Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Business EL > 3.9.1 > Flashcards

3.9.1 Flashcards

1
Q

Why do businesses want to grow

A

larger businesses more stable then smaller
increaseses sales revenue
increase sales volume
bigger market share
benefit from econmies of scale, scope
increased risk of spreading

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is economies of scale

A

A proportionate saving in costs gained by an increased level of production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is purchasing

A

A reduction in unit costs as a result of buying in large quantities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is technical?

A

The lower the unit costs that arise because larger firms are able to use more efficient techniques of production.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is managerial?

A

As business expands it may bring in specialists to focus on parts of the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is financial?

A

A larger business will find it easier to raise funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is economies of scope?

A

Cost savings for operating in several markets or providing several products

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

example of economies of scope

A

eg Procter and Gamble- distributes many different products to supermarkets so transportation cost can be spread over a range of brands

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is organic growth

A

(internal) when a business grows through expanding its own operations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

How does organic growth happen

A

launch exiting products directly into new markets
opening new business locations
new product development
training employees

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

example of organic growth

A

Apple- focussing on development of new products

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Benefits of organic growth

A

Less risk
usually financed using profits
easier to manage and control
less disruptive change
maintain current management style

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Drawbacks of organic growth

A

Harder to build market share if business is already a leader
Slow growth

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is a franchise

A

When one business sells the right to another business to use its name and sell its goods or services in return for a fee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Example of a franchise

A

McDonalds, costa

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is a merger

A

a combination of two previously separate firms which is achieved by forming a completely new business into which the two original firms are integrated

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Example of a merger

A

Lloyds and TSB

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is a takeover

A

Where one firm buys a majority shareholding in another firm and therefore assumes full management control

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Example of takeover

A

Apple and beats

20
Q

Reason for mergers and takeovers

A

-May not have expertise- aquire -smaller companies with experience
-costs may be favourable

21
Q

What is synergy

A

The whole is greater then the sum of parts - 1+1=3

22
Q

why does synergy happen

A

Happens when the value of two businesses brought together is higher then the sum of the values of the two individual businesses.

23
Q

What are the two types of synergy

A

Revenue
Cost

24
Q

Examples of revenue synergy

A

Disney and pixar

25
Q

What is revenue synergy

A

Cross selling to customers of both businesses

new distribution channels

more brands

new geographic markets

26
Q

What are cost synergies

A

no duplicated functions and services

better deals from suppliers as a larger business

higher efficiency from shared assets

27
Q

What is hostile takeover

A

Where a company takes control of another company without the approval or consent of the target company’s board of directors.

28
Q

What is vertical inegration

A

Coming together of firms in the same industry but at different stages of production

29
Q

What is horizontal integration

A

the coming together of firms operating at the same stage of production and in the same market

30
Q

What is conglomerate integration

A

the coming together of firms operating in unrelated markets

31
Q

benefits of forward vertical

A

manufactures have direct access to the retail market
can control whats sold
cost savings
able to control price

32
Q

Benefits of backward vertical

A

retailers control production of their supplies
cheaper supplies

33
Q

Benefits of horizontal integration

A

reduces competition in market
increases market share
benefit from economies of scale

34
Q

Benefits of conglomerate merger

A

Gain experience from existing firm in a new market
spreads risk

35
Q

What is a joint venture

A

an agreement between separate entities coopering within a specific project for the achievement of a common goal

36
Q

What ownership do the businesses have in a joint venture

A

Shared ownership and risk
usually 50:50 split
often used as a method of a business entering international markets

37
Q

eg of a venture

A

Starbucks and tata-
Starbucks- enter Indian market and decrease dependance on US market

TATA- became Asia’s biggest publicly traded coffee grower

38
Q

What are diseconomies of scale

A

occur when unit costs increase as a business expands

39
Q

What are the 4 parts of diseconomies of scale

A

communication, coordination, control, motivation

40
Q

How is communication affected by - diseconomies of scale

A

Poor communication-
Communication between different departments becomes more difficult

More layers in the hierarchy-workers having less clear instructions

More written form of communication

41
Q

How is coordination/ control affected by diseconomies of scale

A

Loss of direction and coordination

Harder to check everyone is working for the same overall goal

More difficult for managers to supervise their subordinated

manager may be forced to delegate tasks

42
Q

How is motivation affected by diseconomies of scale

A

Lack of motivation

Workers can often feel more isolated and less appreciated in a larger business

Harder for managers to stay in day-to-day contact with workers and build u a good team environment and sense of belonging.

As communication becomes harder motivation will decline

43
Q

How can we minimise poor communication, motivation, coordination, control

A

Use of budgets
Appraisals
Target setting
clear mission statement
set of values
delegation of decision making ( empowerment)
Job enrichment- make more interesting
Team-working

44
Q

What is retrenchment

A

Retrenchment occurs when a business reduces the scale of a specific business area or element within the business operation.

45
Q

what ways can a business retrench

A

Reduce capacity.
Job losses / redundancy programmes.
Product / market withdrawal.

46
Q

What is overtrading

A

Overtrading happens when a business expands too quickly without having the financial resources to support such a quick expansion

47
Q
A

Business EL (7 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions