Market segmentation is the subdivision of the market into distinct groups, each group made of homogenous members who react in a similar way to marketing activity (to a distinct marketing mix). Therefore, a different marketing approach (mix) can be devised for each market segment.

• Efficient use of marketing budget. By carefully segmenting the market, Top Furniture can target segments appropriately. This means it can apportion its marketing budget to each segment in proportion to the likely return it may receive from them. This will help maximise the return on its marketing spend. Akate Furniture Enterprise currently sells its range to the whole market and is therefore not using its marketing budget effectively. This is something that can be resolved by market segmentation.
• Identify new opportunities. Segmentation will enable Akate Furniture Enterprise to understand the needs of its customers better. Understanding these needs may identify gaps in the market or other opportunities that Top Furniture may be able to exploit.
• Efficient use of resources. By having a better understanding the needs of its customers, Akate Furniture Enterprise can make changes to its products, for example in materials and features. Meeting the needs of customers and not providing any unnecessary features promotes the efficient use of raw materials and other resources.
• Competitive advantage. Akate Furniture Enterprise can look to dominate particular market segments. This will not only maximise the profit from each segment, but also help reduce the market share of its competitors, thereby forcing them out of the market.
• Better customer relations. Top Furniture may segment the market geographically and switch its focus away from the north where it has difficulty in fulfilling its obligations. This will help bring its attention to the customers that it can serve more productively and therefore improve its relationship with them.                                                                            (3 marks each)

A well-motivated workforce can provide several advantages:

• Increased productivity (amount produced per employee). This can lead to lower unit costs of production and so enable a firm to sell its product at a lower price.
• Lower levels of absenteeism as the employees are content with their working lives.
• Lower levels of staff turnover (the number of employees leaving the business). This can lead to lower training and recruitment costs.
• Improved industrial relations with trade unions.
• Contented workers give the firm a good reputation as an employer so making it easier to recruit the best workers.
• Motivated employees are likely to improve product quality or the customer service associated with a product, etc
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The steps in the disciplinary procedure generally follow graduated steps including a verbal warning, written warning, final written warning, and dismissal. However, in cases of gross or serious misconduct it is permissible to start at stage 4 of the procedure.
However, other sanctions apart from the nuclear option of dismissal should be considered by the employer. Alternatives might include a transfer to a different part of the workplace, different role, or demotion.
Keep in mind that an employee can be suspended on pay pending investigation but would only be suspended without pay pending an appeal of a dismissal.
Stage 1-Verbal/Informal warning
Generally an employee should receive a verbal warning for a first transgression.
Even though the employer is “only” giving a verbal warning, it is still part of a formal disciplinary process and the principles of natural justice, fair procedures, and equity/fairness would apply at all times. This would involve a meeting with the employee at which the employee could bring a colleague or other representative. There is no right to bring a legal representative, unless the employer agrees.
This may be a trade union representative, even though the employer may not formally recognise or engage with the union. His role will be as a minute taker and witness, not an advocate or spokesperson. At the meeting the employee should be advised of what the problem is and invited to respond and explain his actions. There should be no rush to judgement by the employer as the meeting is investigatory. Following the meeting a confirmatory letter should be given to the employee. This letter confirms that the employee has been given a verbal/oral warning. It should also contain the improvements required of the employee in respect of the behaviour which led to the warning and the time frame within which the improvement must be made. This letter should also state that failure to improve will lead to the 2nd stage of the disciplinary procedure and ultimately dismissal. It should also state the time period for which it will remain on the employee’s file, after which it will be removed. 3 months would be a reasonable period for this 1st verbal warning to stay on file, but it could remain for 6 months.
If an employee was suspended with pay pending an investigation it is vital that he knows how long the suspension is to last and the investigation must be held within a reasonable time frame. “Justice delayed is justice denied”. Once this disciplinary procedure has started the employer should assist the employee to improve conduct or performance, whichever was the source of the problem in the 1st place.
The employer should record the details of this 3 month monitoring period and retraining or relocation should be considered, if possible and reasonable. However, if the employee fails to improve or there is a repeat of the activity that caused the oral warning in the 1st place the employer can then issue a first written warning.
Stage 2-First Written Warning
The 1st written warning can be issued within the period of time advised for monitoring after the verbal warning, provided there is no improvement in conduct or performance. Before issuing it, the employee should be invited to another meeting, told of the transgression, and given the opportunity to respond. The written warning will then be issued and last for another 3 months. This warning should also clearly set out the nature of the problem, suggest solutions such as retraining, and advise of the possible sanctions (including dismissal) if no improvement is observed within the 3 months.
The employer should again afford all reasonable assistance to the employee to help him improve conduct and/or performance. However the employer must be mindful of his duty of care to other employees also.
Stage 3-Second Written Warning
If the required improvement is not forthcoming within the 3 month period after the 1st written warning then a 2nd written warning may be issued. This is entirely a matter for the employer and it is common for many employers to only issue a 1st and final written warning. This warning is done in a similar fashion to the other 2 warnings referred to above but you would consider giving a 6 month monitoring period to allow improvement.
Stage 4-Final Written Warning
If the required improvement is not happening then a final written warning would be issued with a 12 month monitoring period.
The letter confirming this warning will advise that if there is no improvement or if the bad behaviour/performance is repeated then dismissal will occur. This warning letter will be the final one prior to dismissal so it is important that it is well drafted as it will be scrutinised closely by the employee and probably his legal advisor. This letter should only refer to the matters which have been the subject of the disciplinary procedure to date and not other matters which have never been put to the employee.

Stage 5: Suspension without pay
Intended to signal seriousness and get employee to think over commitment to changing/improving behavior.
May be used for very serious first offenses, such as:
Gross insubordination
Substance abuse on the job
Others (as outlined in your discipline policy)
Review company policy and procedure.
Stage 6-Dismissal or action short of dismissal
If there is no improvement after the final written warning then dismissal is the likely outcome. A meeting should be called and the employee and his representative invited.
The employer should remind the employee of the behaviour/conduct that has led to this point, the repeated transgressions/failure to improve performance sufficiently, and that the dismissal is in accordance with the disciplinary procedure.
The employee should be given the opportunity to appeal within 14 days. He should also be given a letter confirming the dismissal and the right to appeal, the time period for appeal, and who to appeal to.              (2 marks for every step= 12 marks)

In general, training faces an immediate challenge and teaches the knowledge or skills needed by company employees in a short period of time (one day, one week, several months). It is all about “here and now”. It could be a course to improve the communication skills of employees, a conference to explain the protocol for returning a product or a class to use the Excel program.
On the other hand, development focuses on the long term. Human resource managers propose a strategy to put in place over several months or years, comprising a set of initiatives that are expected to bear fruit over a long period of time. It is a continuous process in which you are trying to develop professionals in their next step or their next position of responsibility.

• Job position vs. Professional career
  Due to its precision and commitment to the short term, training is designed for a specific job position. It seeks to provide professionals with tools and skills, taking into account the work that they will be doing at the company.
  However, development focuses on the person: its objective is to get the best out of each employee in the company, identifying their interests and the fields in which they can more easily progress. If training focuses on a job position, development puts the emphasis on building a successful professional career.
• Specific objectives vs. Open objectives
  In training, the objectives are specific and well defined: learning how to use a program, obtaining a certain personal skill or teaching the new protocols put in place by the company.
  When we talk about development however, the objectives are always much broader and can cover all types of knowledge and skills. Compared to training, development is less tangible and often focuses on philosophical issues, changing habits and improving skills. Not only that, but objectives can be changed over time and completed according to the new demands of the market or the company.
• Group vs. Individual

Training tends to be an initiative designed by a company and taught by a tutor or expert. The company pays for the expenses and organizes the courses, decides what sort of tools its employees should use, and sets the guidelines to follow in all the training activities. These initiatives often focus on a group of employees (a department, people who have recently joined the company, etc.).

However, with development, the emphasis is put on the individual. Development programs are often personalized and the person who is ultimately responsible is the employee.

• To obtain the best possible purchase prices – bulk buying contracts.
• To improve quality in the future – quality standards can be agreed.
• To ensure continuity of supply during periods of limited availability.
• To tie the supplier to the organisation – reducing the supply options of competitors

Single Sourcing is a practice of using one supply source without a competitive bidding process for a justifiable reason. A particular supplier is purposefully chosen by the buying organisation, even when other suppliers are available.

•  It is more difficult for the buyer to be sure that he/she is keeping the company competitive if there is only one source.
• In periods of tight supply, the buyer may be at a disadvantage in being able to ask other suppliers to accept orders.
• Other suppliers may lose interest in trying to compete for the business if they see that a sole source situation is likely to persist.
• There is a real risk if the single source has a catastrophic event, gets bought by a competitor or has financial problems, etc.
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• Organisational structure: The type of structure adopted by the organisation in terms of how the other functional areas interact with each other must be taken into consideration.
• Relationship portfolio: The relationship between the suppliers and the organisation must be considered.
• The organisation should match the benefits to be enjoyed to the costs involved in the transactions and take a decision.
• Skills and competencies: The skills and competencies of the staff must be assessed to determine whether they fit the adopted strategy.
• Performance measures: The organisation must implement monitoring and control measures to streamline the adopted strategy.                                                                                                                                                                              (Any 2)

• Limited liability: Owners or members of a Limited Liability Company have limited liability. This means that unlike partnerships and sole proprietorships the liabilities of members is limited to the shares they hold or any unpaid amount on the shares issued to them. They do not assume the risks for any debts or financial obligations and some acts incurred by their companies.
• Flexibility in allocation: The amount of money members invest in an LLC does not need to be equal to their percentage of ownership. Percentages of profits and losses can be assigned to owners using an operating agreement. This also means that an investor can finance half of an LLC without necessarily owning half of the business.
• A Limited Liability Company has a separate identity and is recognized as a separate company under law. The company can also own property due to this feature.
• Greater pool of knowledge, ideas, skills, abilities and expertise. The large scale of the operations of new company will enable it to attract highly talented specialists who have the knowledge to steer the affairs of the company.
• A Limited Liability Company has stability in that its existence is not affected by the death of a member/s as in the case of a sole proprietorship or partnership.
• It gives the company more authority of risks taking.
• A lot of shareholders are allowed in the company. Hence, this makes it easier to raise capital in comparison to other forms of companies increasing the scope of expansion in future. Growth and Expansion – due to the larger capital base, growth and expansion can be carried out easily.
• No double taxation. Sole proprietors may pay income tax and at the same time the firm also pays tax resulting to double taxation under the new arrangement, tax will be based on the profit made by the company                                            (Any 5)

• Private Limited Company
• Public Limited Company
  The Private Limited Liability Company
  A private limited liability company is a limited liability company formed by a minimum of two people and a maximum of fifty people, with the exception of banks where the maximum is ten. These shareholders make financial contributions where capital is needed as the shares of a private limited liability company cannot be floated on the stock exchange nor sold to members of the public in a trading year.

Features of the Private Limited Liability Company

• Ownership – shareholders range from two to fifty people (except in the case of banks where the range is from two to ten people).
• Legal status – as a separate legal entity, the company can sue and be sued.
• Shareholders are limited by the shares held.
• Transfer of share(s) is made possible only with the consent of other shareholders.
• Source of capital – additional capital can only be raised through private contributions made by shareholders which are converted into shares or by the contribution(s) made by a new shareholder(s). Other sources of capital to the company include loans from private individuals, loans and overdrafts from financial institutions such as banks, the company’s retained earnings and credit facilities from suppliers.
• Privacy – the company’s books of accounts are not made public for inspection nor published in the dailies. As required by the law, audited reports are sent to the registrar of companies to attest to the non-sale of shares to members of the public in a trading year.
• ‘Ltd.’ – the name of a private limited liability company ends with the acronym ‘Ltd.’ which implies ‘limited’. This indicates limited liabilities by shares.                                                                                                                                                (Any 3)
  The Public Limited Liability Company
  A public limited liability company is a company that can be formed by a large number of people, but a minimum of seven shareholders. This is because a public limited liability company offers its shares to members of the public through the stock exchange. The motive for the establishment of the company is to make profit.
  In the Public limited liability company, the shareholders elect members of the board of directors who direct the affairs of the organization, alongside the managing director or any other person as the chairman.
  Features of the Public Limited Liability Company
• Ownership – shareholders range from seven and above.
• Legal status – as a separate legal entity, the company can sue and be sued.
• Shareholders are limited by the shares held.
• Transfer of share(s) is made possible without the consent of other shareholders or the members of the board of directors.
• Source of capital – additional capital can be raised through the value of shares sold to members of the public through the stock exchange, loans and overdrafts from financial institutions such as banks, the company’s retained earnings and credit facilities from suppliers.
• Publicity/Inspection – the company’s books of accounts are made public for inspection in the dailies. As required by the law, audited reports are sent to the registrar of companies in a trading year.
• Incorporation – the company is incorporated under the Companies Act.                                                                        (Any 3)

IFRS foundation is a non- profit making Private Sector body that oversees the International Accounting Standards Board (IASB) activities.
The Objectives are:

• Develop a single set of high quality understandable, enforceable and globally accepted standards.
• Promote the use and rigorous application of those standards.
• Take account of the financial reporting need of emerging economies and small and medium-sized entities.
• Bring about convergence of national accounting standards and IFRS(s) to high quality solutions.

Depreciation is the allocation of the Depreciable amount of an asset over its estimated useful life. This allocated amount is charged against the income statement/Profit and Loss Account.                                                                                       (2 marks)

The useful Life of an Asset is either the period over which a depreciable asset is expected to be used. OR the number of production/similar unit expected to be obtained from the Asset by the enterprise/company.                                             (2 marks)

• Physical deterioration/Expected physical wear and tear.
• Obsolescence/Economic factors.
• Depletion (Natural resources such as mines)
• Legal limit/Time factor.