Unit 9 Definitions - Strategic Methods Flashcards
alliance
occurs when two or more companies co-operate on an issue e.g apple and MasterCard, with MasterCard being the first credit card to offer apple pay
Bartlett and Ghoshal’s Model
a way of indicating the strategic options businesses wanting to manage their international operations based on two pressures: local responsiveness and global integration
the international strategy
producing domestically and exporting from the home country
the multi-domestic strategy
fitting products to each country in which a business operates. The product features are tailored to the local domestic environment, taking into account different food preferences, religious customs and other characteristics that define the locality
the transnational strategy
maximised local responsiveness but also gaining the benefits from global integration, characterised by an integrated and interdependent network of subsidiaries all over the world. These subsidiaries have a strategic role and act as centres of excellence
the global strategy
offering a standardised product worldwide, having. the foal to maximise efficiencies in order to reduce costs as much as possible. Global companies are highly centralised and subsidiaries are often vert dependent on the HQ
benchmarking
basing standards on the most efficient producers in the marketplace
big data
is a term for statistical sets that are so large or complex that traditional data processing applications are inadequate
conglomerate
a company that produces products in a number of different industries e.g Virgin Group or Unilever
conglomerate integration
two firms in an unrelated industry merge
copyright
legal protection against copying of writing, speeches, music and designs. It doesn’t have to be registered and anyone can put the copyright and date on the work they have created and it is copyrighted. To defend copyright it is necessary to take the infringer to court. It
what do copyrights encourage
creativity and they reward individuals for creativity
data mining
the analysis of large sets of data to find patterns and relationships between data e.g correlation and causations.
what is the benefit of data mining
it effectively helps businesses spot market trends ahead of rivals and understands consumers better
direct investment
taking controlling ownership in a company in one country by a company based in another country
diseconomies of scale
as a result of increasing output, average costs rise. Becoming a larger organisation may be less technically efficient due to communication, control or morale problems
e-commerce
buying and selling products and/or using electronic means (online shopping)
economies of scale
as a result of increasing the firm’s output, the average cost falls. In the long run, becoming larger may lead to technical, financial, commercial, managerial and risk-spreading economies
enterprise resource planning
is software that allows businesses to connect data from sales, logistics, distribution, marketing, manufacturing and inventory management
what is the benefit of enterprise resource planning
it can help make the business more efficient by matching sales and production more closely, potentially avoiding stockpiles of stock and allowing work schedules to be set according to likely demand a bit more precisely.
The experience curve
the reduction in average costs that occurs when increased total output allows producers to learn how to produce more efficiently. The larger the production the more experience one has in producing
what is the benefit of the experience curve
it means that market leaders have advantages over others
external growths
increasing sales and size of business as a result of merger or acquisition
franchising
the right to use the name, logos and trading method of another business for a fee
greiner’s growth model
attempts to predict the six phases and five crises that businesses may experience as they grow.
what is the first phase of growth
creativity
what is the first crisis
leadership
what is the second phase of growth
direction
what is the second crisis?
autonomy
what is the third phase of growth?
delegation
what is the third crisis?
control
what is the fourth phase of growth?
coordination
what is the fourth crisis?
the red tape crisis
what is the fifth phase of growth
collaboration
what is the fifth crisis?
growth
what is the sixth phase of growth
alliances
horizontal integration
a merger of two firms, which operated at the same stage of production e.g ITV and friends reunited
intellectual-property
an inventor’s idea protected by patent or copyright
internationalisation
selling and/or operating in more than one country or that move to enter foreign markets and target new groups of consumers
intrapreneurship
occurs when individuals within an organisation set are entrepreneurial by taking risks and generating new ideas
licensing
selling the rights to produce to another company for a fee giving the other business the right to manufacture and perhaps sell the original firm’s product
managerial economies of scale
reduction in average cost due to the specialisation of managerial roles, when organisations grow
mergers
occur when two companies cease to be distinct and operate under a single board of directors. Shares in both previous companies tend to be eliminated and new shares for the new company are issued
multinational
is a business that has operations in more than one country. Note that a business does not become an MNC simply because it sells its goods and services to more than one country. The key to being an MNC is that the business has business operations in two or more countries
off-shoring
companies outsource business activities abroad mainly due to cheaper labour and facility costs
on-shoring
transfer back to the country from which a business was originally located
organic growth
business expansion through increasing output and sales rather than merger or acquisition e.g expansion by new product development
overtrading
expanding beyond the level at which there is a safe level of cash. Growing tends to cause cash outflow for materials and wages before cash from revenue returns. There is a risk this will lead to liquidation despite strong sales
patent
a legal right to be the sole user of new technology or invention. Patents are granted by the patent office and last for 20 years
process innovation
a novel method of production has been initiated e.g nuclear fusion
product innovation
launching an item never seen before
purchasing economies of scale
average costs fall in larger-scale operations due to larger purchases attaining bulk buying discounts
research and development
investigate activities a business conducts to improve existing products and procedures or to lead to the development of new products and procedures
retrenchment
cutting back an organisation’s scale of operations
sourcing
buying from another company. Where the materials come from
synergy
when two companies together are stranger than the sum of individual parts. Illustrated by the equation 2+2=5. E.g economies of scale from a merger
takeover
one firm buys more than 50% of the shares of another firm, probably against its will. It is likely to replace the acquired firm’s management e.g Tesco took over booker
technical economies of scale
reductions in average cost due to the use of large scale machinery
ventures
occurs when two or more businesses set up a business division or new company that will be operated jointly. e.g British Sugar (ABF) has a joint venture with Wuxuan sugar mill in China to produce 100m tonnes of sugar p.a.
vertical integration
two firms operating at different production stages of the same industry combine to form one firm
backwards vertical integration
involves joining with a firm at an earlier stage of the production process e.g a brewery buying a hop farm
forward vertical integration
involves joining with a firm at a later stage of the production process e.g a brewery buying a pub
