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Business > 9 Strategic methods: how to pursue strategies (A-level only) > Flashcards

9 Strategic methods: how to pursue strategies (A-level only) Flashcards

1
Q

what is growth

A

growth is the expansion of business operations

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2
Q

what is retrenchment

A

retrenchment is when a business cuts back on business operations

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3
Q

why do businesses grow (6)

A
  • to achieve higher profits, sales, revenue
  • to increase market share
  • to achieve objectives
  • to increase efficiency (economies of scale)
  • to increase brand recognition
  • mitigate risk
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4
Q

why do businesses retrench (6)

A
  • to avoid cash flow problems
  • to avoid liquidation
  • to avoid losses at the end of a products life cycle
  • delayering improves competitiveness
  • external changes (like covid, political/legislation)
  • to avoid losses during recession
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5
Q

two types of growth and the differences between them

A

organic - internal
inorganic - external

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6
Q

what is economies of scale, naming the three types and what they are in detail

A

economies of scale - as output increases, unit costs decrease

  1. managerial
    by having more output, you are able to get specialised managers and employees in the field
  2. technical
    you are able to get the best technology by having more output
  3. purchasing
    you are able to benefit from discounts in bulk buying
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7
Q

what is economies of scope

A

economies of scope is the more variety a business offers, the lower unit costs become

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8
Q

what is diseconomies of scale and the three types

A

when a business grows too fast, unit costs may start to increase

types
1. poor with communication
2. poor co-ordination
3. poor employee motivation

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9
Q

what is the experience curve and what parts of the business will help with experience curve

A

as the business has more experience in making a product, the efficiency increases, decreasing unit costs

  1. labour efficiency - labour is more experienced so less likely to make mistakes, reducing raw material waste
  2. labour specialisation - as labour is more experienced, they begin to specialise in specific parts of the production process, increasing efficiency
  3. advances in tech
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10
Q

what is a synergy

when two business form a synergy they can benefit from…

A

the whole is greater than the individual parts

when two business join they can benefit from…

cost saving synergies:
- eliminating duplicated functions
- better supplier negotiating powers
- better efficiency in production
- economies of scale

revenue synergy
- customers from both businesses
- greater location choice

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11
Q

what is overtrading
and ways to overcome overtrading

A

when a business grows too fast, the business uses all of its working capital and has no funding for the long term

ways to overcome involve:
1. creating a cash flow forecast
2. decreasing payable and receivable days
3. leasing instead of buying assets

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12
Q

what are the six phases of Greiners growth model

A
  1. creativity
  2. direction
  3. delegation
  4. co-ordiantion
  5. collaboration
  6. external growth
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13
Q

what are the 5 crisis of Greiners growth model

A
  1. leadership crisis
  2. autonomy crisis
  3. control crisis
  4. red tape crisis
  5. internal growth
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14
Q

methods of organic growth (2)

A

-franchising
- opening up new stores

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15
Q

methods of inorganic growth

A
  • mergers and acquisitions
  • takeovers (can be hostile)
  • integration (vertical, horizontal and conglomerate)
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16
Q

what is innovation

A

innovation is the process of improving or generating new ideas

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17
Q

pressures for innovation (4)

A

-competition
- CSR
- stakeholders
- shareholders

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18
Q

two types of innovation and the differences between them

A

product - improving existing product/ new product idea

process- more efficient ways of producing a product or delivering services

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19
Q

the value of innovation for a business (6)

A
  • lower costs
  • brand reputation and value
  • usp
  • first mover advantage
  • competitiveness
  • monopoly
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20
Q

ways of becoming an innovative business

A
  • research and development
  • kaizen
  • benchmarking
  • intrapreneurship
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21
Q

what is intrapenreuship

A

when employees are encouraged to think of ideas and innovations

22
Q

what is benchmarking

A

when businesses take better practices and employ them into their own business

23
Q

what is research and development

A

yeah….

24
Q

what is kaizen

A

continuous, incremental changes through employees

25
Q

two ways of protecting intellectual property

A

copyright and patent

26
Q

what is intellectual property

A

intangible asset to the business

27
Q

what is a patent and copyright and the differences between them

A

patent is protection over a new innovative idea

copyright is protection over creative work

28
Q

what are the reasons for targeting, operating in and trading with international markets (7)

A
  • profits
  • increase market share
  • mitigate risk
  • growth
  • extend product life cycle
  • first mover advantage
  • synergies
29
Q

what is internationalisation

A

when a business develops operations outside of its headquarters are

30
Q

what are the factors that influence the attractiveness of international markets (8)

A
  • political
  • legal
  • economic
  • tax laws
  • cultural differences
  • amount of competition
  • infrastructure
  • location
31
Q

what are the four methods of entering international markets

A
  • exporting
  • direct investment
  • alliances
  • licensing
32
Q

advantages and disadvantages of exporting

A

advantages:
- cheap
- better control over products being sold
- better communication with customers

disadvantages:
- trade costs
- taxes

33
Q

advantages and disadvantages of direct investment

A

advantages
- better control

disadvantages:
-expensive

34
Q

advantages and disadvantages of alliances

A

advantages
- expertise of who your alliance with

disadvantages:
- takeovers
- need to share profits

35
Q

advantages and disadvantages of
licensing

A

advantages of licensing
- expertise of licenser
-cheaper than other ones

disadvantages
- may damage business
-loss of control

36
Q

what are the reasons for producing sourcing more resources abroad

A
  • cheaper
  • more skilled labour
  • closer to target market
  • raw materials are there
37
Q

what is offshoring and why would businesses off shore

A

business sends its operations abroad

  • cheaper
  • more skilled labour
  • closer to target market
  • raw materials are there
  • tax laws
38
Q

what is re-shoring and why would businesses re-shore

A

business brings back its operations from abroad

  • retrenchment
  • gain more control
  • prevent liquidification
39
Q

what are the influences on buying, selling and producing abroad

A
  • exchange rates
  • trade laws
  • legal barriers
  • culture
    -langauge and time zones
40
Q

what does Bartlett and Ghoshal’s business strategy do

A

a model for outlining possible strategies for MNC’s based on pressure for local responsiveness and pressure for managing costs (global integration)

41
Q

what are the pressures to adopt digital technology

A
  • competition
  • customers
  • suppliers
    -shareholders
    -improve
    financial performance
    communication
    productivity
    brand image
42
Q

advantages of e-commerce

A
  • increased size of target market (geographic locations)
  • collect data for better targeted marketing
  • 24/7 shopfront
  • low barriers to entry (cheap to set up)
  • reduced average costs= economies of scale
  • efficient advertising spend
43
Q

in Bartlett and Ghoshal, pressure for local responsiveness is

A

the extent a business must customise their products to meet local tastes

44
Q

in Bartlett and Ghoshal, pressure for managing costs (global intergration) is

A

the extent a business needs to exploit their economies of scale to gain a competitive advantage

do you need to set a lower price to be competitive

45
Q

in Bartlett and Ghoshal, pressure for managing costs depends on

A
  • if the products are not differentiated meaning price is the USP
  • how cheaply competitors are able to produce similar products
  • is the market competitive
46
Q

Bartlett and ghoshals four sections

A

high need to local responsiveness, high need for global integration: transnational strategy

high need for local responsiveness, low need for global integration: multidomestic strategy

low need for global integration,
low need to local responsiveness:
International strategy

high need for global integration,
low need to local responsiveness:
global strategy

47
Q

big data is

A

vast quantities of data that is generated, stored and used by business

48
Q

big data is measured by

A

the three v’s

volume
velocity
variety

49
Q

data mining is

A

the use of software to analyse data to look for patterns and gain organisational learning

50
Q

erp ıs the use of

A

software to integrate key business processes for coordination

51
Q

erp in the different functional areas can be useful. how?

A

finance; ensures all invoices are paid

marketing; ensures customers can personalise products

hr; track employee profiles

operations; used to order supplies, monitor quality

Business (11 decks)

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