UNIT 9 Flashcards
calc for percentage change
change in values/ original value X100
what are the two categories of growth
organic and external
whats the difference between organic and external growth
organic is steady, gradual, low risk growth eg: market penetration
external is sudden and significant growth eg: mergers/ takeovers
whats synergies
the interaction of two organisations/ agents to produce a combined effect greater than separate
name and describe the 4 types of EoS
purchasing- specialist buyers
technological- specialist capital and labour
managerial- attracts most efficient managers
financial
whats overtrading and what can it do to a business
overtrading occurs when a business grows too much, this may lead to
communication issues
loosing control
4 reasons business’ grow
inc market share
inc brand recognition
inc market power over customers and suppliers
inc profitability
define retrenchment
reduction in costs or spending in response to economic struggle eg: redundancies
3 reasons why business’ retrench
- they may be out of touch with customers, therefore they need to be innovative
- failed merger meaning they need to reduce costs to get back on track
- changing markets and customer needs eg: shopping online, free parking
name 3 issues w growth
diseconomies of scale
overtrading
Eos impacts cost of production etc
define economies of scope and an adv of this
a proportionate saving gained by producing two or more goods when the cost to make is less than producing seperately
reduces costs, inc output
name 2 types of internal diseconomies of scale
reduction in productivity
- dec output
- inc unit costs
lack of co ordination
- new staff must be controlled
4 advantages of synergies
inc revenue
combined talent
combines technology
dec in costs
how does growth affect HR department?
decisions to be made on organisational structure, therefore which staff will stay and which roles duplicated etc
how does growth affect finance department
more capital to invest, must live up to shareholders expectations though to increase profits
how does growth affect operations
more money available for supplies
outsourcing becomes an option
potential overtrade?
improvement in capital utilsation
how does growth affect marketing
marketing mix is used to achieve objectives of new larger company
impact of retrenchment on human resources
decisions will have to be made to make staff redundant to cut costs
impact of retrenchment on finance
focus on business costs and how to reduce them during period of retrenchment
impact of retrenchment on operations
resources will have to be used more carefully to reduce costs
some fixed assets may have to be sold
impact of retrenchment on marketing
marketing budget may be cut to reduce costs which may have an impact on sales
types of external growth
mergers, takeovers, joint venture
merger
two business’ join together
takeover
one business acquires another and takes their assets too
joint venture
two business’ come together to work together on product/ service
remain separate but share expertise
name 4 types of mergers
horizontal, forwards vertical, backwards vertical, conglomerate
horizontal merger+ adv and dis
a merger in the same supply chain
- share expertise, gain Eos and synergies
- leadership clash, less flexibility
fowards verticle
taking over a customer eg: retailer
- producer can determine how producers and prompted and build relationships w consumers
backwards verticle
taking over supplier
- allows business to acquire materials for cost price
conglomerate
taking over business in new market
- spreads risk
5 pros of external growth
profitability
economies of scale
shared expertise
instant growth
increase market share
5 disadvantages of ext growth
- may be communication loss
- damages business if cant cope
- risk of retrenchment
- inc regulation
- may be resistant to change
whats a franchise
a franchise is where a business allows another to trade under its name, in return for payment
whats a franchisor
gives franchisers the right to sell its product and service
whats a franchisee
the business that agrees to provide branded product under agreement
benefit of opening franchise
already established
support for training and equipment
access to goods
marketing established
disadvantage of opening franchise
initial investment is costly
decision making
royalty payments
lack of control
benefit for franchisor
regular income
have control
growth of business
disadvantage for franchisor
must provide training and equipment
cant control all time
risk of ruined brand image
innovation is sometimes a result of pressure, what pressure?
PESTLE
P- legislation ie carbon emissions
E- efficiency and low cost
S- trends
T- up to date
E- competitive adv, match innovation
what does innovation potentially lead to?
market leader
what are the 4 ways to become innovative
kaizen- continuous improvement
R+D- investing to observe trends
Intraprenurship- autonomy to work on own
Benchmarking- compare to companies
whats a weakness of the 4 ways to become innovative
it doesnt guarantee success, therefore risk of wasting resources
impact of innovation on each department ( marketing )
marketing- identify needs which drive innovation
impact of innovation on each department ( financial )
needs to retain profits to finance innovation
how innovation affects each dep ( operations )
operations
implement new operations to improve efficiency
impact of innovation on dep ( HR )
HR
job design must be creative, and include innovative ideas
whats disruptive innovation
making expensive products cheap eg: music downloads affect HMV
strengths of innovation for a business
increased creative ideas
act as self actualisation as employees can be creative
awards
what are the 3 types of innovation
completely new product
improvement of existing product
new feature of existing
whats IoT
rapidly growing technology that connects physical devices to internet
3 types of process innovation
improvement in tools
changes in equipment used in manufacturing
update in software
whats the intellectual property
a way to protect an idea
whats a patent
grants exclusive rights to make, use an invention for 20 years
requires detailed registration
costly ( up to £310 )
whats the process of patent
- patent attorney reccomended
- prepare detailed documents
- file
- substantive examination ( takes years )
whats copyright
protects creative rights
automatically granted and lasts a lifetime + 70 years
whats a trademark
protects brands logos and ensures customers recognition
name 3 other types of protecting innovation
contracts and agreements, monitoring and enforcement
licensing agreements
define globalisation
the process of becoming interconnected as a result of massively increased trade and cultural exchange
name 6 reaona for globalisation
reduced cost of transport
reduced cost of communication
political change
dec of trade barriers
inc significance of global companies
migration
structural change
why has the reduction of international trade barriers increased globalisation
to get closer to free trade and to promote economic growth
political change
meetings are now international, discussing open trade
inc of significance of global companies
amount of deliveries reduced by containerisation ( opened 1970 ) which gains companies EOS
communication
ONLINE COMMUNICATION
migration
labour increases, improved economy as well as bringing culturally unique skills
name the 4 reasons for targetting, operating, trading with international countries
exporting, licensing, alliances and foreign direct investment
whats exporting
sending products abroard
if a business has saturated their market, they may find alternatives abroard
2 advantages of exporting
increased eos as unit price will dec by selling more of the same product
increased market share
two weakness’ of exporting
- transport costs high
- cultural differences
whats licensing
business can get foreign firms to produce their products under licence
the licence is where a business grants the right for another to use international goods under their name
3 advantages of licensing
- revenue generation
- royalties
- shared risk and market expansion
3 disadvantages of licensing
- loss of control
- dependancy on licensee
- risk of intellectual property theft
whats an alliance
a union between business formed for mutual benefit, allowing each-other to benefit from other markets
3 advantages of alliances
- synergies
- cheap advertising
- shared customers
3 weakness’ of alliances
shared profit
could become competitor
clash, leading to negative PR
whats foreign direct investment
business outside of marketing trade blocs invest in a business inside trade bloc to avoid tarrifs
3 advantages of foreign direct investment
GDP growth in country
income in country
skills in country
2 weakness’ of foreign direct investment
risk of political changes
higher costs
name 3 things that influence attractiveness of international market
larger populations
increased middle class
low competition
define offshoring
when a business relocates some of its processes to another country to reduce costs eg: manufacturing
advantages of offshoring
lower minimum wage
trade blocs
staff expertise
whats reshoring
bringing those processes back, less labour intensive and more capital. this is due to an adv in technology and benefits get erroded
name 5 influences of buying and selling abroard
- cultural differences
- colours unacceptable eg: black in japan
- war and income of locals
- access to resources
whats local responsiveness
the extent to which a company customises product to suit other countries cost reduction
eg: standardisation and economies of scale
whats digital technology
digital devices and systems that help create and manage data
name 4 pressures to adopt digital technology
automation
e- commerce
big data
data mining
whats e- commerce
buying, selling online. this helps small business’ compete
two adv of e-commerce
start up costs low
prices are transparent and comparable
two weakness of e- commerce
delivery costs
not suitable for all ie: trainers try on
whats big data
large sets of data that can be analysed using data mining to find patterns and trends
whats data mining
finds patterns within big data to then use in decision making process
two adv of data mining
helps understand customers needs
accurately forecasts sales
two weakness of data mining
costly
correlation doesnt always mean LT
whats a real life example of data mining
Dunnhumby
analysed customer data and finds needs
name 5 things digital technology has helped business’ with
- dec time to market product
- inc productivity of employees
- acquire new tech skills quickly
- improve data handling
- gain competitive advantage
how does digital technology affect HRM
- employee monitoring
- performance reviews
- better communication for recruitment
how does digital technology affect finance
- advanced analytics for finance to speed up decision making
- data visualisation tools to improve communication
how does digital technology affect production
- high levels of productivity to improve profits
- replaces hazardous jobs
how does digital technology affect marketing
marketing campaigns can now become more personal to increase sales eg: facebook
features of diseconomies of scale
slow communication, unmotivated workers and difficulty controlling and co ordinating
