3.9.1- Assessing a change in Scale Flashcards

1
Q

Forms of growth

A

Organic
External

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2
Q

differences between organic and external

A

organic=slower
external=immediate (higher risk)

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3
Q

why is growth important?

A

shows progress
financial benefits
bargaining power
opportunities

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4
Q

benefits of growth

A

eos
synergy
experience curve
economies of scope

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5
Q

types of eos

A

purchasing
technological
managerial
financial
marketing

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6
Q

main benefit of eos

A

more efficient lower unit costs

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7
Q

problems of growth

A

diseconomies of scale
overtrading

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8
Q

diseconomies of scale

A

communication
control/coordination problems
motivation issues

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9
Q

what does overtrading lead to

A

cash flow problems of rapid growth

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10
Q

4 methods of growth

A

merger
takeover
venture
franchise

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11
Q

advantages of selling a franchise

A
  • quick growth finance
  • franchisee motivated
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12
Q

disadvantages of selling a franchise

A

-lose complete control
-dont gain all profits

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13
Q

advantages of buying a franchise

A
  • no need for innovation
    -provides training/support
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14
Q

disadvantages of buying a franchise

A

-not complete independence
-dont gain all profits

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15
Q

4 types of integration

A

-forward vertical
-backward vertical
-horizontal
-conglomerate

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16
Q

forward vertical integration

A

further up supply chain

17
Q

backward vertical integration

A

earlier in the supply chain

18
Q

horizontal

A

same stage of supply chain

19
Q

conglomerate

A

no connection

20
Q

retrenchment

A

reducing costs

21
Q

reasons of retrenchment

A

-out of touch w customer
-failed merger/takeover
-changing markets
-economic downturn
-urgent need to cut costs

22
Q

examples of retrenchment

A

-Tesco bought paperchase
-failed merger Asda +Sainsbury’s

23
Q

organic growth methods

A

-new product launch
-opening new stores
-expanding into foreign markets
-expansion of wporkforce

24
Q

external diseconomies of scale

A

price of land, labour rises, traffic congestion

25
Joint venture
business sharing information and resources but remaining seperate identity
26
advantages and disadvatages of JV
A: acess to resouces, shared risk, new opportunities D: 40% fail, culture clash, high risk
27
example of JV
Hotel Chocolat- in Japan JV with Tokyo firm after covid
28
advantages of inorganic growth
-rapid expansion -saves setting up costs -spread risk -acquire brand image -fill gap in product portfolio -compete
29
disadvantages of inorganic growth
-corporate culture clashes -lack of synergy -expensive dis eso -communication problems
30
example of merger
orange +T mobile= EE
31
example of takeover
-Kraft bought cadbury shares -Morrisons takeover safeway