Unit 9 - Growth and expansion Flashcards
What is the difference between organic and external growth?
Organic growth is expansion within the business.
External growth is an increase in a companies sales from merging or takeovers.
Different types of integration (takeovers & merging)
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)
Retrenchment
Downsizing the scale of business operations to improve efficiency eg. closing branches with low profit or diseconomies. of scale.
Synergy
when the value of two firms is higher combined rather than operating individually.
Economies of scope
when a firm gains efficiencies from widening their product range.
Greiners model of growth
What are the 6 phases and 5 crises in order?
6 phases (CDDCCA): Creativity - Direction - Delegation- Coordination - Collaboration - Alliances.
5 Crises (LACRG): Leadership - Autonomy - Control - Red tape - Growth
What is an Intrapreneur ?
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
Difference between Copyright ©️ , Trademark ™️ , and patents.
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.
Offshoring Benefits
+ Access to more skilled labour
+ Lower manufacturing costs
+ Proximity to market
Offshoring Drawbacks
– High relocation costs
– Increased unemployment if labour aren’t willing to relocate
– Corporate Social Responsibility (CSR)
Factors influencing the attractiveness of international markets for a firm (LEAPS)
*Levels of competition
*Economies of scale
*Alliances with suppliers
*PESTLE - external environment
*Size of market growth
Methods of internationalisation
– Outsourcing
– Offshoring
– Foreign Direct investment
– Exporting
Bartlett and Ghoshall model
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
Lewin’s Force Field model
Shows there are forces driving change and forces restraining change - For change to occur, the driving forces must exceed the restraining forces.
Driving Forces - Lewin’s force field model
Need for higher profits
Poor efficiency & lack of innovation
External factors eg. low interest rates.
Restraining forces
Change in culture - uncertainty
Communication problems
Low tolerance to change - insecurity
Kotter and Schlesinger - resistance to change model
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).
Data mining
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.
Benchmarking
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.
Enterprise Resource Planning
Collects information about the activities of different divisions in a business, to inform decision making eg. by loyalty cards.
Handy’s Task culture - organisational structures
(PRTP)
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)
Strategic drift
When a businesses pursued strategy no longer fits the environment surrounding it.
- firm now needs to consider incremental change.
How can a business manage change?
*Delayering to improve communication
*Organic structures - Decentralise decision making.
*Working in projects & Teams
Hofstede’s National Culture
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
Kotter and Schlesinger - Why is Change resisted? (SLIM)
- Self interest
*Low tolerance to change
*Misinformation and Misunderstanding
