Understand Business Flashcards
Methods of Growth
TAKEOVER
MERGER
ORGANIC GROWTH
- business naturally becomes more successful
HORIZONTAL INTEGRATION
- Business’ same stage production merge together eg bakery taking over another bakery
VERTICAL INTEGRATION
FORWARD - Merged with or takes over major customer
BACKWARD - Merged with it takes over supplier
DIVERSIFICATION
- Business with number of different business’ eg Virgin
Internal Factors
Corporate Culture
Finance
Staff
Technology
Groupings
FUNCTIONAL
- Grouping people by similar skills and interests eg typical department in office
PRODUCT
- Organisation structure around product it sells. each products has own dept
CUSTOMER
- Grouping by market segment or target market
LOCATION
- Organisation structure around specific locations
Structures
TALL (Hierarchical)
- Many layers of management
FLAT
- Fewer layers of management, shorter chain of command
MATRIX
- People from different parts organisation come together to form structure
ENTREPRENEURIAL
- Decisions made by owner of certain managers
CENTRALISED
- Decisions made by senior management
DECENTRALISED
- Decisions made by departments and subordinates
Changing structure
DELAYERING
- Removing layers of management to flatten structure
DOWNSIZING
- Removing depts to shrink organisation
Types of Decision Making
STRATEGIC
- Long term
- Senior managers
- Shapes overall objectives of business
TACTICAL
- Medium term
- Middle managers
- Allow organisation to achieve overall objectives
OPERATIONAL
- Day-to-day
- All staff
- Allow business to operate day-to-day
SWOT Analysis
INTERNAL FACTORS
- Strengths & weaknesses
EXTERNAL FACTORS
- Opportunities & Threats
Role of the Manager
P O M CCC + D
- planning
- organising
- motivating
- controlling
- commanding
- co-ordinating
- delegating
Sectors of industry
primary , secondary, tertiary and quaternary
Sectors of the Economy
Private, Public, Third/Voluntary
Objectives of Private Sector Organisations
- Maximise profits
- Maximise sales
- Survival
- Growth
Advantages of Multinationals
- Cheap labour costs
- Increased market share
- Gvmt grants
- Low tax
- Exploit local laws
Advantages of a Franchise to Franchisee
- Reduced marketing cost
- Reduced risk
- Extra support offered eg training
Disadvantages of a Franchise to Franchisee
- Features of store controlled
- Royalty payment needs payed
- Start up fees expensive
Advantages of a Franchise to Franchiser
- Fast method achieving growth without a lot investment
- Provides steady cash flow from royalties
- Low risk as franchisee invest most
Disadvantages of a Franchise to Franchisee
- Only get share of profits
- One poor franchisee damage whole company
- Team may need hired to check standards
Disadvantages of multi-nationals
- Language barriers
- Time differences
- Cultural differences
- Anti-globalisation backflash
