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BUSINESS > Strategic Methods : How to Pursue Strategies (3.9) > Flashcards

Strategic Methods : How to Pursue Strategies (3.9) Flashcards

1
Q

Innovation is the development of…
- Likely to have a _________ which can guarantee future…
- Adds __________.

A

Is the development of an idea into a new product or process.
- Likely to have a patent which can guarantee future income for a business.
- Adds value.

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2
Q

Product Innovation is changing a product that… or developing an….

A

Changing a product that already exists or developing an invention into a brand new product.
- - (Supermarkets have product and process innovation).

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3
Q

Process Innovation is changing a process of… or putting into practice a…

A

Changing a process of production that already exists or putting into practice a brand new production process.
- (Supermarkets have product and process innovation).

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4
Q

Innovation, ADVANTAGES & DISADVANTAGES (3) :

A

+ Prevent products from becoming obsolete.
+ Can increase efficiency/more cost effective.
+ Likely to be a premium product with high prices (USP).
- Expensive and time-consuming (especially during R&D).
- Can make substantial losses if fail.
- Legal implications can arise with other businesses questioning whether the PorP is really an innovation.

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5
Q

Business Model Innovation :

A

Changes at least 2 of 4 things.
- How do you generate revenue?
- How do you add value
- Who is your target customer?
- What do you offer customers?
Initiation (analyse current business model), Ideation (confront model), Integregation (check consistency of business model), Implementation.

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6
Q

Ways of becoming an innovative organisation? (4)
- K___________.
- R…
- I_________________.
- B_______________.

A
  • Kaizen e.g. cheff cuts lemons in Pizza Express now (small, frequent improvement).
  • Research and Development.
  • Intrapreneurship.
  • Benchmarking.
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7
Q

Intrapreneurship :

A

Is when an when employees in a larger organisation act in the same way as entrepreneurs.
9/07/24 10:11

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8
Q

Benchmarking is the process of…

A

Process of identifying the best practice in your industry in relation to yours, identify areas and means of performance improvement.

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9
Q

Kaizen :

A

Continuously improve all functions, all members of workforce involved.
e.g. Pizzas Express, initially waitresses sliced lemons but now chefs do it so W can lay tables.
17/12/24 12:27

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10
Q

Benchmarking Process (7) :
- Identify…
- Collect…
- Identify best…
- Compare…
- Set…
- Implement…
- Review…

A
  • Identify areas that can be benchmarked.
  • Collect quantitative data on these areas.
  • Identify best practice.
  • Compare performance to identify areas of weakness.
  • Set new targets.
  • Implement procedures to achieve these targets.
  • Review progress.
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11
Q

Copyright :
Patent :

A

Copyright : A legal protection for anyone that has produced work in a range of areas, free.
Patent : A legal protection of a unique feature of a product or process, very costly to pay for, e.g. Trunkee still faces problems, as does M&S with Colin the Caterpillar.

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12
Q

(Assessing Change)
Change occurs when a business alters its…
- May be necessary to meet aims and…

A

Occurs when a business alters its structure, size or strategy to respond to internal or external influences.
- May be necessary to meet aims and objectives but also creates opportunities and threats.

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13
Q

(Assessing Change)
Business will either GROW or RETRENCH.
Grow, e.g. to… (3)
Retrench, e.g. to … (4)

A

Grow : e.g. to increase shareholder value, increase marker share or fulfil an objective growth.
Retrench : e.g. to increase efficiency, turn around poor performance, focus on core business, sell off less profitable parts of business to improve overall performance.

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14
Q

(Assessing Change)
Retrenchment :

A

Downsizing scale of the business’ operations, e.g. closing branches and delayering.

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15
Q

(Assessing Change)
Organic or Internal Growth :

A

When a business expands in size by opening new stores, branches or functions or new products.
- Can be very time consuming but is relatively low risk.
- Control is easier to maintain.

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16
Q

(Assessing Change)
Inorganic or External Growth :

A

When a business expands in size by either merging or taking over another business.
- Allows a business to expand more rapidly as its buying pre-established businesses.
- Can be high risk if the two businesses are not compatible.

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17
Q

Advantages (3) & Disadvantages (2) of ORGANIC :

A

+ Lower risk.
+ Easy to maintain control.
+ Less costly.
- Slower growth.
- Limited market capture

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18
Q

Advantages (4) & Disadvantages (3) of INORGANIC :

A

+ Rapid growth.
+Takeover competitors.
+ Access to new expertise.
+ Economies of scale.
- Financial risk.
- Could lose company’s vision
- Employee dissatisfaction

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19
Q

Economies of Scale advantages enjoyed by a business as it…
- Lower…

A

Advantages enjoyed by a business as it increases the scale of its current operations leading to a fall in unit costs.
- Lower unit costs allow businesses to be competitive e.g. lower prices.

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20
Q

Diseconomies of Scale is the disadvantages suffered as a…
- Rising…
- Includes…

A

The disadvantages suffered as a result of a business increasing the scale of its operations that lead to a rise in unit costs.
- Rising unit costs will make a business less competitive, may mean businesses have to increase prices.
- Includes communication, coordination and control.

21
Q

5 main types of Economies of Scale :
- F
- R-B
- Ma
- Ma
- I D

A
  • Financial ES : Banks may feel more secure lending to large businesses as its less risky, may give cheaper interest.
  • Risk-bearing ES : business spreads risks on different products that a company can fall back on.
  • Marketing ES : spread the cost of advertising over a large number of goods.
  • Managerial ES : when a firm can afford to hire specialist, high-skilled people.
  • Increased Dimensions ES : theory that increasing output gains you extra benefits, synergy.
22
Q

Synergy : Two businesses joined together will be…

A

Two businesses joined together will be able to achieve more than the sum of the two businesses operating separately.
- Shared resources, increasing expertise and joint marketing.

23
Q

Mergers vs Takeovers :

A

Mergers : Equal joining, e.g. Lloyds TBC and Curry’s PC world.
Takeover : 51% of shares of more, e.g. Kraft Foods and Cadbury.
(EXTERNAL/INORGANIC GROWTH)

24
Q

(Growth through M&T)
Vertical Integration : Involves acquiring a business in the same _________________ but a different stage of the…
- Forward VI :
- Backward VI :

A

Involves acquiring a business in the same industry but a different stage of the supply train.
- Forward VI : Integration of a business that is closer to final consumers e.g. a manufacturer buying a retailer, e.g. TUI takes over travel agents.
- Backward VI : Acquisition operaters earlier in the supply chain e.g. a manufacturer buying a raw material or component, e.g. takeover suppliers.

25
Q

(Growth through M&T)
Conglomerate Diversification is where a company…

A

Where a company expands its business by adding new products or services that are unrelated to its existing ones.
- Links to Ansoff’s Matrix.
- e.g. Tesco & Toys R Us

26
Q

(Growth through M&T)
Horizontal Integration : Involves the combination of two businesses operating in the same ________________ and at the…
- 3 Advantages :
- 3 Disadvantages :

A

Involves the combination of two businesses operating in the same industry and at the same stage of the supply chain.
+ Exploit internal economies of scale
+ Potential to secure revenue synergies.
+ Reduces competition.
- Risk of diseconomies of scale.
- Reduced flexibility.
- Threatens competition (mergers and acquisitions can lead to monopolies which can be detrimental to consumers).

27
Q

Economies of Scope : The advantages enjoyed by a business as it…

A

The advantages enjoyed by a business as it increases the scale of its operations by expanding the range (scope) of activities it undertakes (leading to a fall in unit costs).
- Economies of Scale is 1 product.
- Economies of Scope is multiple.

28
Q

Economies of Scope includes :
- Entering…
- Introducing…
- D__________.
- Market ______________ rather than…
— Benefits include :
- Can share…
- Maximise…
- Increase…

A
  • Entering new markets.
  • Introducing new products.
  • Diversification (Ansoff’s Matrix).
  • Market brand rather than individual products.
    — Benefits include :
  • Can share expertise.
  • Maximise use of resources.
  • Increase brand loyalty.
29
Q

(Franchise) Franchisor grants a…
- The owner gets paid…
- The franchisor must…

A

Franchisor grants a licence (franchise) to another business (franchisee) to allow it to trade using the brand/business format.
- Owner gets paid royalty payments.
- The franchisor must support the franchisee in a range of areas, e.g. advertising and recruitment.

30
Q

Franchise, Advantages (4) & Disadvantages (3) :

A

+ Rapid expansion (maximise profits).
+ Enables quick geographical growth.
+ Investment from franchisees is an important source of growth finance.
+ Economies of scale (buying power and mass advertising).
- Loss of control, can damage reputation.
- Managing growth can be difficult (have to have enough staff & resources).
- Litigation, a failed franchise is a court case waiting to happen.

31
Q

Joint Ventures is when two or…

A

Two or more businesses agree to act collectively to set up a new business venture with all parties contributing equity to fund the set up and purchase of assets.
e.g. Primark and Greggs, Tesco and Entertainer (E outlets in Big Tesco’s).

32
Q

Research and Development examples :
- Amazon :
- Volkswagen :

A
  • Amazon : Uses AI to enhance its services e.g. Alexa, Intraprenurship, the ‘two-pizza team rule’.
  • Volkswagen picked up a lot of other business, e.g. Bugatti, Porsche and Skoda, and has invested hundreds of billions into R&D, however, due to this, they have a high recall rate.
33
Q

How can technology be used in operations management :
- Production…
- Measure stock…
- C_____/C______ …

A
  • Production line, robotics.
  • Measure stock levels.
  • CAD, CAM : Computer Aided Design and Computer Aided Manufacture.
34
Q

Digital Technology is the use of…
- It includes…

A

The use of computers to find, store, analyse, manipulate and communicate digital information.
- E-commece, big data, data mining and Enterprise Resource Planning.

35
Q

(Digital Technology, E-Commerce) :
— Commercial Transactions can be :
- B2B : …
- B2C : …
- C2C : …
- It’s growing because…

A

Commercial Transactions can be :
- B2B : business to business transactions.
- B2C : business to consumer transactions.
- C2C : consumer to consumer transactions.
— It’s growing because of improved internet speed, convenience, competitive advantage, safer payment and increased confidence.

36
Q

E-Commerce, Advantages + Disadvantages for customers & business :

A

Customers : + Convenience / - potential for slow delivery and can’t try stuff on.

Business : + Operates 24/7 / - can’t provide as good customer specific, have to set up a website, lots of competition.

37
Q

(Assessing Digital Technology)
Big Data : Refers to the volume…
- 5 V’s make it up, including…
- Collected from… (3)

A

Refers to the volume of data that can now be accessed as a result of technological advancements.
- 5 V’s make it up, including volume (amount), velocity (form), variety (different types), veracity (accuracy) and value (how does business benefit from it).
- Collected from customers transactions, detailed insight into demographic trends, consumer behaviour etc.

38
Q

(Assessing Digital Technology)
Data Mining : Refers to the ability to…
- Extrapolation trends in…
- Target advertising, sales _______________ and product _________________.
- Inform…

A

Refers to the ability to manipulate and analyse the data to inform decision making.
- Extrapolation trends in market (predict future trends).
- Target advertising, sales forecasting and product developments.
- Inform resource planning, e.g. inventory, workforce.

39
Q

(Assessing Digital Technology)
ERP (Enterprise Resource Planning) : A piece of….
- Includes… (4)
+ Greater integration leads to greater _________________ & less ________, increased…
- It takes ___________ , and a lot of ___________, also by the time created it will be _____________, staff…

A

A piece of management software that enables greater integration between all functional areas.
- Includes : Inventory, production, accounting, HR etc.
+ Greater integration leads to greater efficiency & less waste, increased customer satisfaction.
- It takes time, and a lot of money, also by the time created it will be outdated, staff will need to be trained with it.

40
Q

Top 5 countries UK imports with :

A

USA, China, Germany, Netherlands and France.

41
Q

Reasons for Importing/Exporting :
- Increased…
- Spread…
- S_______________ skills.
- Proximity to….
- Government…
- Tax…

A
  • Increased wealth (greater target market).
  • Spread risk (different demand/trends in economy).
  • Specialist skills.
  • Proximity to raw materials.
  • Government incentives.
  • Tax advantages.
42
Q

(Methods of entering International Markets)
- Export :
- Liscensing :

A

Exports : Sell goods and services produced in one country to another country
- Liscensing : Business gives permission to a third party to sell their goods or services abroad, e.g. franchises.

43
Q

(Methods of entering International Markets)
- Alliances : e.g.
- Direct Investment :

A

Alliances : e.g. Apple, forming partnerships with one or more businesses operating in another country.
Direct Investment : Capital expenditure to establish a physical presence in another country, e.g. setting u sales outlets or a manufacturing plant.

44
Q

(Factors influencing the attractiveness of international markets)
USA :
Political :
Economic :
Social :
Technological :
Legal :
Environmental :

A

USA :
- Political : Strong trade links.
- Economic : High labour costs.
- Social : Consumerism.
- Technological : Lots of innovation.
- Legal : Legislation varies across USA.
- Environmental : High costs.

45
Q

Off-Shoring :
- Lower…
- Higher…
- Enter new…
- Overcome…
- Talent…

A

Process of moving business functions, e.g. production abroad.
- Lower costs.
- Higher productivity.
- Enter new markets.
- Overcome domestic regulations.
- Increase talent pool.

46
Q

Re-Shoring :
- Cost saving may…
- May be…
- May allow for…
- Government…

A

Process of moving previously off-shored business back to the country of origin.
- Cost saving may no longer be significant.
- May be quality issues.
- May allow for a shorter lead time.
- Government may provide incentives.

47
Q

Multinational Companies : Large…
+ Economies of…
+ Economies of…
+ New…
+ Strong…
+ Market…
+ Shared…

A

Large businesses that operate in a number of different countries.
+ Economies of scale, unit costs fall as output rises, single product.
+ Economies of scope, unit costs fall because produce wide variety of products.
+ New market development.
+ Strong brand recognition.
+ Market dominance.
+ Shared expertise.

48
Q

Glocalization :
- Respond to…
- Ease with which…

A

When a global brand is altered to meet local needs, e.g. McDonald’s.
- Respond to cultural diversity.
- Ease with which products can be altered.

BUSINESS (10 decks)

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