3.9 Strategic methods: how to pursue strategies Flashcards
Organic growth
Expansion achieved through internal development, such as increasing sales, expanding
product lines or entering new markets without acquisitions.
External growth
Expansion achieved through acquisitions, mergers or partnerships with other companies
rather than through internal development.
Technical economies of scale
Cost advantages obtained by increasing the scale of production, leading to lower average
costs per unit due to efficiencies in technology and processes.
Purchasing economies of scale
Cost advantages achieved through bulk purchasing of materials or supplies, allowing for lower
unit costs due to volume discounts or reduced transaction costs.
Economies of scope
Cost savings resulting from producing a variety of products or services together more
efficiently than producing them separately, often by sharing resources or infrastructure.
Diseconomies of scale
Increasing average costs per unit as production levels rise beyond a certain point, typically
due to inefficiencies or complexities in managing larger operations.
Synergy
The combined value and performance of two businesses will be greater than the sum of the
individual parts.
Overtrading
A situation where a company expands its operations too rapidly without adequate financial
resources or operational capacity, leading to cash flow problems.
Retrenchment
A strategic response to financial difficulties or poor performance, involving reducing the scale
or scope of operations to improve efficiency and profitability.
Merger
The combination of two or more companies into a single entity, typically with the aim of
achieving synergies, expanding market share or increasing competitiveness.
Takeover
The acquisition of a controlling interest in a company by another company.
Venture
A business arrangement where two or more businesses agree to share their resources for
mutual benefit.
Franchising
A business model where individuals or groups (franchisees) are granted the right to operate
under the brand and business model of a larger company (franchisor) in exchange for fees
and royalties.
Vertical integration
The expansion of a company’s operations into different stages of the supply chain, such as
acquiring suppliers or distributors, to gain control over production or distribution processes.
Horizontal integration
The expansion of a company’s operations into the same stage of the supply chain or industry,
such as acquiring competitors, to increase market share or consolidate market power.
Conglomerate integration
The diversification strategy of expanding into unrelated industries or businesses to spread
risk and capture new opportunities, often through mergers or acquisitions.
Kaizen
A Japanese business philosophy focused on continuous improvement in processes, products
and services through incremental changes and employee involvement.
Research and development (R&D)
The systematic process of creating, testing and improving products, services or processes
through scientific investigation and experimentation.
Intrapreneurship
The practice of fostering entrepreneurial behavior and innovation within a business,
encouraging employees to develop and implement new ideas or projects.
Benchmarking
Comparing a company’s performance, processes or practices with those of competitors or
industry leaders to identify areas for improvement and best practices.
Patent
Legal protection granted to inventors for their inventions, giving them exclusive rights to
make, use or sell the invention for a limited period
Copyright
Legal protection granted to creators of original works, such as literature, music or software,
giving them exclusive rights to reproduce, distribute or perform the work for a limited period.
Globalisation
The process of increased interconnectedness and integration of economies, cultures and
societies worldwide, facilitated by advances in technology, communication and trade.
Emerging economy
A developing country with rapidly growing industrialisation, infrastructure and economic
potential, often characterised by high growth rates and increasing integration into the global
economy.
