Strategy and implementation strategy growth Flashcards
What are some methods of growth?
Merger
Franchising
Takeovers
What is horizontal intergration?
When 2 businesses in the same stage integrate.
Facebook buying instagram
What is vertical integration?
When 2 businesses are in different stages integrate
Tesco buying Bookers wholesaler
What is conglomerate intergration?
When a business buys a completed unrelated business
Amazon buying whole foods
What are some advantages of horizontal integration?
Reduces competitors
Increases market share
What are some disadvantages of horizontal integration?
Leadership and cultural clash
Reduces flexibility
What are some advantages of vertical integration?
Cost savings
Quality control
Supply chain stability
What are some disadvantages of integration?
Loss of focus
Reduces flexibility
What are some advantages of conglomerate integration?
Opportunity for innovation
Better business reputation
Strategic exit solution
What are some disadvantages of conglomerate integration?
Resistance from shareholders
Potential for bad performance
What is organic growth?
Growth using the businesses resources
What is inorganic growth?
Growth from help from external resources
What are some methods to grow organically?
New product
New market
Franchising
Diversification
What are some methods to grow inorganically?
Integration
Takeover
Merger
What are some advantages of organic growth?
Less risky
Greater consistency
Can be steady
Less loss of control
What are some disadvantages of organic growth?
Missed opportunities from acquisition
Potential for growth may be limited
Lack of shared expertise
Pressure on leaders
What are the advantages of external growth?
Economies of scale
Reduced competition
Increased market share
Create barriers to entry
What are some disadvantages of external growth?
Diseconomies of scales
May inherit problems
Brand dilution
What is franchising?
A franchise is the replication of a successful business formula.
What are some advantages of franchising?
Can be less risky
Will have support from franchisor
What are some disadvantages of franchising?
Can lead to additional costs and loss of independence
Have less decision making
What are the benefits for a franchisor?
Rapid expansion
Investment from others
Economies of scale
What are the pitfalls for a franchisor?
Loss of control
Managing growth
What are the benefits for a franchisee?
Lower risk
Established product
Experienced business
Brand awareness
What is rationalism ?
Downsizing the scale of the business’ operations (delayering, Closing firms, Wilkisons )
Reasons for Rationalism ?
Improve efficiency
Turn around poor performance
Focus on core business
Sell off less profitable parts of the business to have a better overall business
Once a merger or takeover occurs to remove duplication of resources
Factors affecting decisions about location/ relocation and rationalism ?
External EOS
Costs(Land labour )
Availability of grants
Target market (Local,national, International)
Quantitative techniques
Ethics
Infrastructure
legislation
Politcal and environmental factors
What is offshoring ?
Process off moving a business functions (Production and IT support) abroad
What is Reshoring ?
Process off moving previously off shored functions back to the country of origin
Main points off offshoring
Lower costs
Higher productivity
Enter new markers
Overcome domestic regulations
Main points off Reshoring
Cost savings no longer significant (China)
QC problems
Government incentives
Shorter lead times
What is Outsourcing
Practice of using services of an external organisation to carry out a business task
Short term solution to capacity shortages
Cost-effective
Pros and cons of Outsourcing?
PROS
Lower costs
Increased capacity
Greater flexibility
Concentrate on core
Employ specialists employees and resources
CONS
Potential loss of QC
CUstomer dissatisfaction
Loss of domestic jobs
Damage to brand rep
Impact on economy if outsourcing is to foreign firms(Employees going to China )
