Unit 1.6

Question 1

Define growth strategy

Answer 1

Plan of action to achieve a higher level of business goal attainment than present (e.g. gain more profits, expand their market..)

Question 2

Outline the two types of growth strategies

Answer 2

• Internal (organic) growth
• External (fast track) growth

Question 3

Describe internal growth

Answer 3

AKA Organic growth
- The organization uses its own internal resources
-> Purpose: To develop new products, increase efficiency, HR, marketing etc.

Question 4

Outline the three internal growth strategies (in the Ansoff-Growth Matrix)

Answer 4

Question 5

Outline the types of internal growth in the Ans0ff-Growth Matrix

Answer 5

Question 6

Explain market penetration strategy

Answer 6

What?: Expanding the sales of a good/service within the current market.

Why? (Obj.): To increase the sales and market share

Question 7

Explain market extension strategy

Answer 7

What?: Targeting a new customer segment
- e.g.: Dieters, vegans, etc.

Why?: To expand sales and market shares

Question 8

Explain product development strategy

Answer 8

What?: Expand sales and market share by constantly launching new products and services.

Why?: Expand shares and sales

Question 9

Explain diversification strategy

Answer 9

The company grows by expanding into the new products or service categories related or unrelated to the existing business

Question 10

Explain external growth strategies in general

Answer 10

Definition: a growth strategy that focuses on achieving higher level of business goals while not using internal resources.
- How? (Explanation): they use the resources from the business activities of other companies

Example: Barnes and Noble and Starbucks

Question 11

Explain joint ventures (and give examples)

Answer 11

Example:
- NASA and Google in a joint venture to create Google Earth
- Coca Cola and Nestle in a joint venture to create Beverage Partners (which created Nestea)

Question 12

Explain mergers

Answer 12

Examples:
Disney + ABC = Disney ABC International Television
Time Warner Cable + Turner = Turner: A TimeWarner Company

Question 13

Explain acquisitions

Answer 13

E.g.: Jolibee and Mang Inasal

Question 14

Explain strategic alliance

Answer 14

Question 15

Explain integration

Answer 15

When two businesses are brought together by merger OR acquisition

Question 16

Outline the three types of integration

Answer 16

Backward vertical integration, Backward forward integration, horizontal integration

Question 17

Outline the four main types of external growth strategies (things integration may employ)

Answer 17

Joint ventures, mergers, acquisitions (basically a + b = a or b) and strategic alliance
- mergers acquisitions used for integration

Question 18

Explain backward vertical integration

Answer 18

acquires another business operator earlier in the supply chain.
- e.g.: (From secondary -> primary)

Question 19

Explain horizontal integration

Answer 19

Acquiring a business operating in the same level of supply chain
(e.g. quaternary to quaternary — facebook and instagram)

Question 20

Explain backward (vertical?) forward integration

Answer 20

Question 21

Define economies of scale

Answer 21

v average costs -> ^ scale of productions and ^ production efficiency
- more you produce, the less production cost basically

Question 22

Define diseconomies of scale (DOS)

Answer 22

INCREASING avg cost = ^ scale of production ^ production efficiency
- basically ^ production ^ cost

Question 23

Define variable costs

Answer 23

These are costs that change according to output (moe or less production)

Question 24

Define fixed cost

Answer 24

These are costs that DO NOT change according to output (moe or less production)

Question 25

Define “scale”

Answer 25

the lvl of output or size of facilities
- more or bigger and opposite