Unit 9 - Growth and expansion

Question 1

What is the difference between organic and external growth?

Answer 1

Organic growth is expansion within the business.
External growth is an increase in a companies sales from merging or takeovers.

Question 1

Different types of integration (takeovers & merging)

Answer 1

Vertical growth:
Forwards integration (moving towards customers eg. booking.com)
Backwards integration (Moving towards suppliers)

Horizontal growth (within the same industry)
Lateral growth (within a similar industry)
Conglomerate growth (Different industries)

Question 2

Retrenchment

Answer 2

Downsizing the scale of business operations to improve efficiency eg. closing branches with low profit or diseconomies. of scale.

Question 3

Synergy

Answer 3

when the value of two firms is higher combined rather than operating individually.

Question 4

Economies of scope

Answer 4

when a firm gains efficiencies from widening their product range.

Question 5

Greiners model of growth
What are the 6 phases and 5 crises in order?

Answer 5

6 phases (CDDCCA): Creativity - Direction - Delegation- Coordination - Collaboration - Alliances.

5 Crises (LACRG): Leadership - Autonomy - Control - Red tape - Growth

Question 6

What is an Intrapreneur ?

Answer 6

An Intrapreneur is an employee who is given the task of developing an innovative idea within a firm.
2 characteristics:
Focused on added value eg. new features
Creative and risk taking

Question 7

Difference between Copyright ©️ , Trademark ™️ , and patents.

Answer 7

Copyrights legally protect the name of products & artistic work of writers & artists.
Trademarks legally product the brand name & logo.
Patents legally protect a companies right to produce a particular product.

Question 8

Offshoring Benefits

Answer 8

+ Access to more skilled labour
+ Lower manufacturing costs
+ Proximity to market

Question 9

Offshoring Drawbacks

Answer 9

– High relocation costs
– Increased unemployment if labour aren’t willing to relocate
– Corporate Social Responsibility (CSR)

Question 10

Factors influencing the attractiveness of international markets for a firm (LEAPS)

Answer 10

*Levels of competition
*Economies of scale
*Alliances with suppliers
*PESTLE - external environment
*Size of market growth

Question 11

Methods of internationalisation

Answer 11

– Outsourcing
– Offshoring
– Foreign Direct investment
– Exporting

Question 12

Bartlett and Ghoshall model

Answer 12

The Bartlett & Ghoshal Model indicates the strategic options for businesses wanting to manage the location of their operations based on two pressures: local responsiveness & global integration.

*Check book for diagram

Question 13

Lewin’s Force Field model

Answer 13

Shows there are forces driving change and forces restraining change - For change to occur, the driving forces must exceed the restraining forces.

Question 14

Driving Forces - Lewin’s force field model

Answer 14

Need for higher profits
Poor efficiency & lack of innovation
External factors eg. low interest rates.

Question 15

Restraining forces

Answer 15

Change in culture - uncertainty
Communication problems
Low tolerance to change - insecurity

Question 16

Kotter and Schlesinger - resistance to change model

Answer 16

Kotter and Schlesinger suggest there are different ways of overcoming resistance to change.

Education & Training (proposing why change is needed).
Facilitation & Support (additional training & mentoring)
Negotiation ( offering financial rewards to accept change)
Coercion ( people told implications of resisting change).

Question 17

Data mining

Answer 17

The process of collecting & analysing big data sets to identify trends & patterns to be used in decision making.

Helps predict future trends & behaviour, allowing the firm to build strategies (eg. segmenting market ) to engage audiences.
But, depends on recency of data.

Question 18

Benchmarking

Answer 18

Benchmarking is comparing business performance and process with the performance of the best companies.

Identifies underperforming areas, and promotes innovative thinking, but competitor actions might not work them.

Question 19

Enterprise Resource Planning

Answer 19

Collects information about the activities of different divisions in a business, to inform decision making eg. by loyalty cards.

Question 20

Handy’s Task culture - organisational structures
(PRTP)

Answer 20

According to Handy’s model, there are four types of cultures that organisations follow…

Power culture - centralised decision making and authoritarian leadership style

Role culture - delegated roles & people know their positions

Task culture - teams formed to work on projects & tasks eg. Mayo Management Theory

Person culture - employees free to act independently (highly specialised)

Question 21

Strategic drift

Answer 21

When a businesses pursued strategy no longer fits the environment surrounding it.
- firm now needs to consider incremental change.

Question 22

How can a business manage change?

Answer 22

*Delayering to improve communication
*Organic structures - Decentralise decision making.
*Working in projects & Teams

Question 23

Hofstede’s National Culture

Answer 23

Different ways to understand a country’s culture…

*Power Distance (HIGH PD VS LOW PD)
*Individualism VS. Collectivism
*Indulgence VS. Restraint
*Long term orientation
*Uncertainty avoidance

Question 24

Kotter and Schlesinger - Why is Change resisted? (SLIM)

Answer 24

• Self interest
  *Low tolerance to change
  *Misinformation and Misunderstanding