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alevel business > strategic methods > Flashcards

strategic methods Flashcards

1
Q

types of growth

A

internal growth (organic) and external growth (integration)

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2
Q

what will growth achieve

A

economies of scale
economies of scope
experience curve
synergies

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3
Q

what problems may growth have when too fast

A

diseconomies of scale
overtrading
management crisis

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4
Q

what problems come with diseconomies of scale

A

coordination
communication
motivation

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5
Q

impact of growth of finance

A

cash flow needs to be managed by forecasting
to stop
-overtrading
-too high gearing
-exchange rates if international

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6
Q

impact of growth on operations

A

economies of scale
diseconomies of scale
quality issues

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7
Q

impact of growth on marketing

A

may need to change marketing mic
more Distibution
more spent on marketing

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8
Q

impact of growth on HR

A

more staff needed - pressure to recruit people
higher costs for wages- more ppl
recruitment costs
training costs
redeployment

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9
Q

retrenchment

A

it is a strategic change all about reducing costs

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10
Q

how to achieve retrenchment

A

reduce output
reduce staff size - save on labour costs
reduce product portfolio- focus of a few
reduce countries operated in

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11
Q

why do you retrench

A

economic downturn
to leave unprofitable market
low ROCE
diseconomies of scale
focus on core competencies

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12
Q

problems with retrenchment

A

may lose EOS gains, economies of scope, experience curve,
reduce employee motivation

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13
Q

impact of retrenchment of finance

A

may help improve cash flow- less costs, more money
cost cutting- eg no more worry of exchange rates in international

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14
Q

impact of retrenchment of operations

A

EOS and diseconomies of scale depending on where you are according to MES (mini mum efficient scale)
decrease capacity so that cap utilisation increases

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15
Q

impact of retrenchment of marketing

A

reduced product portfolio - less spending on marketing

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16
Q

impact of retrenchment of HR

A

redundancy= less staff- delayering- flatter structure- wider spans of control
reduce staff- costs high in short term- but in long term for costs on wages

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17
Q

purchasing Eos

A

as output increases costs decrease- purchase more supplies for less- you can negotiate with supplier cos you are more important to them

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18
Q

technical Eos

A

as business grows finance increases - able to buy more quantity and quality of capital (machinery)- increase productivity and efficiency - costs decrease

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19
Q

technical Eos example

A

movement from job production to flow production due to automated production line

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20
Q

managerial Eos

A

when a high level manager increase the output and costs

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21
Q

diseconomies of scale

A

when past the Eos mark and an increase in output leads to higher costs

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22
Q

effects of diseconomies of scale

A

discoordinated staff- too many
employee motivation drops, feel insignificant - production drops and waste increases so too costs
employee communication is lacking- being told what to do- reduction decreases

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23
Q

economies of scope

A

when the variety of products makes av cost per unit decrease, because costs can be spread over more products and there are already all the processes in place

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24
Q

economies of scope results

A

can have increased brand loyalty- get everything form one place
more competitive - flexible with pricing

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25
Q

experiance curve

A

more practice better efficiency then lower costs

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26
Q

experiance curve can lead to

A

being complacent and not innovative -resistant to change
its an old theory

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27
Q

what is synergy

A

when the whole is greater than the sum of the parts - the advantage of a merger or takeover
businesses come together -combined effect is better than separate

28
Q

cost synergy

A

benefit of a merger- cost savings occur, purchasing eos

29
Q

overtrading

A

when a business grows too quickly and uses up all of its working capital - liquidity issue
a disadvantage and risk

30
Q

how to prevent overtrading

A

cashflow forecast
reduce receivables days
expand payable days
put long term funding in place
lease rather than buy

31
Q

greiner’s model of growth

A

used to look at the stages of growth and management crises

32
Q

phase 1 gmog

A

growth though creativity :
focus around product and market - encourages innovation and creation - but communication becomes too informal so crisis of leadership occurs

33
Q

how to prevent pahse 1 of gmog

A

create a management structure to regain direction and control

34
Q

phase 2 of gmog

A

growth though direction
defined department and roles but experienced managers want more power
creates autonomy crisis

35
Q

solution for phase 2 of gmog

A

delegation

36
Q

phase 3 of gmog

A

growth though delegation
managers begin to make decisions and will further delegate to others
but this creates a communication gap owenes loose control
crisis of control

37
Q

solution for phase 4 of gmog

A

coordination

38
Q

phase 5 of gmog

A

growth though coordination
centralised and formal procedures procedures
but this creates bureaucracy and the red tape crisis too much bureaucracy means reduced growth and innovation

39
Q

solution for phase 5 of gmog

A

collaboration

40
Q

phase 6 of gmog

A

growth though collaboration
introduction of matrix structures in the biz (each team report to multiple leaders)
but it can fail due to confusion
crisis of internal growth

41
Q

solution for gmog phase 6

A

external growth

42
Q

phase 7 of gmog

A

external growth
mergers or takeovers

43
Q

criticism of gmog

A

just a model- each business grows differently
not all stages re followed
resistance to adapting the solution the longer your in one section

44
Q

external growth

A

mergers
takeovers
quicker that internal
more expensive

45
Q

why do a merger or takeover

A

purchasing eos
increase market share
secure point of sale (if takenover a shop)
secure supplier (if takenover a supplier)
reduce risk
diversification
more knowledge

46
Q

horizontal integration

A

same industry and stage of supply chain

47
Q

forwards vertical integration

A

same industry but further up in the supply chain

48
Q

backwards vertical integration

A

same industry but further down the supply chain

49
Q

conglomerate integration

A

different industry and stage of production

50
Q

joint venture

A

when 2 or more companies join together to invest in a high risk high reward business 50/50 split

51
Q

pros of joint venture

A

skills and expertise from parent companies
synergy
risk is split
losses are shared

52
Q

cons of joint venture

A

profit is shared
diff companies have diff cultures
don’t want to share competitive advantages with the other company invested

53
Q

corperte venturing

A

venture capital - when one larger business takes an equity stake in a smaller business
strategic alliance

54
Q

franchisor

A

creator of a franchise who let franchisee to use the business formula for a price

55
Q

franchisee

A

someone who pays the franchisor to use their idea - pays an initial fee and gives a cut of the profit

56
Q

franchisor in change of

A

concept like menu
uniform
store layout

57
Q

franchisee is in charge of

A

staff training
recruitment
stock control

58
Q

external methods of growth

A

mergers
takeovers
ventures
integration

59
Q

product innovation

A

making new goods/services or improving existing

60
Q

process innovation

A

new processes or delivery methods or improving existing ones

61
Q

benefits of innovation

A

stay ahead of competition
change high prices
reputation
economies of scope

62
Q

disadvantage of innovation

A

costly
time consuming
wasting resources
no guaranteed ROI
risk

63
Q

new product development process

A

idea
analysis and screening
development
value analysis
test marketing
launch

64
Q

how to protect ideas

A

patent - of a product or process
trademark - logo, slogan , name
copyright - writing and music

65
Q

ERP

A

business management tool that connects all functions of the business

66
Q

demerger

A

a company sells it assets and parts of the business

alevel business (11 decks)

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