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Business A-Level > Unit 9 > Flashcards

Unit 9 Flashcards

1
Q

What is innovation?

A

when a new idea is created which leads to the creation of a new good / service

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2
Q

What are the two types of pressure of innovation?

A
  • internal

- external

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3
Q

What creates opportunities for innovation?

A

PEST-C

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4
Q

How can PEST-C factors put pressure on innovation?

A
  • Political change may open up new geographical markets through trade deals requiring a new approach or changes to the product.
  • Economic change may create a pressure for a lower cost solution to a problem.
  • Social change may put pressure on businesses for new environmentally-friendly approaches
  • Technological developments may create opportunities for new ways of doing business. Just think of the pressure these days to have an online presence.
  • Competitive pressure from rivals may require businesses to respond or they will lose market share.
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5
Q

What are strategic methods?

A

refers to the methods a business uses to achieve it’s objectives

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6
Q

Why is growth important?

A
  • shows progress
  • financial benefits higher revenue, lower unit costs
  • creates momentum - new opportunities for employees -
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7
Q

What are the 2 types of growth?

A

internal (organic)

external (inorganic)

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8
Q

Give 2 examples of organic growth

A

launch new products

advertising - increasing the sales of existing products

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9
Q

Give 2 examples of inorganic growth

A

merge

takeover

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10
Q

What are the 4 methods of growth?

A

merger
takeover
franchise
joint venture

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11
Q

What is a merger?

A

is when the owners of two or more businesses become owners of a new shared business

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12
Q

What is a takeover?

A

is one business gains control of the other - gains ownership of it

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13
Q

What is a joint venture?

A

when businesses share information and resources with each other but retain their own identity

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14
Q

What is a franchise?

A

selling the right to use its name and sell its products to other organisations

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15
Q

What are the advantages of selling a franchise?

A
  • quick growth as funds are provided by franchisee

- franchisees may be very motivated as they own part of the business

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16
Q

What are the disadvantages of selling a franchise?

A
  • lose complete control over what franchises do

- do not gain all profits from the operations

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17
Q

What are the advantages of buying a franchise?

A
  • less risky - due to it being an established product
  • data already exists - reduce costs on R&D
  • maybe be provided with training, equipment and finance
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18
Q

What are the disadvantages of buying a franchise?

A
  • do not have complete independence

- do not get all profits from operations

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19
Q

What are the types of integration?

A

vertical
horizontal
conglomerate

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20
Q

What is horizontal integration?

A

occurs when a business integrates with another business in the stage of production process

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21
Q

What is vertical integration?

A

involves acquiring a business in the same industry but at a different stage of the supply chain

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22
Q

What is conglomerate integration?

A

diversification - occurs when one business joins with another business that operates in a different industry.

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23
Q

What are the potential benefits of growth?

A

economies of scope
synergy
economies of scale
experience curve

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24
Q

What are economies of scale?

A

is when the unit costs fall as the scale of operations increase

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25
Q

What are the different types of economies of scale?

A

purchasing economies of scale
technological economies of scale
financial economies of scale
managerial economies of scale

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26
Q

What are purchasing economies of scale?

A

when a firm gets bigger it will purchase more supplies, this gives it more bargaining power with suppliers. Which means suppliers are more likely to reduce prices to keep orders.

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27
Q

What are technological economies of scale?

A

occur when a large scale of operations enables particular technologies to be used efficiently

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28
Q

What are financial economies of scale?

A

occurs as business gets bigger it has more assets and this may mean a bank is willing to lend to it at lower interest rates as the risk is lower

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29
Q

What are managerial economies of scale?

A

occurs as business expands it may bring in specialists to focus on parts of the business

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30
Q

What are economies of scope?

A

are cost savings from operating in several markets or providing several products

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31
Q

What is the experience curve?

A

as a business grows the more experience everyone will gain

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32
Q

What is synergy?

A

when two businesses come together and perform better combined than they did individually

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33
Q

What are the disadvantages of growth?

A

overtrading

diseconomies of scale

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34
Q

What is diseconomies of scale?

A

when unit cost increase as the business size increase

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35
Q

How might diseconomies of scale occur?

A

communication problems
motivation issues
control and coordination problems

36
Q

What are strategic methods?

A

refers to the different strategies used by a business to achieve its objectives

37
Q

Why is growth important?Wha

A
  • shows progress - shows shareholders the value of the business
  • financial benefit as higher revenue, lower unit costs
38
Q

What are the 2 types of growth methods?

A
  • internal (organic)

- external (inorganic)

39
Q

What are examples of organic growth methods?

A

increase sales of existing products

launch new products

40
Q

What are examples of inorganic growth methods?

A

merger

takeover

41
Q

What is a merger?

A

when the owners of two or more businesses become owners of a new shared business

42
Q

What is a takeover?

A

one business gains control of the other - gains ownership of it

43
Q

What is a joint venture?

A

this when businesses share information and resources with each other but retain their own identity

44
Q

What is a franchise?

A

a business may decide to grow by selling the right to use its name and sell its products to other organisations

45
Q

What are the advantages of selling a franchise?

A
  • quick growth as funds are provided franchisee
46
Q

What are the disadvantages of selling a franchise?

A
  • lose control
47
Q

What are the advantages of buying a franchise?

A
  • buying an established product so no need for a new idea

- may be provided with training, equipment etc.

48
Q

What are the disadvantages of buying a franchise?

A
  • do not have complete independence

- do not get all profits from operations, as have to pay money to franchisor

49
Q

What are the 3 types of integration?

A

vertical
horizontal
conglomerate

50
Q

What is vertical integration?

A

when 2 business at the same stage integrates

51
Q

What is horizontal integration?

A

occurs when a business integrates with another business in the stage of production process

52
Q

What is conglomerate integration (diversification)?

A

occurs when one business joins with another business that operates in a different industry

53
Q

What are the potential benefits of growth?

A

synergy
economies of scale
economies of scope
experience curve

54
Q

What is meant by synergy?

A

when two businesses come together and perform better combined than they did individually

55
Q

What is meant by economies of scope?

A

are cost savings from operating in several markets or providing several products

56
Q

What is meant by experience curve?

A

as the a business grows everyone gains knowledge e.g managers and employees

57
Q

What are the problems of growth?

A

diseconomies of scale

overtading

58
Q

How does diseconomies of scale?

A

communication problems
control and coordination problems
motivation issues

59
Q

What is phase 1 of Greiner’s growth model?

A

growth through creativity

60
Q

Explain phase 1 of Greiner’s growth model?

A

business has just started

  • few employees
  • job descriptions fairly vague which can cause problems with jobs being replicated which leads to phase 2
61
Q

What is phase 2 of Greiner’s growth model?

A

growth through direction

62
Q

What is the order of crisis’s?

A 
leadership crisis
autonomy crisis
control crisis
red tape crisis
growth crisis
63
Q

Explain phase 2 of Greiner’s growth model?

A

need for clearer direction

- bring in professional managers to define jobs and roles, and create an organisational structure

64
Q

What is phase 3 of Greiner’s growth model?

A

growth through delegation

65
Q

Explain phase 3 of Greiner’s growth model?

A

delegation

- take more control over operations and performance

66
Q

What is the control crisis?

A

when senior members feel like they don’t have sufficient control and the business is losing shape and direction

67
Q

What is phase 4 of Greiner’s growth model?

A

growth through coordination

68
Q

Explain phase 4 of Greiner’s growth model?

A

coordination
- ensure there’s overall control through establishing systems such as budgets to provide targets and monitor processes in place

69
Q

What is phase 5 of Greiner’s growth model?

A

growth through collaboration

70
Q

Explain phase 5 of Greiner’s growth model?

A

collaboration between the different parts of the business without too much central regulation

71
Q

How might collaboration cause growth crisis?

A

as it’s difficult to grow internally with the appropriate level of control - business grow externally to avoid these difficulties

72
Q

What is phase 6 of Greiner’s growth model?

A

growth through alliances

73
Q

What does digital technology involve?

A

the use of digital resources to find, analyse, create, communicate and use information digitally

74
Q

What are the 4 digital technologies?

A
  • data mining
  • big data
  • e-commerce
  • enterprise resource planning (ERP)
75
Q

What is e-commerce?

A

refers to the transactions made electronically on the internet e.g buying and selling

76
Q

What are the 3 distribution channels for e-commerce?

77
Q

What are the advantages of e-commerce?

A
  • access to 24 hour markets
  • new customers
  • relatively cheap set up costs
  • greater ease to compare prices
78
Q

What are the disadvantages of e-commerce?

A
  • customers inability to physically touch and use products
  • delivery time
  • delivery costs
  • worries about returns
79
Q

What is enterprise resource planning?

A

is a business management software system that allows a business to manage data of its activities e.g marketing

80
Q

What are the 5 parts included in enterprise resource planning?

A
  • financial resources
  • human resource management
  • customer relationship management
  • inventory management
  • supply chain management
81
Q

What are the advantages of enterprise resource planning?

A
  • improves productivity and efficiency of business by ensuring resources are used fully and not idle
  • flexibility of the business and response time by being able to coordinate parts of the organisation more effectively
82
Q

What are the disadvantages of enterprise resource planning?

A
  • investment in systems and technological infrastructure

- training of staff

83
Q

What is data mining?

A

is an analytical process designed to explore data and to try and find patterns within it and/or identify systematic relationships between variables

84
Q

What is big data?

A

when huge amounts of data can be found out

85
Q

What are the advantages of big data?

A

allows greater access to data, and allows greater speed of analyse

86
Q

What are the impacts of digital technology?

A
  • better management
  • enabling new ways to do business
  • change in HR issues

Business A-Level (11 decks)

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