understanding 2 Flashcards
takeovers A and D
a - economies of sale can be achieved
- competition is reduced meaning increasing sales
- risk of failure is spread
d - can lead to mass job losses
- bad for customers as less competition meaning higher prices
- can put off loyal customers
mergers A and D
a - economies of sale can be achieved
- jobs are more likely to be spared
- each business can bring a different area of expertise
d - marketing campaigns informing new changes can be expensive
- bad for customers as less competition means higher prices
horizontal integration
(business of the same sector of industry)
a - new bigger business can dominate the market as competition is reduced
- can benefit from economies of sale
- reduced competition can lead businesses raising prices increasing profits
d - may breach EU competition rules
- quality may suffer due to lack of competition
- customers may have to pay higher prices for the same goods
forward vertical/backward vertical
forward - two business from different sectors
backward - taking over a supplier
FA - business can control supply of their products and decided not to supply competition
- can increase profits by cutting the middleman
BA - guaranteed timely supply of stock
- stock is cheaper as no need to pay supplier
- quality of supplies are strictly controlled
BFD - focusing on new activities can affect core activities
- monopolising different markets can have legal repercussions
conglomerate integration
(business from different markets join)
a - can overcome seasonal fluctuations having more consistent year round sales
- business is larger and more financially secure
- business gains more customers from the acquired business
d - business may become too large and insufficient to manage
- can end in business losing focus on core activities
outsourcing
a - allows business to concentrate on what they’re good at
- high quality work from the outsourced company meaning greater expertise and specialist equipment
- can provide a cheaper service than an in-house service
d - business will have less control over outsourced work so quality may fall
- communication between businesses needs to be very clear to ensure expectation are met
- businesses have to share sensitive information with outsourcers which could get into hands of competitors
internal factors
human resources - managers can take too many risks and put an organisation into financial difficulties
- managers can lead and motivate a team to success
- well trained employees fulfils their role and is an asset to the company
technology - e commerce can be used to sell online and used 24/7
- apps can be used to interact with customers and provide them with up to date information
corporate culture - company values through a mission statement or having strong CSR
- rewarding culture to benefit employees and motivate them
finance - bad finance can prevent them from growing and developing
- may need to take drastic action like downsizing or delayering
political factor
changing laws and legislation - government could introduce new environmental laws meaning the earth will benefit, government could increase minimum wage making businesses have a lower profit
social factor
changing fashion trends - businesses can cater for the latest fashion trends increasing sales, although some fashion trends have a very short shelf life meaning they may end up with stock that won’t sell
uk’s ageing population - potential high sales can occur if businesses cater towards this demographic, although extensive market research must be carried out costing time and money
social media - online presence helps businesses interact and keep in contact with their customers and raise a world wide profile, although customers may be able to spread negative comments on these profiles putting potential customers off
environmental factor
weather - businesses could be impacted by favourable spells of weather that increases their sales, although bad weather spells could potentially ruin stock or prevent employees from making it to work
recycling - encouraging recycling to customers benefits the environment and the businesses image, although this can take time and money to develop
conflicting stakeholders
- employees want a pay rise whereas owners want to maximise profits
- customers want low prices and value for money whereas owners want to raise prices to maximise profits
interdependent stakeholders
- employees and managers need to work well together in order to secure their jobs
- customers want good quality products and owners want to sell good quality products to ensure a good reputation
SWOT analysis
a - identifies strengths and allows business to build on them
- identifies weakness and allows them to be addressed
- time is taken to address the businesses current position and no rash decision are made
d - very time consuming can slow down decision make process
- can help identify many new ideas but doesn’t help pick the correct one
- could be bias
