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AQA A level Business > Unit 9- How to pursue strategies > Flashcards

Unit 9- How to pursue strategies Flashcards

1
Q

what are the 2 types of growth?

A

-external and organic

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2
Q

what is meant by organic growth?

A

Organic growth occurs when a business expands its own product portfolio or its number of retail stores.

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3
Q

what is meant by external growth?

A

External growth occurs when a business expands by purchasing or taking over other businesses.

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4
Q

what is the impact of growth on a business?

A
  • decisions made within business functions
  • motivation for the management
  • increased market share-increased sales revenue
  • increased profit
  • investment for growth
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5
Q

what is the benefit of retrenchment?

A

Retrenchment can allow a business to re-focus on growing a core activity within its operation.

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6
Q

what is the impact of retrenchment on HR?

A

Retrenchment affects human resources as workforce planning, redundancy and redeployment will need to be considered.

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7
Q

what is the impact of retrenchment on operations?

A

Retrenchment affects operations as it can offer economies of scale through addressing diseconomies of scale which may have arisen, and this reduced unit cost.

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8
Q

what is the impact of retrenchment on marketing?

A

Retrenchment affects marketing as promotional campaigns are likely to be refocused on the refined business offer which may include selling from a smaller product portfolio.

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9
Q

what is the impact of retrenchment on finance?

A

Retrenchment affects finance as the business will need to ensure it is able to fund the short-term increase in the cost of redundancy payments.

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10
Q

when does technical economies of scale occur?

A

Technical economies of scale occur when a business is able to adopt advanced technological approaches to production as a result of their scale and size. –> this decreases their unit costs

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11
Q

when does purchasing economies of scale occur?

A

Purchasing economies of scale occur when a business is able to take advantage of bulk ordering discounts.

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12
Q

when does managerial economies of scale occur?

A

Managerial economies of scale occur when a business is large enough and able enough to introduce specialist staff for each of its functions.

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13
Q

what are the 3 types of economies of scale?

A
  • technical
  • purchasing
  • managerial
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14
Q

when does economies of scope occur?

A

Economies of scope occur when a business is able to spread its costs over several markets or products.

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15
Q

what is meant by diseconomies of scale (3)?

A
  • As businesses grow, communication becomes more difficult; decision making becomes slower which can increase overall costs.
  • As businesses grow, it becomes much harder to motivate staff as relationships are harder to manage; demotivation can affect productivity and therefore increase unit costs.
  • As businesses grow, it becomes harder to control and co-ordinate and this can cause mistakes and errors, therefore increasing unit costs.
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16
Q

what is meant by the experience curve?

A

The experience curve suggests that businesses with better knowledge, resulting from experience, can inform a better decision which offers a cost advantage.

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17
Q

when do synergies occur?

A

Synergies occur when two or more businesses combine and are worth greater than the individual sum of each.

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18
Q

when does overtrading occur?

A

Overtrading occurs when a business experiences liquidity problems associated with the cost of growth.

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19
Q

what is the benefit of Greiner’s model of growth?

A

Greiner’s model of growth offers solutions to overcoming the challenges of growth experienced by businesses.

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20
Q

explain stage 1 of Greiner’s Model of growth

A

Growth through creativity occurs as businesses begin to establish themselves but have few employees and an informal structure throughout the business. As growth occurs, roles may overlap and there is a leadership crisis which requires structure and direction.

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21
Q

explain stage 2 of Greiner’s Model of growth

A

Growth through direction occurs, and as departments become established, managers request autonomy, and there is an autonomy crisis.

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22
Q

explain stage 3 of Greiner’s Model of growth

A

Growth through delegation occurs, until senior managers may feel there is too much control delegated throughout the business. Senior managers may regain control if they are worried about vision and a control crisis occurs.

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23
Q

explain stage 4 of Greiner’s Model of growth

A

Growth through co-ordination occurs as managers begin to introduce centralised systems for budgeting and staff performance management. A lack of autonomy or a red-tape crisis can then happen.

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24
Q

explain stage 5 of Greiner’s Model of growth

A

Growth through collaboration then occurs as departments and functions begin to work together, centrally, however further internal growth becomes difficult and a growth crisis occurs.

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25
Q

explain stage 6 of Greiner’s Model of growth

A

Growth through alliances can only occur through external growth: takeovers and mergers, however, present their own challenges to a business pursuing growth.

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26
Q

what are the 3 factors for diseconomies of scale?

A
  • communication
  • motivation
  • control and co-oridination
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27
Q

what is meant by conglomerate integration/ merger?

A

A conglomerate merger is a merger between firms that are involved in totally unrelated business activities. These mergers typically occur between firms within different industries or firms located in different geographical locations.

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28
Q

what are the 2 types of innovation?

A

-product innovation and process innovation

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29
Q

what is meant by innovation?

A

Innovation is the development of a new idea which leads to the production of a new product or service which can be sold.

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30
Q

what are the pressures for innovation?

A
  • social changes

- competition

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31
Q

what is meant by product innovation?

A

Product innovation involves the development of new products which will be offered for sale to customers.

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32
Q

what is meant by process innovation?

A

Process innovation involves improving the process of manufacturing or offering a product or service for sale to customers to add value, decrease costs or improve efficiency.

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33
Q

what are the advantages of innovation?

A
  • Innovation allows businesses to improve the products in its portfolio which can increase market share, sales revenue, and profit.
  • Innovation allows a business to improve its processes which can increase efficiency and therefore competitiveness.
  • Innovation allows businesses to develop a unique selling point which can improve competitiveness and customer loyalty.
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34
Q

what are some ways a business can become innoative?

A
  • kaizen
  • intrapreneurship
  • benchmarking
  • research and development
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35
Q

explain kaizen

A

Kaizen is an approach to innovation and consists of continuous improvements being made to a process so that over time it continues to evolve and develop.

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36
Q

what needs to occur in order for kaizen to be successful?

A

A Kaizen approach requires the support of employees; however, employees must feel passionate about helping the business improve.

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37
Q

explain intrapreneurship

A

Intrapreneurship refers to individuals who have the characteristics of entrepreneurs but work within and contribute their entrepreneurial ideas to their employer instead of pursuing these on their own.

38
Q

what needs to occur in order for kaizen to be successful?

A

-Intrapreneurship can only lead to business improvements if there is an accepting culture of employee contributions.

39
Q

what is a benefit of intrapreneurship?

A

Intrapreneurship can motivate employees which supports engagement and retention.

40
Q

explain benchmarking

A

Benchmarking refers to the process of identifying an area of expertise or specialism within the industry and using this as a foundation to inform and improve the business’ own process.

41
Q

whats a benefit of benchmarking?

A

Benchmarking allows a business to adopt industry best-practice.

42
Q

what is a disadvantage of benchmarking?

A

Benchmarking assumes a business is able to implement processes from other businesses and this may be a challenge depending on the business, its expertise, and the wider industry.

43
Q

explain research and development

A

Research and development refer to the process of researching new approaches and products and developing these to satisfy customer needs.

44
Q

whats a benefit of research and development?

A

Research and development allow businesses to update and introduce products and services which are reactive to changes in customer demands and technological advancements.

45
Q

what are some advantages of internationalisation?

A
  • Accessing international markets gives businesses access to a larger market of customers which can increase sales revenue and profit.
  • Accessing international markets can reduce a business’ risk in case demand in the home market declines rapidly following a change in tastes and fashions.
46
Q

whats a benefit of exporting?

A

Exporting allows a business to access international markets by selling products abroad.

47
Q

whats a benefit of licensing?

A

Licensing allows a business to access international markets by providing overseas businesses with a license to sell and produce its products in that country.

48
Q

whats a benefit of alliances?

A

Alliances allow a business to access international markets through working in partnership together to share risk.

49
Q

whats a benefit of direct investment?

A

Direct investment allows a business to access international markets through investing in facilities, such as a production centre, abroad.

50
Q

what are the 4 ways of internationalisation?

A
  • exporting
  • licensing
  • alliances
  • direct investment
51
Q

explain the different factors that help a business choose an international market to enter?

A
  • The political stability (more stable is better)
  • Local competition (less competition is better)
  • Size of the market (higher population and income is better)
52
Q

why might business’ source its raw materials from overseas suppliers?

A

as these may be cheaper than raw materials bought from the home market.

53
Q

what is meant by offshoring?

A

Off-shoring involves a business moving part of its production process to an overseas manufacturer.

54
Q

what is an advantage of offshoring?

A

Off-shoring can reduce cost which allows a business to lower its selling price or increase profit.

55
Q

what is a disadvantage of offshoring?

A

Off-shoring can lead to quality problems if overseas producers do not uphold the same quality standards as the business which outsources.

56
Q

what is meant by reshoring?

A

Re-shoring involves a business bringing its production processes back to the original country.

57
Q

whats an disadvantage of reshoring?

A

Re-shoring can increase cost which means a business may need to increase its selling price or accept reduced profit.

58
Q

whats an advantage of reshoring?

A

Re-shoring can increase quality as production can be monitored more closely which can build a business’ reputation.

59
Q

what is meant by multinational organisation its benefit?

A
  • Businesses can target overseas markets by becoming a multinational organisation.
  • A multinational organisation is a business which has production facilities in more than one country.
60
Q

what are some influences on the decision to enter an international market?

A
  • The importance of quality may affect a business’s decision when deciding whether to produce in an overseas market.
  • The importance of cost reduction may affect a business’s decision when deciding whether to produce in an overseas market.
61
Q

why is the management and leadership of an international business quite different from the management and leadership of a domestic, or local business?

A
  • cultural differences
  • legal difference
  • markets and customer demands
62
Q

why might cultural differences causes differences in management and leadership between domestic and overseas business’?

A

Cultural differences often influence the management of international businesses as trading may involve dealing with different cultures.

63
Q

why might legal differences causes differences in management and leadership between domestic and overseas business’?

A

Legal differences often influence the management of international businesses as trading may involve dealing with the laws of different countries.

64
Q

why might markets and customer demands differences causes differences in management and leadership between domestic and overseas business’?

A

Markets and customer demands often influence the management of international businesses as trading may involve dealing with customers and markets which demand different products and services, or adapted products and services.

65
Q

explain the Bartlett and Ghoshal’s measures?

A

Bartlett and Ghoshal use pressure for local responsiveness (the requirement to adapt a product according to location) and pressure for reducing costs to decide the most appropriate strategy for a business to pursue.

66
Q

what are the 4 strategies in the Bartlett and Ghoshal’s model to support international businesses?

A
  • global organisation
  • transnational organisation
  • international organisation
  • multidomestic organisation
67
Q

where in the Bartlett and Ghoshal model is global strategy/organisation?

A

businesses who have high pressure to reduce costs but low pressure for local responsiveness.

=high global integration, low local responsiveness

68
Q

where in the Bartlett and Ghoshal model is international strategy/organisation?

A

is for businesses who have low pressure to reduce costs and low pressure for local responsiveness.

=low global integration, low local responsiveness

69
Q

where in the Bartlett and Ghoshal model is transnational strategy/organisation?

A

is for businesses who have high pressure to reduce costs and high pressure for local responsiveness.

=high global integration, high local responsiveness

70
Q

where in the Bartlett and Ghoshal model is multinational strategy/organisation?

A

are for businesses who have low pressure to reduce costs but high pressure for local responsiveness.

=low global integration, high local responsiveness

71
Q

define intellectual property

A

Intellectual property is a broad categorical description for the set of intangible assets owned and legally protected by a company or individual from outside use or implementation without consent. An intangible asset is a non-physical asset that a company or person owns.

72
Q

what must a business consider when assessing its pressures for local responsiveness?

A

If customer requirements differ significantly in different countries, local responsiveness pressure is high.

73
Q

what must a business consider when assessing its pressures for cost reduction?

A

If the business competes based on its efficiency and therefore requires, for example, economies of scale, to operate competitively, there is pressure for cost reduction.

74
Q

what is meant by digital technology?

A

Digital technologies refer to the use of digital platforms or resources to support the business.

75
Q

what is meant by e- commerce?

A

E-commerce is an example of digital technology which allows the business to use online platforms to sell goods and services through the internet.

76
Q

what is meant by data mining?

A

Data mining is an example of digital technology which allows businesses to gather data and use this to look for trends and patterns.

77
Q

what is meant by big data?

A

Big data is an example of digital technology which allows businesses to collect and combine data from many different sources.

78
Q

whats meant by enterprise resource planning (ERP)?

A

Enterprise resource planning (ERP) is a digital technology which allows businesses to use central software to control many different activities of the business including stock management, sales data, and production systems.

79
Q

what are some advantages of using digital technology?

A
  • Digital technologies give businesses access to new opportunities such as selling products internationally through e-commerce.
  • Digital technologies give businesses access to data which can be used to improve and target marketing activities.
80
Q

what impact does digital technology have on HR?

A

Digital technologies can require training so that staff can use new systems, and this affects human resources.

81
Q

what impact does digital technology have on finance?

A

Digital technologies can require significant investment, and this affects finance.

82
Q

what impact does digital technology have on marketing?

A

Digital technologies can allow marketing to access and analyse new sources of data and research.

83
Q

what impact does digital technology have on operations?

A

Digital technologies can provide increased quantities of data about production processes which can allow operations to improve their systems.

84
Q

whats an advantage of e-commerce?

A

E-commerce allows businesses to access customers internationally therefore increasing sales volume and revenue.

85
Q

whats a disadvantage of e-commerce?

A

E-commerce is less suitable for some businesses, such as those businesses selling products which customers like to see, try or feel before purchasing.

86
Q

whats an advantage of big data?

A

Big data allows businesses to access large amounts of data about many aspects of their business and environment.

87
Q

whats a disadvantage of big data?

A

Big data provides many challenges for businesses in terms of the legal requirements around data storage, processing and transfer.

88
Q

what an advantage of data mining?

A

Data mining allows recommendations to be made to customers about items likely to be purchased and can therefore increase sales volume and revenue.

89
Q

whats a disadvantage of data mining?

A

Data mining provides many challenges for businesses in terms of the legal requirements around data storage, processing and transfer.

90
Q

whats an advantage of ERP?

A

ERP supports the standardisation of information across the business which supports accurate decision making.

91
Q

whats a disadvantage of ERP?

A

Implementing and using ERP software can be expensive and require specialist skills and knowledge.

AQA A level Business (13 decks)

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