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Business > Schedule N > Flashcards

Schedule N Flashcards

1
Q

reasons firms will grow (4 points)

A
  • economies of scale
  • economies of scope
  • benefit from the experience curve
  • acquiring other businesses creating synergies
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2
Q

reasons for retrenchment (2 points)

A
  • economic downturn
  • suffering from diseconomies of scale
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3
Q

how do businesses retrench? (5 points)

A
  • reduce physical stores
  • reduce number of employees
  • reduce output
  • reduce portfolio size
  • reduce geographical area
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4
Q

when does change occur

A

when businesses alter their structure, size or strategy to respond to internal or external influences

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5
Q

reasons for change (4 points)

A
  • to meet objectives e.g. gain market share
  • to respond to external forces e.g. consumer demand
  • respond to internal forces e.g. employee pressure
  • gain a competitive advantage e.g. economies of scale
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6
Q

reasons a business may want to grow (4 points)

A
  • increase shareholder value
  • increase market share
  • decrease average costs
  • stakeholders perception of success
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7
Q

reasons for retrenchment (4 points)

A
  • restructure to increase efficiency
  • turn around poor performance
  • focus on core businesses
  • sell off less profitable parts of business to increase overall performance
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8
Q

organic growth

A

when a business expands in size by opening new stores, branches, functions or plants

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9
Q

benefits of organic growth (5 points)

A
  • low risk
  • get to maintain control
  • less disruption
  • typically more sustainable
  • incremental growth
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10
Q

disadvantages of organic growth (3 points)

A
  • takes a long time
  • dont gain synergies
  • slow gain of market share
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11
Q

external growth

A

when a business expands in size by either merging with or taking over another business

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12
Q

advantages of external growth (6 points)

A
  • quick access to new markets
  • quick growth
  • material impact of market share
  • become a more diversified business
  • access to new technology
  • overseas business will mean you gain their experience
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13
Q

disadvantages of external growth(3 points)

A
  • expensive
  • high risk
  • managers of business may lack experience in new market/business
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14
Q

economies of scale

A

the advantages enjoyed by a business as it increases the scale of its current operations leading to a fall in unit costs

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15
Q

technical economies of scale

A

the benefits enjoyed when a business is able to spend more on larger and more efficient machinery leading to a decrease in average unit costs

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16
Q

purchasing economies of scale

A

the benefits enjoyed when a business is able to negotiate greater discounts with suppliers for bulk buying to lower average unit costs

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17
Q

managerial economies of scale

A

the benefits enjoyed when a business can employ specialist people leading to a fall in average costs

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18
Q

financial economies of scale

A

the benefits enjoyed when a business gets bigger and has more assets

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19
Q

economies of scope

A

the advantages enjoyed by a business as it increases its operations by expanding its range of activities leading to lower AUC

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20
Q

the experience curve

A

the advantages enjoyed by a established business as a result of having both managers and employees who are experienced with the running of the business

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21
Q

diseconomies of scale

A

the disadvantages suffered as a result of the business increasing its operations scale leading to increased unit costs

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22
Q

rising unit cost will force a business to… (2 points)

A
  • increase selling price of product
  • sell less products to decrease costs (retrenchment)
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23
Q

diseconomies of scales (communication issues) (3 points)

A
  • larger firms struggle to communicate internally
  • increased costs for communication methods
  • lots of workers = harder to communicate with them all
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24
Q

diseconomies of scales (coordination and control) (2 points)

A
  • large firm = more people = harder to organise
  • may become harder to delegate and moderate
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25
Q

diseconomies of scales (motivational issues)(3 points)

A
  • increase size of business = less contact with senior managers and overall vision of the business
  • may feel insignificant in bigger businesses
  • Maslows hierarchy of needs
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26
Q

Greiner’s model of growth: Phase 1(3 points)

A
  • Characteristics: creative and lack of hierarchy as business is young and entrepreneur is likely to be in control
  • Crisis: need for direction
  • Revolution: creation of leadership structure
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27
Q

Greiner’s model of growth: Phase 2(3 points)

A
  • Characteristics: Better structure, some managers may feel lack of autonomy
  • Crisis: autonomy
  • Revolution: increase delegation
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28
Q

Greiner’s model of growth: Phase 3(3 points)

A
  • Characteristics: decentralised decision making. senior managers feel they no longer have control
  • Crisis: loss of control
  • Revolution: introduce more formal procedures
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29
Q

Greiner’s model of growth: Phase 4(3 points)

A
  • Characteristics: centralised decision making and increased bureaucracy
  • Crisis: red tape
  • Revolution: coordination between HQ and functions
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30
Q

Greiner’s model of growth: Phase 5(3 points)

A
  • Characteristics: increased communication and team work between HQ and functional areas
  • Crisis: Potential future crisis but will vary between organisations
  • Revolution: dependant on the nature of the crisis
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31
Q

limitations of Greiner’s model (4 points)

A
  • only a model, growth isn’t always perfectly linear
  • you can skip phases of model
  • you can retrench which model doesn’t show
  • the longer you stay in one stage of growth the greater the resistance to change
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32
Q

Horizontal integration

A

2 businesses at the same stage e.g. Tesco and ASDA

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33
Q

vertical integration

A

2 businesses at different stages e.g. Tesco and Bookers

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34
Q

conglomerate integration

A

2 unrelated businesses integrating

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35
Q

Advantages of diversification (4 points)

A
  • may reduce risk
  • might acquire intellectual property
  • might acquire talent
  • gained increase marketing exposure
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36
Q

Disadvantages of diversification (5 points)

A
  • culture clash
  • red tape
  • monopoly issues
  • lack of direction
  • might lack efficiency
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37
Q

joint ventures

A

two or more businesses agree to act collectively to set up new business venture with all parties contributing equity to fund the set up

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38
Q

advantages of joint ventures (5 points)

A
  • access to new markets and distribution networks
  • increased capacity
  • sharing of risks and costs with a partner
  • access to new knowledge and expertise
  • access to greater resources e.g. tech and finance
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39
Q

disadvantages of joint ventures (5 points)

A
  • objective of venture is unclear
  • communication between partners is not good
  • partners expect different things from venture
  • expertise and investment isn’t equal
  • conflict over decision making
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40
Q

costs for a franchisee

A

pay initial and anual fee to franchisor

41
Q

benefits of franchising for franchisor (4 points)

A
  • rapid expansion
  • minimal capital expenditure
  • less exposed to risk
  • local expertise
42
Q

drawbacks of franchising for franchisor

A
  • maintaining quality for brand name
43
Q

benefits of franchising for franchisee(3 points)

A
  • already established brand name
  • support with marketing, pricing, training…
  • getting a proven model, reduces risk of failure
44
Q

drawbacks of franchising for franchisee(3 points)

A
  • expensive
  • dont have total control
  • dont get to keep all of the profits
45
Q

pressures for innovation: competition (4 points)

A
  • gain a competitive advantage
  • people copying your products
  • gain market share
  • disrupt the market
46
Q

pressures for innovation: market (4 points)

A
  • innovate to meet customer needs
  • environmental regulations forcing change
  • laws that regulate e.g. safety standards
  • global growth will require innovation in production
47
Q

pressures for innovation: growth (3 points)

A
  • global growth
  • gaining diversification through conglomerate growth
  • in search of efficiency through growth and economies of scale
48
Q

product innovation

A
  • changing an existing product or developing an innovation into a new product e.g. apple watch
49
Q

process innovation

A
  • changing a process of production that already exists or putting into practice a new one e.g. Ocado sorting factory
50
Q

advantages of innovation (6 points)

A
  • gain a competitive advantage
  • become more efficient due to process
  • better customer experience
  • expand the market
  • creates jobs
  • better quality product
51
Q

risks of innovation (4 points)

A
  • product failing, loss of money in R&D, time and resources
  • money and time in patent
  • need a skilled workforce who are motivated
  • management need to take a risk
52
Q

intrapreneurship

A
  • when a firm encourages staff to act as entrepreneurs, developing new ideas which the company will provide financial backing for
53
Q

benchmarking

A

seeking our examples of outstanding ways other companies do things and then finding a way to implement these methods in your own business

54
Q

processes that can be benchmarked (7 points)

A
  • lead times
  • production time
  • distribution
  • quality control
  • supply chain and logistics
  • inventory management
  • marketing conservation rates
55
Q

copyright

A

a legal protection for anyone that has produced work in a range of areas e.g. music
- dont have to apply for it

56
Q

patent

A

a legal protection of a unique feature of a product or process
- lasts for 20 years
- can be very expensive

57
Q

reasons for trading internationally (4 points)

A
  • target a larger customer base
  • cheaper supplies
  • access to cheaper labour
  • potential wider range of skills/talent
58
Q

methods of entering international markets: direct investment (3 points)

A
  • high risk
  • capital expenditure to establish a physical presence in another country e.g. fresh and easy
59
Q

methods of entering international markets: Alliances (3 points)

A
  • Medium/high risk
  • a joint venture
    e.g. M&S and Ocado
60
Q

methods of entering international markets: Licensing (3 points)

A
  • Medium/low risk
  • a business gives permission to a third party to sell their goods or services abroad
  • e.g. Mcdonalds
61
Q

methods of entering international markets: Export (3 points)

A
  • Low risk
  • selling goods and services produced domestically to markets abroad
    e.g. Toyota
62
Q

Multinationals

A
  • organisations that have production bases in multiple countries
63
Q

reasons governments like multinationals (3 points)

A

they can:
- increase employment
- increase tax revenue
- might support local suppliers

64
Q

benefits of being a multinational (6 points)

A
  • larger customer base
  • year round demand
  • access to cheaper labour
  • access to more highly skilled labour
  • possible government incentives
  • gain closer proximity to different markets
65
Q

multinationals can be criticised for… (4 points)

A
  • exploiting local resources and not sharing the rewards with local economy
  • keeping senior jobs for their staff and employing locals for low level jobs
  • finding ways to avoid paying high tax levels
  • being involved in corruption to win contracts
66
Q

factors influencing the attractiveness of a market (9 points)

A
  • cultural/consumer preferences
  • tax advantages
  • competition
  • market size and potential for market growth
  • GDP
  • infrastructure
  • quality/availability of labour
  • technology
  • political stability
67
Q

benefits of producing products abroad (3 points)

A
  • cheaper labour
  • access to raw materials
  • access to talented and potentially harder working people
68
Q

off shoring

A

the process of moving business functions e.g. production, abroad

69
Q

advantages of off shoring (5 points)

A
  • lower costs
  • increase productivity
  • enter new markets
  • overcome domestic regulations
  • talent pool
70
Q

re-shoring

A

the process of moving previously off shored business functions back to country of origin

71
Q

reasons for re-shoring (5 points)

A
  • costs savings no longer significant
  • quality issues
  • infringement to intellectual property
  • shorter lead times
  • government incentives
72
Q

Bartlet and Ghostal’s model: pressure for local responsiveness

A

represents the extent to which different countries consumers expect products to be adapted to suite local tastes

73
Q

Bartlet and Ghostal’s model: cost pressure

A

the pressure of lowering costs

74
Q

Bartlet and Ghostal’s model: Low pressure for local responsiveness and high cost pressure (2 points)

A

global
- centralised decision making to maximise scale advantage
- product stays the same e.g. McDonalds

75
Q

Bartlet and Ghostal’s model: high pressure for local responsiveness and high cost pressure (3 points)

A

Transnational
- Hardest to implement
- foreign subsidiaries get high level of autonomy
- different branches in different countries will be specialised in particular area of competence

76
Q

Bartlet and Ghostal’s model: Low pressure for local responsiveness and low cost pressure (2 points)

A

international
- business primarily runs from home country
- centralised branding but localised products.

77
Q

Bartlet and Ghostal’s model: high pressure for local responsiveness and low cost pressure (2 points)

A

multi-domestic
- decision making is decentralised, local branches are seen as separate businesses
- each individuals country’s branch is run on its own

78
Q

digital technology definition

A

any piece of equipment containing a computer chip

79
Q

E-commerce

A

involves digitally enabled transactions between and amongst organisations and individuals

80
Q

B2B

A

Business to business

81
Q

B2C

A

business to consumer

82
Q

C2C

A

Consumer to consumer

83
Q

reasons for the growth of E-commerce (6 points)

A
  • improved internet speed
  • millennial generation
  • convenience
  • competitive advantage
  • safer payment
  • increased confidence
84
Q

benefits of E-commerce for a business (3 points)

A
  • reach a larger customer base
  • open 24/7
  • digital processes will work out to be cheaper
85
Q

drawbacks for e-commerce on businesses

A
  • increased competition due to low barriers to entry
86
Q

advantages of e-commerce for consumer (5 points)

A
  • convenience
  • large range of products
  • competitive prices
  • comparative shopping
  • digital payments
87
Q

drawbacks for e-commerce on consumer (5 points)

A
  • cant try things on
  • shipping cost
  • delivery time
  • return policies
  • fraud and scams
88
Q

big data

A

the volume of data that can now be accessed as a result of technological advancements

89
Q

big data can be… (5 points)

A
  • collected from transactions
  • government statistics
  • insights into trends
  • market intelligence
  • easily stored
90
Q

data mining

A

refers to the ability to manipulate and analyse the data to inform decision making

91
Q

data mining can be… (6 points)

A
  • used to extrapolate market trends
  • sales forecasting
  • product development
  • record responses to adverts
  • inform resource planning
  • take advantage of bloggers
92
Q

benefits of big data and data mining (marketing) (2 points)

A
  • social media and sentiment (the feeling on social media)
  • marketing campaigns
93
Q

benefits of big data and data mining (HR) (2 points)

A
  • track employee performance
  • talent acquisition in hiring
94
Q

benefits of big data and data mining (finance) (2 points)

A
  • use data to improve budgeting and forecasting
  • risk management
95
Q

benefits of big data and data mining (operations) (2 points)

A
  • inventory management
  • supply chain optimisation (tracking packages)
96
Q

enterprise resource planning (ERP)

A

Management software that enables greater integration between all functional areas

97
Q

greater integration leads to… (4 points)

A
  • greater efficiency
  • less waste
  • increased productivity
  • customer satisfaction
98
Q

negatives of increased integration (3 points)

A
  • takes time and capital to implement
  • it is likely the business will experience teething problems during which time, reputation can be damaged
  • staff will need to be trained
99
Q

enterprise resource planning (ERP) will: (3 points)

A
  • calculate how soon inventories will be used up, and re-order dates
  • calculate what skills are needed to complete new orders
  • enable all the right physical and human resources to be in the right place and right time.

Business (14 decks)

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