Unit 1.6 Flashcards
Define growth strategy
Plan of action to achieve a higher level of business goal attainment than present (e.g. gain more profits, expand their market..)
Outline the two types of growth strategies
- Internal (organic) growth
- External (fast track) growth
Describe internal growth
AKA Organic growth
- The organization uses its own internal resources
-> Purpose: To develop new products, increase efficiency, HR, marketing etc.
Outline the three internal growth strategies (in the Ansoff-Growth Matrix)
Outline the types of internal growth in the Ans0ff-Growth Matrix
Explain market penetration strategy
What?: Expanding the sales of a good/service within the current market.
Why? (Obj.): To increase the sales and market share
Explain market extension strategy
What?: Targeting a new customer segment
- e.g.: Dieters, vegans, etc.
Why?: To expand sales and market shares
Explain product development strategy
What?: Expand sales and market share by constantly launching new products and services.
Why?: Expand shares and sales
Explain diversification strategy
The company grows by expanding into the new products or service categories related or unrelated to the existing business
Explain external growth strategies in general
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
Explain joint ventures (and give examples)
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)
Explain mergers
Examples:
Disney + ABC = Disney ABC International Television
Time Warner Cable + Turner = Turner: A TimeWarner Company
Explain acquisitions
E.g.: Jolibee and Mang Inasal
Explain strategic alliance
Explain integration
When two businesses are brought together by merger OR acquisition
Outline the three types of integration
Backward vertical integration, Backward forward integration, horizontal integration
Outline the four main types of external growth strategies (things integration may employ)
Joint ventures, mergers, acquisitions (basically a + b = a or b) and strategic alliance
- mergers acquisitions used for integration
Explain backward vertical integration
acquires another business operator earlier in the supply chain.
- e.g.: (From secondary -> primary)
Explain horizontal integration
Acquiring a business operating in the same level of supply chain
(e.g. quaternary to quaternary — facebook and instagram)
Explain backward (vertical?) forward integration
Define economies of scale
v average costs -> ^ scale of productions and ^ production efficiency
- more you produce, the less production cost basically
Define diseconomies of scale (DOS)
INCREASING avg cost = ^ scale of production ^ production efficiency
- basically ^ production ^ cost
Define variable costs
These are costs that change according to output (moe or less production)
Define fixed cost
These are costs that DO NOT change according to output (moe or less production)
Define “scale”
the lvl of output or size of facilities
- more or bigger and opposite
