in terms of size, time and quality of the workforce to achieve its objectives.
It determines the experience, knowledge and skills required. It aims to get the
right number of employees in the right time and the right place. It also covers the
requirements and training required for these employees.
As for ladyA, as her business expands, the need for having a qualified and
experienced staff around her became very important because she has no
experience in management and accounting (she didn’t attend university) so to
ensure the smooth running and management of her business and concerts, and to
make sure that she has the required people to assess the performance of her work,
she hired an accountant to produce the final accounts, and she employed people to
set up venue and stage.
To ensure the success of her work she hired a combination of core, flexible and
peripheral workers.
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As her work continued expanding into other product lines and she started
outsourcing her perfumes, she thought that she needed to reorganize the business
so “she appointed a managing director and a human resources manager to assess
in work force planning and manage the rest of the business” (Line 121)
“Technology was changing the music industry”, which implies that LadyA had to
hire people specialized in ICT.
18. Distinguish between core and peripheral employees and temporary
employees (flexible) in relation to ladyA’s business?
Core employees are highly qualified professionals and managers, they set and
implement the objectives of the firm and have the detailed knowledge of how
things get done; they are central to the survival and growth of the organization
and receive a rewarding financial package and fringe benefits, therefore they are
usually very loyal and committed. They are supported by peripheral and flexible
workers. In the case of ladyA, her main core worker was her agent, Ruth
Liberman. And later on when she assigned a director, events manager, and the
full time accountant. Some examples on core employees are a band, a group of
dancers, music and video technicians, and Gavin Pratt.
Peripheral workers or contractual fringe consist of workers who provide
services such as advertising, catering, and transport. They are not a part of the
decision making in the firm. Their value to the organization is measured in output
and results. They have to be monitored by the business since the business can be
held accountable for their practices, and are paid by fees. In the case of ladyA,
her peripheral workers are “two personal assistants, two housekeepers, one
chef, one personal trainer, one driver, and one chief body guard who supervises
six bodyguards.”
Flexible (temporary) workers these are part time or seasonal workers whose
services are only needed for a certain period of time, so it is cheaper for ladyA to
employ them upon need rather than full timers, however this means that they are
the least committed and the least loyal, because they know they know that they
would be the first to be laid off in case the business faces financial difficulties. In
addition, they might leak information from one business to another. In ladyA the
temporary workers are the workers that were needed at each venue to set things
up on stage. However, they might be working with other singers, so the secrecy
of the ladyA business is at risk.
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19. Distinguish between laissez-faire and paternalistic style of leadership.
Laissez-faire literally means to leave alone.
a) The manager prefers to have little, if any, direct involvement with employees
b) Allows workers to tackle tasks in their own way; granted them decision making
power
c) Sets organizational aims and objectives and empowers workers to decide how
best to achieve these
d) Trusts workers who are highly efficient and skilled
For ladyA this is a good style because we assume people working in the music
industry are rather passionate about their work. However if she has any workers who
lack the experience or passion, this style might not be successful.
LadyA became paternalistic because she became more mature. Paternalistic is
defined as a type of leadership style, fatherly managerial style, which is usually
employed by males, where the organization power is used to control and protect
subordinate staff and where the leader consults the employees over issues and listens
to their feedback and opinions. However, the final decision is always made by the
leader. In this case, the manager, LadyA, relies on the loyalty of her employees who
follow her instructions willingly. Yet this might weaken their ability of making
decisions.
20. Why did the style of leadership of ladyA change with time? (What factors
determines the style of leadership)
This might be due to the following factors:
a) The nature of the leader, in this case ladyA was inexperienced and was very
young and did not trust her employees, so she was rather autocratic.
However, as time passed she became more mature, and she went to Laissezfaire. However, eventually, she adopted a paternalistic style.
b) The nature of subordinates surrounding ladyA for example their experience,
knowledge, qualifications, age, motivation, and their expectations.
c) The environment: whether it was standardised or creative. She started with
Laissez-faire, but once it started to become competitive she turned to
paternalistic.
d) The decision itself: how major or strategic the decision i, for example a major
decision on changing the agent, and it will be taken mainly by herself,
although other smaller decisions can be consulted by the employees.
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21. Discuss the impact of Lady A’s leadership style on employee motivation.
Motivation is defined as giving incentive to workers to work to their best potential/
productivity.
LadyA started out with an autocratic leadership style (which is when the leader does
not consult any decision made with his employees; it is rather a form of one way
communication, where she gives them orders). She then adopted a more laissez faire
approach (literally means to leave alone. The manager gives the employees complete
freedom to do the job the way they want, the employees can set their own goals, make
their own decisions and resolve problems as they see fit), and then adopted a
paternalistic style (as a type of leadership style, fatherly managerial style, which is
usually employed by males, where the organization power is used to control and
protect subordinate staff and where the leader consults the employees over issues and
listens to their feedback and opinions. However, the final decision is always made by
the leader).
Initially, when LadyA was autocratic, communication was poor, the employees never
knew what to expect, and they were complaining behind her back, calling her “la
princesa”. This reflects that they are rather unmotivated, although working with a
superstar had its exciting moments (LINE 89)!
When LadyA pursued a laissez faire style, it was rather motivating for groups of
employees who had the passion for working with a pop star and who have creative
ideas and the know-how and the knowledge needed to do the job (set objectives) by
themselves. However, this might not be same for workers who are inexperienced. For
example, LadyA’s personal trainers and chef might be motivated by such a style
(unlike maids).
When she moved to a paternalistic style; “her leadership style matured as well. She
became more consistent and paternalistic” (lines 130-31). This type of leadership
would improve communication between employees and the decision maker; it is twoway communication – so it would be more motivating. Workers would need their
social needs are being met, which transports them to the second level of Maslow’s
hierarchy. Thus, the business woul retain a more relaxing atmosphere.
22. A) Assess the effectiveness of logistics in LadyA’s business (HL)
Logistics refers to, also known as supply chain management, logistics is the art of
managing and controlling the sequence of activities from the production of a good or
service (such as cosmetics and perfume products made in the Malaysian factory) to it
17
being delivered to the end customer (such as LadyA’s customers in USA). It therefore
involves the complexities of
stock control, warehousing, packaging and transportation. In LadyA’s case, she hired a
company “specializing in logistics” (line 79) that would transport equipment and set up
the stage at each concert.
B) With reference to LadyA, analyse the importance of leadership styles in business
organizations.
Leadership style refers to the way in which a leader, such as LadyA, influences and
inspires
others to get things done. It is important for several reasons, including:
– workers were often confused with Alejandra’s
inconsistent of being rather autocratic at times (lines 84-85) and laissez-faire at
other times (line 86)
– In order to get the best out of her employees, LadyA needs to
motivate them and earn their respect, trust and loyalty
– Without effective leadership,
organizations cannot achieve their aims, especially when faced with change and
challenges (such as the three strategic options facing LadyA)
– LadyA needs to inspire her staff to achieve organizational
goals; working for a super star is not enough on its own
– LadyA’s leadership style will ultimately
determine the organizational culture at LAM, thereby affecting its daily
operations, corporate image and productivity.
23. Assess the effectiveness of logistics in LadyA’s business (HL)
Logistics refers to the attempt to maximize the efficiency of a business’s supply
chains in order to reduce the costs and time that it takes to get the products from the
raw materials stage to the point of sale to the consumer. In LadyA’s case, she hired a
company “specializing in logistics” (line 79) that would transport equipment and set
up the stage at each concert.
24. Analyze reasons behind ineffective communication in LadyA’s business.
Communication refers to the process by which meaning is conveyed with the aim of
creating understanding. It has 4 elements; the sender, receiver, message and medium. If
anything goes wrong with any one of these elements, communication would be poor.
18
Language might be a barrier though she worked on her English; still some employees
may not understand her accent. Additionally, using jargon (the use of vocabulary specific
to a certain discipline, in this case, music) might distort communication.
Inconsistency in her leadership style made it difficult for employees to understand her
tone, her facial expressions, the way she gives instructions, etc. They never knew what to
expect.
The gap between sender and receiver; sometimes she used to give direct orders,
sometimes she did not.
(Medium not specified)
25. Analyze the decision of LadyA of moving from a sole owner to an LTD. (6
marks)
The most important argument is limited liability which means that she will only lose the
amount of money she invested in the business; her personal assets won’t be in jeopardy in
case the business went bankrupt. In the case, line 90 “she needed the protection of limited
liability”.
Another advantage could be that she can raise funds by selling shares to family or friends.
The shareholders will share the profits but at the same time they’ll share the losses.
However, her profits won’t be for her alone. In addition if any shareholder wants to sell
his shares they can’t just sell them in the stock exchange, they’ll have to sell them to
another shareholder or to someone that they all agree on.
There are more legal requirements for establishing a limited company than for a sole
trader, which is time and money consuming. Finally there is more transparency than for a
sole trader, since they have to make it available at the company’s registrar. In addition,
the original owner will not have full control over the business.
To conclude, Alejandra’s decision is rather logical because the advantages are worthy
and she will still have the control of the business since she controls 98% of the shares,
and the other 2% are for her parents and Ruth Liebermann (line 92).
26. How did technology affect LadyA’s business?
The profitability of CD albums was reduced due to illegal file sharing. Though file
sharing is illegal, people did it anyway (line 94). So LadyA had to start producing her
own videos and upload them to video sharing websites. It was expensive to produce these
videos and they didn’t generate direct revenue.
19
To conclude, though these new technologies had consequences on part of LadyA’s brand,
being a singer in the 21st century, and having many competitors who use these
technologies as well, she had to adapt, yet to address these threats.
27. Discuss the difference between above the line and below the line promotion.
Promotion in general is defined as activities used to raise consumer awareness about the
product. There are two types; above the line and below the line promotion.
Above the line promotion is direct advertising through consumer channels where the
control of the process is passed to third parties such as TV or magazines. Advertising
might be informative or persuasive, where persuasive is more aggressive where you try
and convince your customers to buy your product and the rival product, whereas
informative advertising is when you inform the customers about the products’ key
characteristics.
Alejandra started to use social networking websites (line 109) to communicate with her
fans. Most people use social networking websites, so they would help raise the brand
awareness of LadyA- additionally, her competitors most definitely use them too.
Below the line promotion refers to activities that are taken by the firm and the process is
under the control of the firm, and in this case it is under Alejandra’s business.
Below the line promotion ….
28. To what extent does social networking help in promoting LadyA?
Social networking is a dedicated website or other application such as Facebook, Twitter,
and Instagram, which enables users to communicate with each other by posting
information and comments.
LadyA started communicating with her fans through social networks, line 109, “She also
began communicating with her fans through various social networking websites.”
Advantages:
a) It is cheaper than most promotional activities.
b) It also enables as worldwide connectivity. Proof line 100: “LadyA had to
produce their own ideas and upload them to video hosting websites.”
c) Respond effectively to feedback.
d) Fast
e) It’s a form of free advertisements
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Disadvantages:
a)
b)
c)
d)
Risks of fraud or identity theft
Invasion of privacy
Face-to-face interaction with people will be limited and worsened in effect.
It is not reachable to those who don’t have access to technology.
To conclude, ladyA became more popular and well known through social networking
since she can update her profile continuously, however she needs to address all the
disadvantages and monitor any hacking that can ruin the reputation of the business.
29. Define what is meant by “Product Line” in line 110 and product mix.
It is a group of related products that are produced by the same company. The product mix
is the complete range of products produced by a business- including product lines and
individual products.
30. Discuss the difference between primary and secondary research.
Market research is the process of collecting, analyzing and interpreting data about the
market, competitors, customers, and the economy.
Primary research (or field research) is first-hand data which is collected by the business
through directly contacting or questioning and by gathering data from consumers.
Examples are surveys, interviews, focus groups, observations, and others.
Secondary research (or desk research) is when the business makes use of already existing
data or information that is available, such as gathering information from the business
itself like reports and studies from the firm, or from outside the firm, like magazines or
government publications.
LadyA used both of these two types in order to study the customer demands and to make
sure she can reach her target market. She might have used questionnaires because she
managed to identify her main target market; which is teenage girls (line 113).
She used feedback from customers from social networking website.
Advantages of primary research:
a) It provides up-to-date information
b) Directed to answer specific questions of the business
c) You can explain if they don’t understand the question
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Disadvantages of primary research:
a) Costly in terms of time and money
b) Some questionnaires might not be answered or turned back to the business or the
respondents might not take the questionnaire seriously.
c) Sometimes in primary research if interviews are used, the answers might be given
under pressure so they might biased.
Advantages and disadvantages are reversed for secondary research.
It is important for ladyA to use a combination of both so as to get accurate information
that she can rely on for her decisions.
31. Define “target market” (line 113), and explain the importance in identifying
it for a business.
The target market is the specific group of consumers at which a company aims its
products and services. The target customers are those who are most likely to buy the
business’ output.
When a business identifies its target markets, it will be able to tailor its marketing mix
according to the target market, making marketing more cost effective. Additionally, some
gaps or customer requirements may be identified that the business will be able to address.
It will also enhance the competitive advantage of the firm. However, the process of
finding the target market may be time and money consuming, and if errors occur the
business may unintentionally exclude potential customers.
LadyA identified her target market of consisting of teenage girls and young women (line
113), in order to approach them with the appropriate marketing mix.
32. Define outsourcing (subcontracting), and state the advantages and
disadvantages of it.
Outsourcing is when the firm or the business gets a subcontractor to perform part of its
production process, for example catering, accounting or advertising.
22
Advantages:
a) Usually the firm which is doing the activity is specialized in the field so the
quality will be better.
b) The firm will concentrate on its core activities.
c) Delivery time will be reduced.
d) Cost will be reduced, in line 115, “where costs were much lower.”
e) Transfer of expertise.
Disadvantages:
a) Language barrier, since LadyA outsourced to Malaysia (line114)
b) Lady a will depend on its suppliers which might be risky.
c) LadyA won’t have full control on the process or the quality of the product, in the
case line 115, “Quality control could, however, be a problem.”
In conclusion, since LadyA’s core activities do not include the production of cosmetics,
she is essentially required to outsource that activity. Nonetheless, in order to ensure
standardized quality and therefore sale, LadyA must be aware of the risks of outsourcing
–especially to another country- and should set managerial practices in place to monitor
the production process.
33. Distinguish between quality control and quality assurance.
Quality control is the practice of inspecting products to ensure that they meet the required
quality standards, usually it is the job of one person or one department, and they detect
defects (allowed to be around 2 per cent)
Quality assurance is the process used to assure consumers that a firm’s product or service
will be fit for their purpose by preventing quality issues rather than detecting them (they
don’t allow for defects). The objective is to meet quality standards at each stage of the
production to ensure customer satisfaction.
23
Item
Concept
Process
Cost
People
Quality Control
Quality is controlled by one
person (might be the
manager) or department, by
inspection after production
has been completed.
It is rare to halt production
as it is costly to do so.
Quality stops with the job;
the focus is only on the job
at hand.
A certain percentage reject
rate is set, for example 2%
are allowed to fail (wasteful
production).
Quality is the responsibility
of one person (quality
inspector).
Role culture.
Autocratic leadership.
Top-down, one-way
communication.
Quality Assurance
Quality is assured because
no one person is in full
control, rather, the whole
business is responsible for
the quality.
The company expects to
halt production to fix errors.
Associated with cellular or
modular production and
quality includes suppliers
and after-sales services.
Zero rejects are expected.
Every product is expected
to pass inspection (lean
production).
Quality is the responsibility
of the team (quality circles).
Total quality culture.
Democratic consultative
leadership.
360 degree communication.
34. Assess the advantages for a firm to implement quality assurance or total
quality management.
Total quality management contains all of quality assurance, lean production, statistical
process control, etc. If this is implemented it offers many advantages to a firm. First and
foremost, by eliminating defects from the production process, production is more
effective and therefore saves time and money; it significantly reduces long-term cost,
even though it might require a large startup capital.
35. Define batch production.
It is the production of a group (batch of identical items at the same time. The batch stays
together and moves from one stage of the production process to the next until all
processes are completed before performing the next operation.
24
35. Using BCG (Boston matrix), evaluate the product portfolio of ladyA.
BCG: It’s a business tool used to assess the product portfolio of a business by addressing
two attributes; market share and market growth.
The core activities that bring in the most revenue are concerts so they are considered the
Cash Cow for ladyA.
Perfumes and cosmetics produced by ladyA have been introduced to the market and seem
to have been successful (since she is planning on perhaps expanding the range, in option
2) so they have a chance to still grow in the market. Hence, they are considered Stars.
If LadyA implemented option 2 then introducing accessories, shoes and handbags
produced by ladyA will put them in the Question Mark where the market growths
chances are high but market share is still low for LadyA.
To conclude ladyA’s portfolio is rather diverse yet it is still under control. Being diverse
spreads the risk for ladyA, because depending on one product in such a competitive
market will put her financial situation at risk. In addition, when ladyA continues
introducing new products (question marks), it means that she keeps on investing in new
initiatives, and that any extra cash in the business is invested wisely and efficiently.
Furthermore, having more than one category in the products means that cash cows can
support stars or question marks to invest in. On the contrary, ladyA can decide which
products she needs to divest. However ladyA should make sure that the diversity of her
product portfolio does not go out of proportion so as not to go out of control and not to
lose focus on the core activities of ladyA’s business; music.
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36. Define USP:
USP: it is a unique characteristic or attribute for a good or a service which differentiates it
from its competing brands and gives its buyers a logical reason to prefer it over other
brands.
For ladyA, these characteristics or attributes are her powerful voice, youth and innocent
look, and her Hispanic heritage, language and being able to sing in two languages.
37. Evaluate the existing marketing mix for ladyA’s business.
Marketing mix (4 P’s) refers to the set of actions, or tactics, that a company uses to
promote its brand or product in a market. It consists of the product, place, promotion and
price for a good, in addition to people, process, physical evidence and packaging for
services.
Product: LadyA’s USP; being a mainstream American singer with Hispanic roots, as
emphasised by being able to sing in both Spanish and English. As for the product lines of
cosmetics and perfumes, they carry the name LadyA, thus differentiating them greatly
(with a star appeal).
Place: Her as a singer, revenue streams were opened through concerts, presumably
around the US. LadyA product lines were distributed to and sold in a US “nation-wide
chain of department stores” (line 119). In option 2 they would expand into the
international market with e-commerce.
Promotion: as LadyA, Alejandra advertised herself by use of above-the-line advertising,
such as appearing on the cover of “high profile fashion magazines” (line 60).
Additionally, as a PR technique, LadyA started producing her own videos and posting
them of video-hosting websites, which proves below-the-line advertising. Similarly, by
adopting option 3, LadyA would enhance her PR by “associating herself with a charitable
cause,” namely, improving her CSR. Furthermore, the introduction of cosmetics and
perfume product lines are a way of promoting the LadyA brand, as emphasised by option
2 in which producing more products would be used as a marketing technique.
Finally, for “price” in the marketing mix, no indication is given about what pricing
strategies are being used, or any financial information at that.
As for physical evidence, in terms of LadyA products, since they are sold in department
stores, she has little control over how they are presented to potential customers, and thus
the physical evidence associated with buying them, which goes hand-in-hand with the
process, since LadyA does not sell them directly. When considering LadyA herself, she
directly delivers concerts, which give her control over the process and physical evidence.
She lays great weight on that, since it is said that she hired an events manager and a
company specialising in logistics, which should give rise to well organized concerts.
26
When it comes to packaging, the case study gives no indication of how LadyA perfume
or cosmetics are packaged, besides evidently sporting her name.
Therefore, the case study gives more indication about LadyA as a product than her
product lines, as no pricing strategies are highlighted for instances. Thus, more
information is required in order to form a clear decision about whether her marketing mix
is effective.
38. Discuss the difference between interviews, focus groups, and surveys.
Interview, focus groups and surveys are all types of primary research.
Surveys involve questionnaires, which typically have open and closed questions.
Questionnaires are often mailed to customers (postal survey) or the consumer fills it out
at the business location. Focus groups are a method of qualitative market research that
involves the use of a small cluster of people to gather their perceptions and opinions of a
product, brand or organization.They involve groups of customers being brought together
on one or a number of occasions, where customers and consumers are asked to answer
and discuss questions related to the product or service.
Interviews involve obtaining information from one person face-to-face. The
interviewer rather than the person being interviewed records responses to questions,
which often contain more open than closed questions.
Surveys are relatively inexpensive, have no interviewer bias, and can yield
information on many people covering a wide geographic area.
Consumers, however, often will not fill out questionnaires, or they fill them out in
haste, not considering carefully their responses. If the questions are poorly worded,
the questionnaire may be misleading or produce inaccurate results.
Focus groups, while relatively inexpensive, often involve only a small number of
customers who may not reflect the views of the market or market segment in
which the business is interested.
Interviews allow for detailed knowledge. Long or difficult questions can be
explained, and many of the interviewee’s responses can be used. Follow up or tag
questions can be asked. However, interviews are time consuming and can be
expensive. Moreover, the interviewer may have a bias that influences the
responses of the interviewee.
For LadyA, these types of market research techniques are appropriate. LadyA
needs to understands the wants and needs of her customers. The surveys allow LadyA to
get input from a large number of customers at a relatively low cost, especially if it is
done using the internet. Once preliminary ideas are developed from this
information, she can get more in-depth information from focus groups. Focus
groups, from her target market (young women and teenagers). Finally, a select number
of interviews can be done to obtain detail knowledge. These details can either be
“positive”, or negative. Focus groups can provide important information to businesses
27
such as LadyA to formulate the refine their marketing strategies, e.g. they helped
Alejandra change the brand name to LadyA because “some English-speakers did not like
the name “Lady Alejandra” (line 65).
Market research is especially important because many of LadyA products
are sold in different department stores in the USA, and her concerts are held
internationally. Getting customer input about quality, reliability, and safety can help
LadyA shape her product to meet these priorities. Also, because she is planning on
reaching markets outside of the US, she will need to have a keen understanding of
local circumstances in each market. Consumers’ needs, wants, and priorities may
be quite different from consumers’ needs, wants, and priorities in other markets and
countries.
As increasing numbers of consumers around the world possess high-tech
devices such as mobile phones and tablets, LadyA may want to consider alternates
types of market research techniques, such as computer-aided telephone interviews,
which can be highly cost effective and reach a large number of customers.
Define “Delegation” (line 123).
Delegation means passing authority to the outlying bits. OR: the assignment given to
others, who are lower in the hierarchy (subordinates) of the authority for particular tasks.
Define Shares
Shares are a source of finance raised from shareholders (or stockholders) who buy a
financial stake in LadyA Management Limited (LAM). In return, these shareholders get a
distribution (or share) of any profits that LAM earns (in the form of dividends) and enjoy
limited liability. The four shareholders of LAM are Alejandra, Ruth Liebermann and Mr
and Mrs Carroccio (lines 91-92).
Option 1
In option 1, LadyA would simply be moving from the North American market to the
South American Market from which she originates. Therefore, she would be using the
Ansoff Matrix model once more, which is a marketing tool that is used to help a business
explore possible growth strategies. LadyA would pursue market development, since she
would be spreading her existing products in a new market. Additionally a PEST analysis
28
would be necessary to determine whether she would succeed, and suggested one is
presented below.
New Markets
Existing Markets
Existing Products
Market Penetration
New Products
Product Development
Market Development
LadyA Option 1
Diversification
Increasing risk
Political
Sociological
Some South American countries have
increase nationalization of industries, so
that new brands are less likely to succeed.
Spanish songs are preferred.
Economical
Technological
South American has experienced a rapid
economic growth in the last decade,
making sales more likely.
The telecommunication infrastructure in
South America is not as developed as in
North America therefore it is harder to
distribute music.
Older female artists are more accepted.
29
Incr
easi
ng
risk
An advantage of this option is that LadyA could make use of her latino roots to attract the
Additionally, as shown by the PEST anaylsis, the South American market is more
accepting of older female stars than the North American one. Additionally, since South
American has seen large economic growth in the past decade the success of new brands
or firms is perhaps more likely, and as such the success of LadyA merchandise such as
“perfume and cosmetics” is more likely.
Nonetheless, this option also includes many risks. Mainly, LadyA, who would have to
spend significant funds and time on rebranding herself as Lady Alejandra again, would
maybe not be received well in the South American market since she did not “make them
a priority” before. Similarly, the move would require a significant start-up capital, as
LadyA would have to start promoting herself anew. Additionally, no financial
information is given to assess the profitability of the option.
In conclusion, this option offers little to assess in terms of analysing the result of its
cause. However, the PEST analysis seems motivating especially due to LadyA’s roots
and ability to adapt to it. Nonetheless, a decision cannot be made based on the limited
qualitative information available.
Evident advantages:
a) The South American market “generally accept older female musicians and film
stars” line 139-140. Since LadyA was approaching her late thirties, this will make
it easier for her to enter the Hispanic market.
b) By rebranding herself as Lady Alejandra, conducting tours and promoting her
brand name, it be easier for her to attract the Hispanics. There is a huge number of
potential customers in Latin America with 120 m people in Mexico alone.
c) Immense growth in the Hispanic population in the USA, which would mean that
moving into South America would not jeopardise earnings in the US market
significantly.
Disadvantages:
a) She will have to compete with local Hispanic competitors, making it difficult for
her to attract new customers (some may already be fans though).
30
b) After leaving the Spanish-speaking market for several years, she might have lost
her small fan base because “she had never made them a priority” (line 142), so the
transition into the market might not be as easy, and would require a push from a
strong marketing campaign, to facilitate an easy entry into the market.
c) It is time and money consuming to rebuild her brand identity in South America.
Using Lewin’s forces (HL topic – Tutor2u)
Driving forces that drive Lady to the South American market:
a) LadyA’s career has peaked (128) and may struggle to remain popular in
the US (132-34)
b) South American markets generally accept older female singers and
actresses (139-40)
c) She has Spanish-speaking fans (141)
d) Touring in South America (143) could gain her a huge number of fans, in
the same way that other Hispanics have done in the past (Shakira, Lopez
etc)
e) Hispanics have huge spending power, especially with the growth in Latin
music globally.
Restraining forces:
a) The Spanish speaking market in the USA is expanding (63), so there is not
necessarily a need to move into the South American market. Also, Hispanics are
expected to account for 1.5 trillion of the US’ real GDP by 2015.
b) Adopting the name Lady Alejandra (141-42) may create some discontent with
loyal English-speaking fans in the USA (64-5)
c) Option 2 may provide LadyA with greater revenue streams from the sale of
shoes, handbags, clothing and lingerie to the international market
d) The Latin American market may already be saturated with plenty of Hispanic
positions such as Ricky Martin, Jennifer Lopez. So there will certainly be fierce
competition between them
31
Option 2
This option would have LadyA produce more products under the already existing brand;
she would employ family branding. Family branding is also called umbrella branding,
which is when a firm uses a brand name for two or more products. This would include “a
clothing range,” and “accessories such as LadyA handbags, and LadyA lingerie.”
According to the Ansoff Matrix model, which is a marketing tool that is used to help a
business explore possible growth strategies (also, it’s a strategy to expand the product life
cycle), this would be categorized as product development. However, LadyA would also
be moving into an “international market, with e-commerce,” meaning that she would
develop her market as well; thus proving diversification. The success of these plans
depends very greatly on the strength of the LadyA brand, which can be assessed through
a SWOT analysis, as follows.
Strength
Weakness
Family branding makes use of the already
established brands to promote new
products effective.
LadyA is considered to be old, “she was
approaching her late thirties,” which is too
old for the music industry in the US, which
might make it difficult to market lingerie
associated with this age.
Threat
Opportunity
Globalization has made e-commerce
available to reach a global market, which
will enhance revenue.
Already existing brands might make entry
into the market difficult, as many other
Hispanic musicians also ventured into the
same product lines (such as Jennifer
Lopez)
32
New Markets
Existing Markets
Existing Products
New Products
Market Penetration
Product Development
Market Development
Diversification
Incr
easi
ng
risk
LadyA Option 2
Increasing risk
Diversification is usually the riskiest expansion strategy because LadyA is entering with a
new product and spreading into the international market which requires extensive
resources in time and money in terms of market research and marketing, however it may
be the most suitable expansion strategy since it will spread the risk; if one product fails, it
may be compensated for by another one in the US market. Also, expanding in the
international market through e-commerce will open a large potential market for LadyA
products which will help customers buy them from virtually anywhere in the world, thus
potentially increasing sales.
This option has quite a few advantages. To begin with, family branding will enable sales
to take off at a relatively high rate, presumably, seeing as the new clothing range would
be marketed under the same name as the already established LadyA cosmetics, and her
artist image as well. Also, she would save on marketing expenditures and benefit from
advertising economies of scale. Additionally, the expansion into the global market would
open up opportunities to increase market share, more than it would only in the US.
33
Moreover, with this strategy the already existing channels of distribution will be utilized
further to incorporate products such as a clothing line and lingerie.
On the other hand, family branding can mean that if any product in the line gets a bad
reputation, the whole brand of LadyA would be harmed and reduce sales.
In conclusion, LadyA might face less risk when choosing this option by increasing her
firmly established brand, since her cosmetics and perfumes have spread nation-wide (line
119) “by 2011 LadyA perfumes and cosmetics... US,” and the fact that she implemented
quality control, might imply that the new product lines would be boosted faster.
However, to make a better judgement, profitability figures and customer feedback on
LadyA cosmetics and perfumes would be beneficial.
Therefore, option 2 would perhaps be easier than expanding to South America as in
option 1. Nonetheless, LadyA must be careful to balance between available quantitative
and qualitative information to make a decision.
Option 3
In option 3, LadyA would be rebranding herself as a way to remain in the market, if we
consider her the product. Rebranding is the process of giving a product a new image in
order to make it more attractive or successful. In order to achieve that, she “would
associate herself with a charitable causes” (line 153). This means that she would be
working on her CSR; her corporate social responsibility. CSR is a management concept
whereby she would integrate social and environmental concerns in her business
operations and interactions with her stakeholders, for instance “international trafficking
of children” (line 156).
A way in which her decision may be analysed is by use of the Ansoff Matrix model,
which is a business tool that analyses the different expansion strategies available for
LadyA. Since she would be setting up various NGOs (non-governmental organisations,
which are not set up to generate profit but for humanitarian reasons), she would be
tapping into new markets where potential customers (fans, in her case) would be attracted
by that new image. This would be categorized as market development. However, it might
be argued that this strategy is a form of simply market penetration, since she would be
marketing herself anew.
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Nonetheless, the association with such a “mature, compassionate” cause would develop
her as a product, and change the perception of her, thus editing her brand identity.
“Building a new brand identity based on the image of strong, mature, determined and
compassionate woman.” Like so, she would generate and develop her USP; unique
selling proposition, to differentiate her from competitors, and attracting like-minded
customers, thus generating greater revenue.
New Markets
Existing Markets
Existing Products
New Products
Market Penetration
ProductDevelopment
Market Development
Diversification
Incr
easi
ng
risk
LadyA option 3
Increasing risk
Furthermore, LadyA can be modelled on the product life cycle, as these options are
basically extension strategies. The product life cycle is a theoretical model that shows the
stages a product passes through over time in terms of sales. LadyA, as she is growing
older “she was approaching her late thirties,” so she is approaching the decline stage in
the life cycle. With the option, she would extend that phase into further maturity.
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Advantages of using this option are the fact that she would develop a more positive
image of herself as a more serious artist, thus most likely attracting a new, like-minded
customer base /audience. Additionally, she would have a huge presence as she would
appear on “American television talk shows and do magazine interviews.” Also, the
development of a new CSR would be motivating not only for LadyA but also for he
employees, especially her marketing team, for which this whole rebranding would be an
enormous challenge. Additionally she would be able to avoid pressure groups, and
perhaps gain the support of the government (and possibly achieve tax allowances).
Nonetheless, by following this strategy to remain in the pop-star market, she would be
removing herself from the public eye for three years. She could be forgotten or easily be
replaced by new artists entering the market, who could take her market share. Also, it is
highly risky because she would be using “her own wealth” to promote the cause, which is
also not a given revenue stream, seeing as the newly developed CSR may not be well
received; many people may not believe that she is actually passionate about the cause, but
that she is simply employing it as a marketing tool. Also, a decision about whether or not
this option is practical cannot be easily made seeing as a financial analysis would have to
be made, for which no data is provided. Finally, as LadyA would be spending on her
CSR, a cash flow drainage could ensue, and this creates an opportunity cost for LadyA as
the money could have been spent on marketing herself, as other artists are doing.
Therefore, the option seems highly risky, especially in the light that it may not prove
successful, as people might misinterpret her cause and see it as solely a marketing tool.
Also, due to the purely qualitative information available, and the fact that her main source
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of revenue is removed, it is also very risky. Therefore, it is not advised that LadyA should
pursue this option.
In general, diversification might be very risky, however, it achieves risk-bearing
economies of scale which means LadyA will spread the risk; if one market fails, another
compensates, or if one product fails, another compensates.
each year. Knowledge of consumer profiles helps LadyA to identify the needs and wants
of its customers (whether they are young women and teenage girls) and to identify any
segments that might be overlooked (such as teenage boys, young men or potential fans
from other parts of the world). This is an area that LadyA could tap into to remain
popular (line 133).
Whilst the vast majority of LadyA’s fans may be teenage girls and young women, this
does not mean that such trends will continue in the future as Alejandra approaches her
forties. Hence, knowledge of segmentation and consumer profiling (such as expanding
into the Spanish-speaking markets) can be fundamental for the success of LadyA’s
marketing strategies. Expanding into untapped market segments (such as men’s
clothing or healthcare products) might also provide further growth opportunities.
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