9 pursue strategies Flashcards
methods of growth
- Internal(organic)
- External(inorganic)
- integration (horizontal, vertical- backward and forward, diversification/conglomerate)
- franchising
- ventures
- merges and takeover
methods to retrenchment
- reduce capacity (outsourcing)
- redundancies/ delayering
what is economies of scale
decrease in unit cost as scale of output increase
what are the types of economies of scale
- purchasing more: purchasing economies of scale(discounts of bulk buying)
- producing more: technical economies of scale (make use of machinery)
- more efficient: managerial economies of scale (delegate tasks to specialist to manage their tasks effectively)
economies of scope
reduce unit cost by increasing the production of similar products
diseconomies of scope
Factors causing costs to rise as the scale of output increases
experience curve
theoretically, more experienced manager are, lower firm’s cost
synergy
when a business is joined by another they will benefit, the sum of parts is greater than the other parts
over-trading
the financial stress caused by when one business is expanding too quickly
value of innovation
- first mover advantage
- market dominance
- growth→ sales
- loyal customers
- a type of extension strategy
- benchmarking
how to be innovation
how to be innovative:
- kaizen + marginal gains (operations efficiency)
- product and process innovation ( quality/ uniqueness to add value)
- product innovation: develop NEW goods and service
- process innovation: improve EXISTING goods
- encourage intrapreneurship
requirements/pre-conditions of innovation
requirements for innovation:
- research and development
- capital investment and commitment
- faith and support from directors
protect innovation
- licensing
- patent
- copyright
methods for internationalisation
- export
- licensing
- alliances
- direct investment
off-shoring and re-shoring
