Quiz 19: Managing Marketings Link With Other Functional Areas
The marketing plan notes Dr. Hardy's short- and long-term growth goals. Over the short term, there is a plan to maintain longer hours and hire more personnel. These additional expenses are noted in the marketing plan and should be offset by additional revenues earned due to the increased capacity. Still, in the short-run, there may be cash flow concerns that require tapping outside resources - perhaps a line of credit at the local bank since borrowing is likely to be minimal. Dr. Hardy hopes to move into a new location where a wider range of pet supplies can be sold and kennel services can also be offered to clients. This may require significantly more funding - to either build a new location or renovate an existing building will be expensive. A small business like this typically does not issue stock - although it may be possible to find local investors. A bank loan may be a more likely source of funding. Calculating the costs of individual customers requires that an organization accurately track the revenues and costs of each customer. The database proposed in the marketing plan may be helpful in accomplishing this. On the other hand, it may be difficult to assign actual costs by customer. And with a large number of customers, the costs of this exercise may not justify the benefits. Such an approach might work well for very large customers. HVC seems to have taken into account some elements of the local labor market. As noted in the marketing plan, the local veterinary school makes it relatively easy to find vet techs. On the other hand, the growth plan seems very contingent on the availability of the part-time vet Dr. Hardy hopes to hire.
Marketing plans are the new ways to satisfy the needs of the customers, but these plans need funds for execution. So, allocating funds and investing in marketing plans will be handled by the finance department. Following are the ways to raise money for supporting the new marketing plan: There are different sources of raising capital for the marketing strategy implementation. They are external sources and internal sources. External sources: External sources of raising money include loans from banks and selling stocks or bonds. Usually when the firm is in the initial stage it lacks enough funds for its daily operations, then the firm needs other external sources for investing in its new plans. Advantage and disadvantage of this approach is as follows: The firm can get immediate financial assistance to implement the strategy provided if the investors were impressed with the firm's strategy. The major disadvantage of selling stock is as it represents the share ownership of the company if the company sell most of its stocks then the ownership gets diluted. Some investors expect profits quickly, in that case the marketing manager need to develop a plan to satisfy the investors. Hence, marketing manager need to face challenges to develop a plan that gives short term profits, so they need to consider the investors time horizon. Internal sources: Internal sources of raising money include cash accumulated from profits. Firms can use cash available with them, immediately for successful implementation of the strategy. The main advantage of this approach is there is no need to approach for outside funds and profits of the company can be utilized within the company internally for development of the marketing strategy. The problem with this approach is generally firms need to manage their daily expenses and cash flows. So, there might be a difficult to invest at once in the marketing strategy.
Generally, firms which are in the initial stage of development need some financial assistance from investors or either from banks. They need some funds to generate marketing strategies to develop the company and improve the financial condition of the firm. An entrepreneur who wanted to expand his facilities and start a new outlet to start his auto services. for that he needs some capital, so his financial advisor suggested him to give his idea to a franchise. Hence, they will invest in his idea and he can open new centers. By following this idea, the franchisee would invest money for setting up of the outlets. On the other hand, giving his idea to franchise has the following disadvantages • The franchisee who will invest in the business will get the ownership control over the outlets. • The franchisee will own the equity of the business. They will develop the outlet and enjoys the profitability because of the entrepreneur idea. • An Entrepreneur cannot enjoy the total profits alone. Franchisor will get the profits from percentage of total sales made by the outlets. As there are many ways to raise the capital, so entrepreneur can depend on other sources like, External sources of raising money include loans from banks and selling stocks or bonds. Usually when the firm is in the initial stage it lacks enough funds for its daily operations, then the firm needs other external sources for investing in its new plans. Hence, franchising his idea is not a good decision as there are some other ways which will be helpful for him to expand his facilities.