9. Decision making to improve marketing performance Flashcards
benefits of growth
economies of scale
economies of scope
experience curve
synergies
what is retrenchment
a strategy used by a business to reduce its overall size or diversity of operations
5 internal economies of scale
purchasing managerial technical financial marketing
what is the experience curve
the idea that the more experience a business has in producing a particular product, the lower it costs
what is a synergy
the idea that the value and performance of two businesses combined will be greater than the sum of the two parts
what is overtrading
the situation where a business grows too quickly, undertaking more business than its working capital can cope with
5 phases of greiner’s model of growth
creativity direction delegation coordination collaboration
5 crisis of greiners growth model
leadership autonomy control red tape growth
4 reasons why growth is an important objective
- increased profit
- survival
- reduce risk: move into new markets
- increase market share
what is economies of scope
the reduction of unit costs because of producing a wider variety of goods and services
what is diseconomies of scale
when a business grows too large that costs per unit increase
3 reasons why diseconomies of scale may occur
- poor communication
- lack of control and coordination
- alienation of the workforce
what is vertical integration
when a business merges with or takes over another business in the same production chain but at a different stage (earlier stage - backward - suppliers) or (later stage - forward - pub chain)
what is horizontal integration
when a business merges with or takes over another business in the same stage of the production chain (another brewery)
what is a conglomerate
when a business merges with or takes over a firm in a total unrelated business area
what is a joint venture
where two or more businesses agree to pool their resources for the accomplishment of a specific task
what is franchising
a method of growth when an existing business (franchisor) grants another party (franchisee) the right to use its trade name and sell its products and services.
benefits for the franchisor of franchising
- relatively quick
- finance is provided by the franchisee
- franchisee is likely to be highly motivated
- organisational structure is less complex
what is innovation
when a new product or process is launched to make a profit
what is product innovation
launching a new or improved product or service
what is process innovation
developing more efficient production methods or ways of delivering of service
value of innovation 3
- competitive advantage
- aligned to strategic positioning
- stakeholder value
3 benefits of product innovation
- opportunity to build early customer loyalty and benefit from “first mover advantage”
- premium or skimming pricing strategy (high profit margin)
- publicity
7 benefits of process innovation
- greater efficiency
- improved quality
- faster production time
- reduction in unit cost
- enables mass customisation
- greater flexibility
- better customer service
4 ways of promoting innovation are
research and development
intrapreneurship
kaizen
benchmarking
what is research and development
R&D is about developing new products and processes
2 influences on the level of investment in r&d depends on
- finances available
- the strategy of the business: differentiation or cost leadership
what is an IPP or IP
intellectual property protection or IPP or IP is a legal document proving that someone is the owner of an invention
what is a patent
a government licence that gives the holder exclusive rights to a process, design or new invention
what is a trademark
a trademark is a recognisable name, logo, slogan or design that denotes a specific product or service and legally differentiates it from others
what is a copyright
the legal protection provided for the work of authors, composers and artists
what is intrapreneurship
enabling staff to behave like entrepreneurs in their work to the benefit of the business. individuals who are prepared to take the risk of developing their own ideas as a business
what is kaizen
‘continous improvement’ or small steps to innovation
assumes employees are the best people to identify innovative ideas
3 benefits of kaizen
- small changes can result in innovation
- ideas come from staff’s own experience and understanign of the way product is made - more likely to succeed
- kaizen should lead to a constant search for innovation
what is benchmarking
compares the business’ performance with industry best practice to identify areas and means of performance improvement
impact of innovation on HR 6
- recruitment of talented staff
- use of ‘soft HR’
- reward innovation
- productivity
- quality
- motivation
impact of innovation on marketing 3
- enables product life extensions
- can shorten product life cycle
- use of digital tech in market research
impact of innovation on finances 2
- large R&D budget needed - sources of finance, equity or debt
- can increase some costs and reduce others
impact of innovation on operations 4
- customisation
- lowers unit costs
- capacity coulf increase
- role of digital tech and robotics
benefits of greiner’s growth model
- warns leaders that growth strategy is difficult
- highlights potential signs of ‘crisis’
- suggest methods to overcome these crisis
cons of greiner’s growth model
- too simplistic model?
- not all businesses will suffer crisis as they grow
- model doesn’t account of other external factors e.g. PESTLE + C
