Marketing Strategies In Life Insurance Services Marketing Essay

Marketing Strategies In Life Insurance Services Marketing Essay The study is designed to evaluate the marketing strategies in life insurance service sector how these strategies boost sales marketability of a product which ultimately lead to customer satisfaction. The insurance scenario faces multiple challenges such as increased costs of operation, regulatory pressures, and inflexible technology infrastructure. These pressures are compounded by low to moderate premium growth the increasing burdens of regulatory compliance. Keeping all the above problems around the study would attempt to study all the factors that contributed to the effective marketing strategies. This paper presents different marketing strategies that are taken up in life insurance services keeping in view external and internal environment of the firm. Marketing strategy is the basic approach that the business units will use to achieve its objectives, and it consists of broad decisions on target markets, market positioning and mix, and marketing expenditure levels. As the finan cial services sector has become more competitive, financial institutions need to consider ,ways of developing relationships with their existing customers in order to defend their market share. Strategic dimension of marketing should focus on the direction that an organization would take in relation to a specific market or set of markets in order to achieve a specified set of objectives. Every insurer must recognize that its strategic posture depends partly on the competitive environment, partly on its allocation of marketing resources. An insurance firm strategy is a plan for action that determines how an insurer can best achieve its goals and objectives in the light of the existing pressures exerted by competition, on the one hand, and its limited resources on the other hand. Key words: Customer satisfaction,Insurance,Innovation,Marketing Strategies,Services, Introduction: In todays economy, the financial services industry is exposed to increasing performance pressures and competitive forces (Goergen, 2001). Modern media, such as the internet, have created new challenges for this industry (Fuchs, 2001).New business concepts, a change in client sophistication (Davis, 2006), and anincreasing number of new competitors entering into the market, such as independent financial consultants, have changed the business models and the competitive forces that established financial services organizations are facing today worldwide.A marketing strategy serves as the foundation of a marketing plan. A marketing plan contains a list of specific actions required to successfully implement a specific marketing strategy. A strategy is different than a tactic. While it is possible to write a tactical marketing plan without a sound, well-considered strategy, it is not recommended. Without a sound marketing strategy, a marketing plan has no foundation. Marketing strategies serve as the fundamental underpinning of marketing plans designed to reach marketing objectives. It is important that these objectives have measurable results.A good marketing strategy should integrate an organizations marketing goals, policies, and action sequences (tactics) into a cohesive whole. The objective of a marketing strategy is to provide a foundation from which a tactical plan is developed. This allows the organization to carry out its mission effectively and efficiently. The following techniques are implemented to device the Marketing Strategy for the product/service: Segmentation Targeting Positioning Market segmentation is the process in marketing of grouping a market (i.e. customers) into smaller subgroups. This is not something that is arbitrarily imposed on society: it is derived from the recognition that the total market is often made up of submarkets (called segments). These segments are homogeneous within (i.e. people in the segment are similar to each other in their attitudes about certain variables). Because of this intra-group similarity, they are likely to respond somewhat similarly to a given marketing strategy. That is, they are likely to have similar feeling and ideas about a marketing mix comprised of a given product or service, sold at a given price, distributed in a certain way, and promoted in a certain way. Segmentation: Market segmentation is widely defined as being a complex process consisting in two main phases: identification of broad, large markets Segmentation of these markets in order to select the most appropriate target markets and develop marketing mixes accordingly. Positioning: Simply, positioning is how your target market defines you in relation to your competitors.   A good position is: 1. What makes you unique? 2. This is considered a benefit by your target market   Positioning is important because you are competing with all the noise out there competing for your potential fans attention.   If you can stand out with a unique benefit, you have a chance at getting their attention.   It is important to understand your product from the customers point of view relative to the competition.   Targeting: Targeting involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments. Target marketing can be the key to a small businesss success. The beauty of target marketing is that it makes the promotion, pricing and distribution of your products and/or services easier and more cost-effective. Target marketing provides a focus to all of your marketing activities. Marketing Mix: Marketing professionals and specialist use many tactics to attract and retain their customers. These activities comprise of different concepts, the most important one being the marketing mix. There are two concepts for marketing mix: 4P and 7P. It is essential to balance the 4Ps or the 7Ps of the marketing mix. The concept of 4Ps has been long used for the product industry while the latter has emerged as a successful proposition for the services industry. The 7Ps of the marketing mix that are used to frame marketing strategies of life insurance companies can be discussed as: Product It must provide value to a customer but does not have to be tangible at the same time. Basically, it involves introducing new products or improvising the existing products. A product means what we produce. If we produce goods, it means tangible product when we produce generate services, it means intangible service product. A product is both what a seller has to sell buyer has to buy. So, insurance companies sell services services are their products. Apart from life insurance as product, customer not only buys product but also services in the form of assistance advice of agent. It is natural that customers expect reasonable returns for their investments insurance companies want to maximize their profitability. Hence while deciding the product mix services or schemes should be motivational. Price Pricing must be competitive and must entail profit. The pricing strategy can comprise discounts, offers and the like. The pricing of insurance products not only affects the sales volume and profitability but also influences the perceived quality in the minds of the consumers. There are several different methods for pricing insurance, based on the insurance marketers corporate objectives. They are the survival approach, the sales maximization approach, and the profit maximization approach. To determine the insurance premium, marketers consider various factors such as mortality rate, investment earnings, and expenses, in addition to the individual risk profile based on age, health, etc., and the time period/ frequency of payment. In insurance business the pricing decisions are concerned with: -The premium charged against policies -The interest charged for defaulting the payment of premium credit facility. -Commission charged for underwriting consultancy activities. The pricing decisions may be high or low keeping in view the level or standard of customers or the policyholders. Mainly, pricing of insurance is in the form of premium rates. The three main factors used for determining the premium rates under a life insurance plan are mortality, expense interest. The pricing of insurance is in form of premium rates. The three main factors for determining the premium rates under life insurance plan are: Mortality: Average death rates in a particular area. Expenses: The cost of processing, commission to agents, registration is all incorporated into the cost of installments premium sum forms the integral part of pricing strategy. Interest: The rate of interest is one of the major factors which determine peoples willingness to invest in insurance. People would not be willing to put their funds to invest in insurance business if the interest rates provided by other financial instruments are higher than the perceived returns from the insurance premiums. Place It refers to the place where the customers can buy the product and how the product reaches out to that place. This is done through different channels, like Internet, wholesalers and retailers. This component of marketing mix is related to two important facets- -Managing the insurance personnel -Locating a branch The management of insurance personal should be done in such a way that gap between the services promises-services offered is bridged over. In a majority of service generating organizations, such a gap is found existent which has been instrumental in making down the image problem .The insurance personnel if not managed properly would make all efforts insensitive. They are required to be given adequate incentives to show their excellence. They should be provided intensive trainings to focus mainly on behavioral management. Another important dimension to the place mix is related to the location of insurance branches. While locating branches, branch manager needs to consider the number of factors such as smooth accessibility, availability of infrastructural facilities and management of branch offices and premises. Thus place management of insurance premises needs a new vision, distinct approach an innovative style. The branch managers need professional excellence to make place decisions productive. Promotion It includes the various ways of communicating to the customers of what the company has to offer. It is about communicating about the benefits of using a particular product or service rather than just talking about its features. The insurance services depend on effective promotional measures, so as to create impulsive buying. Promotion comprises of advertising other publicity tactics. The promotion is a fight not only for market share, but also for mind share. The insurance services depend on effective promotional measures, so as to create impulsive buying. Promotion comprises of advertising other publicity tactics. Due attention should be given in selecting the promotional tools. Personnel should be given adequate training for creating impulsive buying. People People refer to the customers, employees, management and everybody else involved in it. It is essential for everyone to realize that the reputation of the brand that you are involved with is in the peoples hands. Understanding the customer better allows to design appropriate products. Being a service industry which involves a high level of people interaction, it is very important to use this resource efficiently in order to satisfy customers.Training, development strong relationships with intermediaries are the key areas to be kept under consideration. Process It refers to the methods and process of providing a service and is hence essential to have a thorough knowledge on whether the services are helpful to the customers, if they are provided in time, if the customers are informed in hand about the services and many such things. The process should be customer friendly in insurance industry. The speed accuracy of payment is of immense importance. The processing method should be easy to convenient to the customers. Installment schemes should be streamlined to cater to the ever growing demands of the customers. IT Data warehousing will smoothen the process flow. IT will help in servicing the large no. of customers efficiently and bring down overheads. Technology can either complement or supplement the channels of distribution cost effectively. It also helps to improve customer service levels helps to find out profitability potential of various customers product segments. Physical (evidence) It refers to the experience of using a product or service. When a service goes out to the customer, it is essential that you help him see what he is buying or not. For example- brochures, pamphlets etc serve this purpose. Evidence is a key element of success for all insurance companies. Physical evidence can be provided to insurance customers in the form of policy certificate and premium payment receipts. The office building, the ambience, the service personnel etc. of the insurance company and their logo and brand name in advertisements also add to the physical evidence. To reach a profitable mass of customers, then new distribution avenues alliances will be necessary.Initally insurance was looked upon as a complex product with a high advice service component. Buyers prefer a face to face interaction they place a high premium on brand names reliability. Review of literature: Sankaran M (1999) studied the measures that would help domestic players in financial services sector to improve their competitive efficiency, and thereby to reduce the transaction costs. The study found that the specific set of sources of sustainable competitive advantage relevant for Financial Service Industry are: product and process innovations, brand equity, positive influences of Communication Goods ,corporate culture, experience effects, scale effects, and information technology. Trevor Watkins (1989) while studying the current state of the financial services industry worldwide identified four major trends: the trend towards financial conglomeration, globalization , information technology in service marketing; and new approaches to financial services marketing. These trends, it was concluded, will affect the marketing of banks and other financial services in the 1990s. Marisa Maio Mackay (2001) examined whether differences exist between service and produc t markets, which warrant different marketing practices by applying ten existing consumer based measures of brand equity to a financial services market. The results found that most measures were convergent and correlated highly with market share in the predicted direction, where market share was used as an indicator of brand equity. Brand recall and familiarity, however, were found to be the best estimators of brand equity in the financial services market. P. Kotler rightly states that a companys marketing strategy depends on many factors, one of which is its size and position in the market. From this assertion he suggests that one method of classifying marketing strategies is to place the firm in accordance with its competitive position; namely as to whether they are market leaders, challengers, followers, or nichers. In effect these are behavioural strategies ordered in relation to the companys market share. Impetus for marketing strategy: India is a jumbo-sized opportunity for life insurance need hardly belaboured. Here is a nation of a billion people, of whom merely 100 million people are insured. And, significantly, even those who do have insurance are grossly underinsured. The emerging middle class population, growing affluence and the absence of a social security system combine to make India one of the worlds most attractive life insurance markets. No matter how you look at it whether in terms of life insurance premiums as a percentage of GDP or premium per capita the market is under penetrated and people are under-insured. In a country where there is high unemployment and where social security systems are absent, life insurance offers the basic cover against lifes uncertainties. India has traditionally been a savings-oriented country and insurance plays a critical role in the development of the Indian economy. The role of insurance in the economy is vital as it able to mobilize p remium payments into long-term investible funds. As such, it is a key sector for development. So marketing strategies are important and inevitable phenomenon to tap huge untapped potential. Effective selling of insurance policies depends to a large extent on the marketing strategies selected. As the market for insurance is dynamic and accompanied by rapid changes in the environment due to advancements in technology and uncertain economic conditions, coupled with inflation, increased attention must be given in the future to the selection of marketing strategies. Components of marketing strategies: Pricing Personal selling Advertising Word of mouth selling Institutional image Quality control Marketing orientation New approaches to strategize the productization of life insurance services: Latest tools and techniques are used by marketers of life insurance products to boost the sales to ensure customer satisfaction and brand building. Some are the approaches to survive in this scenario are as under: Innovation: Innovation in the delivery system refers to the internal organizational arrangements that have to be managed to allow service workers to perform their job properly, and to develop and offer innovative services. All the insurance companies have a structured internal organization team with customer service teams for the delivery of the service. Extensive training is given to the service contact personnel who are called the financial consultants or Agent advisers. Service development, service design and delivery are intricately intertwined. All parties involved in any aspect of the new service must work together at this stage to delineate the details of the new service. (Valarie A Zeithmal and Mary Jo Bitner, 2003). The need and importance of the customers involvement in the service innovation process is considered to be of prime importance by all the life insurance companies as the current market for life insurance is customer centric. They also express their opinion that t he new services developed currently are based on customer focus. The degree of involvement of the customer has gradually increased in the last five years. In the last two years customers are involved in the new service process as information providers. Product/Service differentiation: In case of product differentiation, new products, customized products, tailored products, bundled products can be introduced and new target segments can be identified. For example, life, health and personal accident insurance can be bundled together. Similarly Home Loan and insurance covering fire and burglary can be put together. The life insurance companies provides only packaged policies whereas new players have been providing several Riders. Rider in insurance parlance is an option that gives the policyholder additional coverage without disturbing the fundamental risk coverage. The service in the field of life insurance has improved greatly with the entry of multinationals and rising competition. The customer should have the option to continue or to switch over or to come out of the given policy. The service in the field of life insurance has improved greatly with the entry of multinationals and rising competition. The customer should have the opt ion to continue or to switch over or to come out of the given policy. Advertising and sales promotion: Advertising and publicizing have a positive effect on the prospective customers as well as personal selling. Both the direct and indirect strategies have to be balanced and mixed well to get the desired result. Discounts and incentives promised along with the policy have to be presented in detail to the customers. The companies must provide a tangible and rational reason to the customers to buy a particular policy. Unity and honesty must be maintained by the company and the frontline executives at any cost to attract the customers in the long term. Various creative and innovative strategies should be developed to promote various different life insurance policies. Finding an ideal mix of customers with high disposable income and targeting them with specific policies is another good promotional strategy. Life insurance may be one of the most difficult products to sell, but with an effective promotional strategy it can be sold easily. Technology: Information Technology progress is a major driver behind the structural change in the Life insurance industry to enhance risk transfer efficiency. Ebusiness opens up new ways to reduce costs while lowering market entry barriers and facilitating the break-up of the traditional insurance value chain. Insurance clients will benefit from greater transparency, lower prices and improved services not just in the sales area, but also in claims management. New information and communication technologies are making it easier for insurers to break up the value chain and outsource individual functions to specialized providers. In the long-term basis the information technology units control the potential for new service delivery since all new products represent a more sophisticated delivery of the service. Although it is argued that service innovations are often non technological, this is still the center of much analysis and debate (Kandampully, 2002). Customer relationship management: Insurance companies experiencing competition from within and abroad. Making this problem-situation into an opportunity lies always on the prudent management adopting or adapting tactics and strategies. In line of this, customer relationship management is a measure of winning competitiveness as it is the information-driven approach to customer analysis and process automation; and thereon supplement customer-value proposition. An action on tangible services prompt and accurate issue of document, prompt and fair settlement of claim ,good listening mechanism, better problem solving approach, reliable manner of service and meet requirement of customers on time every time in lieu of intangible promises would give utmost satisfaction to customers, the customer relationship management provides better service to the insured protecting him against perils or risks and the insurer enabling to retain the existing customers and bringing in new customers in his a mbit of business Distribution channels: The distribution network is most important in insurance industry. Insurance is not a high cost industry like telecom sector. Therefore it is building its market on goodwill and access on distribution network. We cannot deny that insurance are not bought, it is sold. The market has a great scope to grow. This can be better done by more innovative channels like a super market, a bank, a post office, an ATM, departmental store etc. these could be used to increase channels of insurance. But such growth in channels shall increase with time. Till then agents seem to be the most important distribution channel in this industry. Agents connect with people and influence them to buy any insurance policy. For the same such agents charge commission on the policies they get for the company. There is a fixed percentage of commission for which these agents work. In the field of distribution channels, many innovative techniques can be adopted. For example, Bancassurance and sel ling through postal network will make a great deal of difference. In Europe 25 percent of insurance policies are sold through banks. Bancassurance, as a package of financial services that can fulfill both banking and insurance needs, if implemented correctly can bring vast benefits to stakeholders such as banks, insurance companies, shareholders and consumers.Bancassurance will facilitate mass selling of insurance products through banks. Banks can act as large financial supermarkets. Distribution of insurance will be smoother through wider number of branches of the banks. Customer database, personalized service, rural penetration, cross-selling of products (e.g. car loan along with car insurance), being cheaper than agents are some of the greatest advantages of Bancassurance. At present the distribution channels that are available in the market are listed below: Direct selling Corporate agents Group selling Brokers and cooperative societies Bancassurance Mallassurance Conclusion: Life insurance industry requires new strategies in order to survive and survive successfully .To tap the insurance potential to maximum industry needs to frame such plans and strategies that will help to capture the market. Companies instead of focusing only on improving the variety of products needs to focus on targeting new segments and implement innovative strategies in order to achieve sustained growth and ensure profitability of business as well as growth of insurance coverage.

Obesity Crisis Speech

Thesis/Central Idea: Obesity Crisis Introduction: Obesity has become a controversial and great medical issue within today’s society. It is defined as a disease in which excess body fat has accumulated to such an extent that health may be negatively affected. In other word, an increase of body fatty tissue mass. It can also be defined as a body mass index of around 30 or above (Mathur, 2007). Many studies show an association between excessive body weight and various diseases, particularly cancers and heart problems which directly relate to increased mortality and lower life expectancy.Body I. Main Point: In many countries, obesity has become a major problem. Obesity is rapidly rising especially in developing countries. A. Subpoint: Statistics indicate that obesity is a high-risk national malaise. 1. According to the World Health Organization, in year 2005, 400 million adults were obese. 2. And predicts that there will be more than 700 million adults will be obese in the world b y 2015. B. Subpoint: Childhood obesity is also at an all time high 1. According to the U. S.Center of Disease Control and Prevention (CDC), the percentage of obese children has increased by 54 percent in 6 to 11 year olds and 39 percent among 12 to 17 year olds. 2. That is to say that 16 to 33 percent of Americans within the ages of 6 to 17 are considered obese. 3. Unfortunately for children of the age of 7 who are obese, 40 percent of them will struggle obesity throughout their adulthood and be faced with many health complications. As for the obese adolescents, 70 percent of them will remain obese throughout their adult life. . Another statistic figures children between the ages 10 and 13 have an 80 percent chance of battling through the torments of an obese life as an adult. Transition: What causes obesity?II. Main Point: Genes, eating habits and a slow metabolism rate may all play a part. A. Subpoint: Most often, obesity tend to run in family which leads to genetic cause (Myers, 2004) 1. In one study, adults who were adopted as children were found to have weights closer to their biological parents than to their adoptive parents. . In this case, the person's genetic makeup has more influence on the development of obesity than the environment in the adoptive family home. B. Subpoint: Apart from hereditary factors, obesity also occurs when there is a combination of unhealthy eating habits and a sedentary lifestyle. 1. According to the American Academy of Child ;amp; Adolescent Psychiatry (AACAP), unhealthy weight gain due to poor dieting and lack of exercise is responsible for over an incredible 300,000 deaths a year. 2.Nowadays, most people indulge in static mental exercise such as surfing the internet, watching television and reading rather than physical activities. 3. This would lead to an increase in the rate of obesity as more and more people become lazier (Myers, 2004) C. Subpoint: Eating habits are essential in maintaining a healthy lifestyle and preven ting the degenerate diseases in which are hand and hand with obesity. 1. The fast-food revolution and the carbohydrate-laden two-minute noodles as convenient substitutes for wholesome food also contribute to weight gain. .This is especially to those who have the eating habits of consuming a big portion of oily and fatty foods all at once. 3. Besides that, too much alcohol may also cause obesity because most alcoholic drinks are high in calories and this can lead to consuming more calories than we should. D. Subpoint: Obesity could also be caused by the slow metabolism rate of a person (Mathur, 2007) 1. Researchers found more metabolic and digestive disorders resulting from over consumption of trans-fats and refined white flour carbohydrates, combined with low fiber intake. 2.These eating patterns are known to interfere with food and energy metabolism in the body, and cause excessive fat storage. Transition: The effect of obesity is that people are getting fatter III. Main Point: Gro wing evidence shows that if you are overweight you are more likely to develop health problems, such as heart disease, stroke, diabetes, certain types of cancer, gout and gallbladder disease. A. Subpoint: Being overweight can also cause problems such as sleep apnoea (interrupted breathing during sleep) and osteoarthritis (wearing away of the joints) B.Subpoint: Type 2 diabetes is the most common type of diabetes which reduces our body's ability to control blood sugar. 1. Therefore, a person’s blood glucose level will increase and later become obese 2. It is also a major cause of early death, heart disease, kidney disease, stroke, and blindness. C. Subpoint: Heart disease and stroke are the leading causes of death and disability for both men and women. 1. This is because overweight people are more likely to have high blood pressure, a major risk factor for heart disease and stroke, than people who are not overweight 2.Very high blood levels of cholesterol and triglycerides (blo od fats) can also lead to heart disease and often are linked to obesity. 3. Being overweight also contributes to angina (chest pain) and sudden death from heart disease or stroke without any signs or symptoms (Mathur, 2007) Transition: There are many things we can do to control obesity IV. Main Point: Becoming more active is the best way to burn more calories and lose weight. A. Subpoint: As a citizen, we could help by walking or running at least 20 minutes a day. This will ensure that our heart stays healthy. . Also, if we know someone who is overweight, we should always try to support and encourage them to exercise. Quite often, people who are overweight will shy away from society, so any support we can give them will be greatly appreciated.2. We should be a role model for the younger generations to follow on how a healthy lifestyle is like. Also, a child could develop a healthier eating habit when they are still young as that’s their best learning time. B. Subpoint: It is imperative that the Government prioritize disease prevention and health promotion. . The government could organize health talks on obesity and publish advertisements through the media to show the damaging effects of obesity. 2. Measures have already been taken thanks to The Health Ministry’s Healthy Lifestyle campaign for promoting physical activity since factors such as environment, sports and recreational amenities influenced people’s inclination in this direction (Crawford, 2004) Conclusion: Obesity has a strong negative effect on the society and therefore, it is harmful.If society can take steps to solve the challenges faced, obesity will decline and people would have a healthier lifestyle. If obesity gets bad, then problems that come with it may be irreversible. Problems such as diabetes and heart conditions are common illnesses suffered by people who are obese. Therefore, there is a need to stop it from becoming a serious threat.Bibliography Crawford, Lester M. à ¢â‚¬Å"Government's role in combating the nation's obesity epidemic. Health & Human Services, June 2004 Mathur, R. â€Å"Obesity†, http://www. medicinenet. com/obesity_weight_loss/article. htm Myers, M. D. â€Å"Causes of obesity†, http://www. Weight. com. World Health Organization http://www. who. int/mediacentre/factsheets/fs311/en/index. html U. S. Center of Disease Control and Prevention http://www. cdc. gov/obesity/index. html American Academy of Child & Adolescent Psychiatry http://www. aacap. org/cs/root/facts_for_families/obesity_in_children_and_teens

Nx448 Business Game Report

Contents Part 1 Introduction3 1. 1 Business Objective3 Part 2 Company Performance4 2. 1 Round 14 2. 1. 1 Discrepancy analysis4 2. 2 Round 26 2. 2. 1 Business Strategy6 2. 2. 2 Round 2 Forecast7 2. 2. 3 Discrepancy Analysis7 2. 3 Round 38 2. 3. 1 Business Strategy8 2. 3. 2 Round 3 Forecast9 2. 3. 3 Discrepancy Analysis9 2. 4 Round 49 2. 4. 1 Business Strategy9 2. 4. 2 Round 4 Forecast10 2. 4. 3 Discrepancy Analysis10 2. 5 Key Performance Indicators11 2. 6 Performance Evaluation Comments12 Part 3 Learning14 3. 1 Financial Management14 3. 2 Human Resource Management15 3. 3 Operation Management16 3. Marketing Management17 Part 4 Team Performance18 4. 1 Team18 4. 1. 1 Management Team18 4. 1. 2 Decision-making Process19 4. 1. 3 Leadership19 4. 1. 4 Team Role19 4. 2 Individual20 4. 2. 1 My Contribution20 4. 2. 2 My learning about effective teamwork and decision making20 4. 2. 3 Suggestions for Improving My Performance21 Part 5 Conclusion21 Part 6 Reference22 Part 7 Appendices23 7. 1 Design and Options23 7. 2 Warranty Cost24 7. 3 Other Key Performance Indicators25 Part 1 Introduction This report will give a clear analysis and explanation of the company performance during the business game.Learning about four main business functional areas (Finance, Marketing, Operation and Human Resource) will be discussed in part 3. Team performance and individual assessment will be critically evaluated in part 4. 1. 1 Business Objective Moon Star Motors aims to provide customers with the ability to own a car and lead the customers to experience comfort and quality at an affordable price. We intend to create a distinctive place in the market for our products and build up brand value of quality and reliability in the mind of customers.The initial business objectives set up by management team is: * Increase sales annually * Maximise our profit * Sell out 98% of our cars for every round * Obtain 16% return on investment by the end of round 4 | City Car – TIKI| Large Car – C RUISER| Total| Forecast Production (Units)| 85,000| 35,000| 120,000 | Sales Income (? m)| 850| 833| 1,683| Post Tax Profit (? m)| -| -| 20| Bank Balance before Loan (? m)| -| -| -74| Closing Bank Balance (? m)| -| -| 26| Table 1. 0 Forecast for year 1 Part 2 Company Performance 2. 1 Round 1 2. 1. 1 Discrepancy analysisUnsold stock In round 1, we forecast to sell out both TIKI and CRUISER. However, only 80% of TIKI is sold, with 17,393 units left. We concluded three main reasons as following: * Supply over demand. We are over confident to sell big volumes with low price, but the market actually reached saturation. * Unattractive and inflexible options. In order to maintain low material cost, we only offer two options for customers to select. It might affect the popularity of our TIKI and make it less competitive compared with other car manufacturers. * Not enough promotion.We invested 23 million on market promotion via television and internet, which is about ? 200for every single car . We didn’t invest too much for this round because we want to firstly evaluate the effect of advertisement. Net profit We forecast 20 million net profits and actual figure is minus 116 million. This is mainly due to the large amount of unsold stock and ineffective pricing strategy. The total contribution is unable to recover our fixed cost. In other words, the break-even point is set up too high and our sales volume did not reach BEP.Meanwhile, some overheads such as professional charges and warranty claims are not properly calculated. Gross margin The difference between forecast and result for gross margin of TIKI and CRUISER is 3. 21% and 7. 08% respectively. It is mainly caused by the unexpected extra direct cost. For example, the worker strike increase our labor cost of both models and the option take-up is more than our estimate. Market share Our target market share is 1. 5% for TIKI and 1. 2% for CRUISER. We sold out all our CRUIER and hit the large car sales target. Ho wever, market share for TIKI is around 0. % less than we expected due to our unsold stock. 2. 2 Round 2 2. 2. 1 Business Strategy New Pricing Strategy The management team decided to adapt average pricing strategy in round 2 for two main reasons: * We already access successfully to target market. * Low price high volumes strategy did not make profit. Sales income must be increased in order to recover all overheads in this round and most of the loss in previous round. Based on this, TIKI gross margin increased 2% to 14. 24%, while CRUISER gross margin increased 4. 3% to 25. 25%. ProductionProduction for TIKI in this round has to decrease due to 17,393 units in stock, and we try to sell them out in round 2. Meanwhile, results of round 1 indicated that CRUISER won thepopularity in the market so we intend to increasethe production by 10,000 units. Based on the production adjustment and market predictions, the market share of CRUISER will increase from 1. 2% to 1. 5%, while TIKI maintains 1. 2% market share. Under this situation, our forecast sales will reach ? 2058 million in round 2. Redundancy The harshest decision made by management team is to cut down 574 workers.Even though we understand this have negative effects on industrial relations, it is far beyond our business objective to over produce the cars and keep unsold stock by the end of the year. Therefore, we forecast a 2. 4 million of redundancy cost within total overheads. 2. 2. 2 Round 2 Forecast round 2 forecast| TIKI| CRUISER| Total| production/ units| 51,000 | 45,000 | 96,000 | selling price ? | 11,800 | 27,800 |   | gross margin %| 14. 24%| 25. 25%|   | sales income ? m| 807| 1,251 | 2,058 | total overhead ? m|   |   | 262| post tax profit ? |   |   | 82| closing bank balance ? m|   |   | 12| 2. 2. 3 Discrepancy Analysis There are three main differences between round 2 forecast and results: (1) production (2) Sales (3) pre-tax profits. Production Production (units)| TIKI| CRUISER| tota l| Target| 51,000| 45,000| 96,000| Actual| 49,668| 44,467| 94,135| Difference| | | 1,865| Our target production is 96,000 units but we actually produced 94,135 units, with 1,865 units missing. This is mainly because the redundancy decision initiated serious worker strike, which is recorded as 41 days in our company report. Thus, the actual production did not hit our target.Sales Sales (? m)| Total| forecast| 2,058 2,058 | actual| 2,017 | difference| 41 41 | The discrepancy between forecast sales and actual sales is 40 million. We have 387 units CRUISER in stock which could increase our sales by 11 million if we can sell them out. And we will get 29 million more if we are able to hit the target production of 96,000 unites and sell them up. Pre-tax profit The actual pre-tax profit is less than the forecast due to wrong calculation on current account interest and loans interest. We have closing bank balance of minus 270 million last round.According to overdraft facility, we forecast to pay 11% of 270 million as overdraft interest which is around 30 million, but it actually is 15% of that amount and cost us 40 million. Besides, an extra 8 million is deducted as the interest of 100 million bank loans of round 1 and is ignored when we did financial forecast. 2. 3 Round 3 2. 3. 1 Business Strategy Personnel Decisions Management team decided to maintain the size of workforce and to increase wages by 8% and training investment by 25% in order to improve worker satisfaction and commitment, especially after we suffer a great loss caused by 41 days strike.We hope to effectively control the strike in this round and expect the improvement of productivity. Automation Investment Management team made a decision of doubling the automation investment due to two main reasons. Firstly, it is recognized that automation can effectively increase the productivity and decrease the high wage bill. Secondly, the profit we made in previous round increases our confidence and financial capa city to introduce new equipment. 2. 3. 2 Round 3 Forecast round 3 forecast| TIKI| CRUISER| Total| production/ units| 65,500 | 40,500 | 106,000 | selling price ? 12,270 | 28,600 |   | gross margin %| 15. 25%| 28. 98%|   | sales income ? m| 804| 1,169 | 1,973 | total overhead ? m|   |   | 281| post tax profit ? m|   |   | 118| closing bank balance ? m|   |   | 158| 2. 3. 3 Discrepancy Analysis Gross profit Gross Profit| forecast| actual| difference| Sales (? m)| 1,973| 1,973|    0| cost of sales (? m)| 1,512| 1,577|    65| gross profit (? m)| 461| 396| 65| The actual gross profit is 65 million less than our forecast, even though our sales reach the target. This is mainly caused by exceeded materials costs.It is indicated on company report that design and options cost for CRUISER is ? 7572 per unit, but we only count it as ? 6186 when we forecast. In this situation, we are charged ? 1386 more for producing every CRUISER. It reflects that the options we offer to cust omers are of great popularity and we should enlarge option take-up percentage when doing the material cost forecast for next round. 2. 4 Round 4 2. 4. 1 Business Strategy Sales target Encouraging by the good financial performance of last round, management team decided to increase the sales by 32% in round 4 in order to further satisfy our shareholders.However, we do not plan to increase the gross margin for both models because we guarantee customers of good value for money. Thus, we expect the high volumes sales bring us profit. Design and options To make our cars competitive, we add more options to both models for customers to choose based on the popularity indicators (see appendix). Since the very beginning, both 3/5 door hatch with small engine (city car) and MPV with diesel engine (large car) are most popular designs for our target age group. So, the adjustment is focused on the alternative options. Promotion ExpenditurePromotion expenditure will increase by 34% to ? 40 million. This decision is made by management team with attempt to make our products sold better. Market predictions indicated that city car market and large car market will shrink by 12% and 9% respectively. That is to say, risk of keeping stock is high if we increase our production in round 4. Thus, we hope the promotion and advertisement could help reduce that risk. 2. 4. 2 Round 4 Forecast round 4 forecast| TIKI| CRUISER| Total| production/ units| 70,000 | 44,550 | 114,550 | selling price ? 13,900 | 26,800 |   | gross margin %| 15. 34%| 30. 73%|   | sales income ? m| 973| 1,639 | 2,612 | total overhead ? m|   |   | 308| post tax profit ? m|   |   | 235| closing bank balance ? m|   |   | 412| 2. 4. 3 Discrepancy Analysis Unsold Stock We expect to achieve zero closing stock but actually have 12,853 units unsold which worth ? 246 million. As a result, we are unable to reach target sales, post-tax profit and target market share. Market Share| TIKI| CRUISER| round 3 result| 1. 20%| 1. 51%| round 4 target| 1. 46%| 1. 80%|After evaluation, we conclude two possible reasons which contribute to this result: * We over estimate our capacity and are hurry to expand the market share. As shown on the table, we increase 0. 26% for TIKI and 0. 34% for CRUISER. It seems better if we execute market expansion step by step. * The competitors’ price might have negative impact on our sales. In final round, in order to offer more alternative choices and high quality experience to customers, we added more popular and high cost options for both TIKI and CRUISER, which increase our direct cost per car and make it hard to decrease the selling price. . 5 Key Performance Indicators Performance indicators| round 1| round 2| round 3| round 4| Sales | 1509 | 2017 | 1973 | 2274 | Sales growth (decline) %| -| 34%| -22%| 15%| Cost of sales| 1333 | 1599 | 1577 | 1700 | Cost of sales ratio %| 88%| 79%| 80%| 75%| Profitability| Gross profit margin %| 12%| 21%| 20%| 25%| Operating profit %| -7%| 6%| 6%| 12%| Net profit %| -8%| 3%| 5%| 9%| Return on assets %| -24%| 12%| 14%| 26%| Return on investment %| -23%| 21%| 18%| 36%| Liquidity| Current ratio| 0. 64| 1. 26| 3. 52| 3. 24| Quick ratio| 0. 13| 1. 1| 3. 52| 1. 45| 2. Performance Evaluation Comments In general, sales increased from ? 1509 million in round 1 to ? 2274 million in round 4 – an increase of 51%. Over this period, we did not launch any new model and enlarge the sales volumes too much. The main reason for sales increase is the growth of our selling price. Direct cost of sales decreased yearly from 88% in round 1 to 75% in round 4. Even though inflation raises material costs and we offer a pay rise to our workers, we are still able to handle the cost/sales ratio efficiently by adapting smart and efficient pricing strategy.Profitability: Gross Margin % The gross margin has doubled from 12% (round 1) to 25% (round 4). In real money terms, our gross profit increased from ? 176 million to ? 574 mi llion. This trend indicated that return on sales improved. Although direct cost of sales increased year by year, we adjust our pricing strategy in order to make our business more profitable. Operating Profit % Operating profit margin improved from minus 7% (round 1) to 12% (round 4) indicatingmore efficient operation management. To be specific, stock upkeep cost and redundancy cost are well managed.The R&D investment and warranty costs are effectively controlled. Even though the investment on promotion and training increase yearly, this cost is balanced by the decreasing depreciation cost due to the book value of our fixed assets reduced yearly. Net Profit % Net profit margin shows an increasing trend from minus 8% (round 1) to 9% (round 4). Our company remains profitable since round 2. This indicated that our business is successful in consistency of earning. Return on Assets % The return on assets grows dramatically from minus 24% (round 1) to 26% (round 4).This indicates that mana gement is more and more efficient in using business assets to generate profit. Return on Investment % The return on capital employed shows a similar trend, except a slight decline of 3% in round 3. The ROI is 36% by the end of round 4, which has actually achieved our business objective. Liquidity: From round 1 to round 3, the current ratio increase from 0. 64 to 3. 52 times, and the quick ratio increase from 0. 13 to 3. 52 times. The increasing ratio indicates that we have more cash flow to pay our creditors (quick settlement) and meet our short-term obligations.In round 4, the current ratio drop slights to 3. 24 times and the quick ratio drop greatly to 1. 45 times. This trend looks good because high ratio does not mean a healthy cash position of the business. It indicates that we do not use our capitals properly and efficiently. In conclusion, according to our current liquidity situation, our company is suggested to reduce the stock levels and to invest surplus cash in longer term investments. Market Share From round 1 to round 4, market share of TIKI increased from 1. 21% to 1. 35%, despite a slight decline in round 2.Market share of CRUISER increased sharply in round 2 compared with round 1, then showed a tiny increase trend year by year. It indicated that we are successful in persistently and steadily supplying products to the market. Overall, our company’s performance has been improved in several ways, (e. g. sales, profit, creditors, market share, etc. ) In addition, it would have been more helpful for the further financial performance evaluation if the industrial average figures and key competitors’ information had been made available (Behn 2003). Part 3 Learning 3. 1 Financial ManagementIn the field of financial management, cost-volume-profit analysis is a powerful tool that helps managers identifies the relationships among cost, volume and profit (Banfield, Newcastle Business et al. 2008). It focuses on how profits can be affected by th e following variables: selling price, sales volume, unit variable costs, total fixed costs, etc. (Banfield, Newcastle Business et al. 2008). Break even analysis and margin of safety is the important part of cost-volume-cost analysis. The formula is shown as following: Formula: BEP = Total Fixed Cost = (in Units) Contribution per unitMargin of Safety = Forecast Demand – BEP Forecast Demand In round 1, we forecast our total fixed cost and depreciation charge is 241 million, and the contribution per unit is 2316. By using formula, the forecast BEP is 104,000 units. So we decided to produce 120,000 units after evaluating market demand. Our forecast margin of safety is therefore around 13. 3%. However, we underestimated the total fixed cost and overestimated our sales volumes. Thus, we suffered a loss of 116 million in the first round. In round 2, we re-evaluate the cost, volume and profit, and then set up 32. % of margin of safety. Financial performance is improved in this round so we adapted the similar approach for round 3 and 4, in which our margin of safety is about 39. 1% and 52. 8% respectively. It has been proved that high margin of safety makes profit less vulnerable to demand drops (Jacobs 2002). Even though we have 12,853 units unsold stock, we still make a profit of 198 million in round 4. From the business game, we have practiced how to price products and how much volume of products we must sell in order to make a profit. 3. 2 Human Resource ManagementWhen we practice the Human Resource function in business game, we put emphasis on rewards, in particular worker wage. High wage will not always improve the work performance from long-term perspective, but annual pay increase works (Banfield and Kay 2008). Based on this learning, we decide to pay our worker ? 355 weekly in round 1 and to increase that wage annually. However, we suffered a loss due to bad company performance in round 1, so wage did not increase even though inflation rate is around 3% . In round 2, company performance is improved and we make profit. Thus, wage increase by 9% ahead of 4% inflation rate in round 3.In round 4, wage increase by 5% to ? 404. Overall, from round 1 to round 4, wage increase by 14%, but the strike days only reduced 1 day (8 days in round 1 and 7 days in round 4). It is indicated that a reward cannot help to improve work performance if the pay increase does not meet the employee expectation (Corby 2009). According to data on competition, EMPIRE, our key competitors, pays their worker ? 500 weekly in round 4 and the strike day is controlled as 2 days. From the business stimulation, we realized the importance of monetary rewards and the link between rewards and productivity.On the other hand, poor management of employee relations often end up with strikes (Blyton and Turnbull 1998). With this learning, we could have found another solution to allocate our workers instead of redundancy. There are some limitations of business game in terms of HR management. High wage and training investment seems to be the only way to motivate productivity. And some other important HR functions such as recruitment and selection, promotion and employee engagement are not covered in the game. Learning experience will improve if those issues are made available in the game. 3. 3 Operation ManagementQuality management refers to the management activities involved in determination of quality policy and its implementation through means such as quality planning and quality assurance (Gitlow 2005). High quality puts costs down and revenue up (Banfield, Newcastle Business et al. 2008). Based on this learning, in order to control product quality, we focus on the R&D (Research and Development) and skills training when we practice the operation function during business game. From round 1, we keep investing on projects of fuel efficient engine and low emissions in order to detect and control the quality of engines.Both of them are successful after 3 ye ars of research and development. This help to reduce our warranty cost efficiently (see appendix). Due to safety factor, we started to invest on the project of advanced safety systems. We expect the continuous R&D investment bring us long term financial benefit. Meanwhile, we continuously invest on skills training based on the knowledge that investment in skills training can significantly improve product quality (Gitlow 2005). From the business game, I got better understanding about quality management and how quality influences customers’ buying decision.We also learn how to define the quality characteristics, set quality standard and measure the quality of our products. One of the limitations in stimulation process is that it is unavailable to evaluate and select the suppliers by ourselves. If this is made available, I believe that the operation cost would be controlled autonomously and learning experience of students about supply chain would be improved. 3. 4 Marketing Mana gement Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value (Kotler and Keller 2011).In carrying out the marketing functions, the company needs to have a marketing program or strategy. This is known as the marketing mix (Marc 1997). The conventional view of the marketing mix consisted of four components: Product, Price, Place and Promotion. It is indicated that 4Ps constitute the cornerstone of any sound business (Marc 1997). Based on this learning, we tried to use the right marketing mix to reach our target market during the business game. Product: In round 1, 3/5 door hatch and small engine are chosen for city car (24-40 market), while MPV and diesel engine are chosen for large car (41-55 market).Options are selected due to the factors such as safety, comfort and style. From round 2, we detect the popularity index and aim to offer the most appropria te products to our customers (see appendix). Price: We use market penetration in round 1. In the next three round, we adapt average pricing strategy. The economic trend and income status of our target customers are also taken into account as well. Promotion: We keep increasing our promotion investment from 23 million to 40 million via various media. In round 1, we invest ? 200 for every car and it increase to ? 450 in round 4.Through business game, I got better understanding about marketing mix. However, innovation and new product strategy, as another important marketing strategy, is failed to be used in our game. We could have learned more about finding customer value opportunities and creating an innovation culture in our team if we had launched new model. Part 4 Team Performance 4. 1 Team 4. 1. 1 Management Team We distributed our team into four groups in order to cover the four main functional areas of business organization: Finance, Marketing, Operation and Human Resource. Base d on personal interests and experience, I take the charge of Finance.Dorothy and Kira take the responsibility of managing marketing. Operation is taken charged by Michael and Jayson. Adetoro is responsible for HR. It does not mean that we make decisions and take responsibility separately. Actually, those functional areas are linked with and supported by each other. And everybody of the team is required to know exactly the whole process of our business. In reality, the main purpose of functional areas is to ensure that all important business activities are carried out efficiently. This is essential for a company to achieve its business objectives (Marcouse 2010). . 1. 2 Decision-making Process The overall decision-making was a collective process. During the business game, we discussed and evaluated all feasible solutions and make sure every decision is made to help settle the current problems and lead to business objectives. The controversy, however, is sometimes unavoidable. For ins tance, Dorothy, marketing manager, proposed to launch new model in round 3 due to market attractiveness. I cannot agree with that because we are still experiencing financial difficulty. Our net cash position is minus ? 371 million with poor ability to pay our creditors.Adetoro is standing by my side, thinking from a long-term perspective. He suggested our team not to launch new model until we gain a reasonable market share. The further discussion and communication led to unanimous approval of the final decision. The similar situation happened when we discussed whether or not to adept price skimming strategy for our products. The dispute finally is settled properly. 4. 1. 3 Leadership I was nominated as the leader in business game due to my ability to manage market information and provide direction to my team members at the very beginning.Under my leadership, our company is driven to achieve business objectives (execution). I make clear that all my team members are enjoying the game and have learned how to run a business in a real world. 4. 1. 4 Team Role Through my observation, I have identified the strengths/weaknesses and work preference of my team members: * Jayson and Michael prefer to analyze the current situation and raise the issues that we have to face (analysis). Michael is a good team worker who communicates and cooperates effectively with others.Jayson, as a monitor evaluator, has a high critical thinking ability but lacking of expression. * Dorothy and Kira are intuitive about the market information, and they often give the creative ideas (plan). Both of them play as plant. Dorothy prefers change and innovation. She can work more effectively when cooperate with the people who are identified as implementer in Belbin team role framework. * Adetoro used to reflect all our decisions we have made for every round and make everything reasonable and explainable (reflection). He is enthusiastic and logic thinker. 4. 2 Individual . 2. 1 My Contribution I hav e little knowledge about car industry when I take this project, but I quickly realize that I have special interest on costing and budgeting due to my previous work experience. So, I went through the user menu and market research then finish the finance forecast sheet before attending the group meeting. In round 1, I am responsible for both Finance and Marketing. During the group meeting, I proposed my ideas about cost/price, most of which are accepted by my team members and I therefore am nominated as manager of Finance. We suffered a loss in round 1.After analysing the discrepancy between forecast and results, I suggest to adapt new pricing strategy and set a higher gross margin. The strategy is adapted by management team and makes profit for our company by the end of round 2. I am nominated as team leader due to my hard-working, efficiency and reliability. And I actively build up team relation and motivate our team members. I play the role of implementer successfully. I monitor ev ery process of the game and every detail of our decisions, and put emphasis on improving efficiency of every group meeting, and record the minutes. 4. 2. My learning about effective teamwork and decision making Through business game, along with the knowledge I learn from Developing Self module and the experience of residential weekend, I have better understanding about: * An effective teamwork involves in a group of people with common objectives and being able to build up trust and cooperate relationship with each other. * An effective teamwork involves in a group of people who have complementary strengths/weaknesses with each other. * An effective team should have a leader who is able to provide direction, open mind to different opinions, ake right decision and take risks. * An effective decision should create the competitive advantage for organization and bring short term profit along with long term development. * An effective decision builds up the core competency of organization and turn competitive advantage into sustainable competitive advantage. 4. 2. 3 Suggestions for Improving My Performance * If the game could be played again, I would like to think twice before adapting market penetration strategy in round 1 and try to avoid that loss as much as possible. I would like to pay more attention on developing my leadership capability and making better use of the abilities of my team members in order to build up a powerful and effective team. Part 5 Conclusion Overall, our company is successful in the achievement of business objectives. By the end of round 4, our sales have increased by 50%, and our profit is showing a trend of growth. Even though the unsold stock percentage is larger than what we expect, we are still able to control the inventory and keep profitable. Return on investment in round 4 is 36% which is much more than our target.Part 6 Reference Banfield, P. and R. Kay (2008). Introduction to human resource management. New York, Oxford Universit y Press. Banfield, P. , S. Newcastle Business, et al. (2008). Managing for competitive advantage, McGraw-Hill custom publishing. Behn, R. D. (2003). â€Å"Why Measure Performance? Different Purposes Require Different Measures. † Public Administration Review 63(5): 586-606. Blyton, P. and P. Turnbull (1998). The dynamics of employee relations. Basingstoke, Macmillan. Corby, S. (2009). Rethinking reward. Basingstoke, Palgrave Macmillan. Gitlow, H. S. (2005). Quality management. New YorkLondon, McGraw-Hill. Jacobs, T. (2002). â€Å"The margin of safety. † NATURE BIOTECHNOLOGY 20(12): 1191-1191. Kotler, P. and K. L. Keller (2011). Marketing management. Harlow, Pearson Education. Marc, L. (1997). â€Å"Marketing mix customization and customizability. † Business Horizons 40(6): 39. Marcouse, I. (2010). â€Å"BTEC First Business. † 1. 4 The main functional areas within business organisations Ed. Retrieved 06/01, 2012, from http://www. teachmebusiness. co. uk/pag e29/page16/page18/assets/Functionalareas. pdf. Part 7 Appendices 7. 1 Design and Options TIKI (City Car)  | | round 1| round 2| round 3| round 4| /5 Door Hatch| Y| Y| Y| Y| Small Engine (4 Cylinder)| Y| Y| Y| Y| Multi Location Airbags|   |   |   | Y| Alloy Wheels|   | Y| Y| Y| Parking Sensors| Y| Y|   | Y| Air Conditioning| Y| Y| Y| Y| Superior Sound System/iPod|   | Y| Y| Y| Security Package|   |   |   | Y| Safety Package|   | Y| Y| Y| CRUISER (Large Car)  | | round 1| round 2| round 3| round 4| SUV| Y| Y| Y| Y| Diesel Engine| Y| Y| Y| Y| Multi Location Airbags|   |   | Y| Y| Alloy Wheels|   |   | Y| Y| Security Tracker|   |   |   | Y| Cruise Control| Y| Y|   |   | Automatic Transmission| Y| Y|   |   | Parking Sensors| Y| Y| Y| Y| Electronic Stability Control| Y| Y|   |   |Panoramic Sunroof| Y| Y|   |   | Heated Elec Wing Mirrors|   |   |   | Y| Electric Adjustable Seats|   |   |   | Y| Air Conditioning| Y| Y| Y| Y| Superior Sound System/iPod| Y| Y| Y| Y| Bluetooth Phone Preparation|   |   |   | Y| TV/DVD Player| Y| Y|   |   | Metallic Paint|   |   | Y| Y| Security Package|   |   | Y| Y| Safety Package| Y| Y| Y| Y| Luxury Package|   |   |   | Y| 7. 2 Warranty Cost Warranty Cost| round 1| round 2| round 3| round 4| TIKI per car ? | 173| 170| 140| 155| CRUISER per car ? | 400| 353| 295| 348| Total Warranty Claims ? m| 26| 27| 21| 23| 7. 3 Other Key Performance Indicators

Classical Operant Conditioning Case Study - 1686 Words

Introduction In the last decade alone there has been such a progression when using the CBT approach when it comes to dealing with individuals who have a substance abuse problem. There is a link between Cognitive therapy and behavior therapy which works well together. CT has to do with thoughts, beliefs, values, and opinions where behavior is emotions, family, social relationships, cultural influences and biological factors (Rohsenow, 2016). Each of the case studies that are talked about the CBT approach and how it applies to a substance related disorder. This paper talks about classical, operant conditioning, social learning as it applies to a substance disorder. As well as the CBT approach and how it applies to someone who has a†¦show more content†¦One thing that must be understood is that when any individual uses cocaine it s for important and a particular reason. Social learning theory- when someone learns from someone else it is called social learning, it is the most c ommon way people learn. With any type of addiction such as cocaine, it requires the help of others because they tend to help each other find the drugs they are in search of. Over time the addiction occupies more and more of their time till eventually all they are doing is surrounded by people associated with the addiction. At this point, it is nearly impossible for them to withdraw away from that situation and form new relationships with people who are not associated with it (Horvath, Misra, Epner, Cooper, 2017). Cognitive therapy- was developed as a method to prevent relapse when treating problem drinking and then eventually adapted cocaine addiction. This theory is based on the development of behavioral patterns like substance abuse; individuals in CBT learn to correctly identify the problem behaviors by applying the skills necessary that can be used to stop drug abuse and to address the problems that often happen with co-occurring disorders (NIDA, 2013). When it comes to helping someone involved with CBT is to anticipate the problems that are likely going to occur and help develop effective coping strategies such as looking at the positive and negativeShow MoreRelatedClassical and Operant Conditioning Case Study1357 Words   |  6 Pagesthat occur close in time. When an organism learns to make associations, it is being conditioned. There are two types of conditioning. Operant conditioning is when an organism associates an action and the consequence of that action. It results in the or ganism adapting its behavior to maximize rewards and minimize punishment (Skinner). 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