Unit One : Understanding business Flashcards
Internal growth is also known as ….
Organic
Firstly,state what horizontal integration is and then give two advantages and one disadvantages …
Horizontal integration is where a company joins with another company in the same field of production
Advantages are there is less competition as the customers are no longer fought over and since it’s now a bigger firm there will be more customers and therefore larger profit.
Disadvantages are the pricing for customers will increase
State the definition of divestment,management buy in and asset stripping
- Where a company will sell of one of its brands
- this is where a group of managers from outside the business buys over the failing business
- where somebody will but over a company and sell off all the assets such as machinery.You get more money from the assets than you paid for buying he company
Explain why a business may want to grow internally ?
In attempt to attract new customers to their products,eg: by launching a new product, which will then increase sales and profits
Forward vertical integration is where a company will join up with a stage in the next line of production … What are the advantages and disadvantages of doing so ?
Adv : control the image of your product and increase the profit
Dis: may loose sight of your core activity
State what the term market share means …
The percentage share of the market a business has
Give one benefit and one loss of backward vertical integration
Benefit is the company can control the amount of raw materials being bought and any surplus can be sold with the profits coming back directly to the business
Loss is that can take always form core activity and may cost a lot to initiate
Give the definition of VISION
Shared direction for the business,shared ideas of what needs to be accomplished to achieve the business objectives
Give the definition of VALUES
Belief in what is best for the organisation,commonly held standards of what is acceptable ,right and important for employees
State the definition of penetration pricing
Prices are lowered for a short period of time which will generate interest among consumers
Give five ways that a business can grow internally ?
Opening up more branches Launching a new product (for example Mars ice cream ) Employing more staff Building a bigger factory Introducing online shopping
State two advantages and two disadvantages of strong corporate culture
A/ employees feel part of the organisation through uniform colours and then their loyalty is increased which means they are happy in their job and save costs on recruiting staff.high quality staff are attracted
D/ it’s hard to introduce if it wasn’t their originally by the founders and manager may lose control if the culture is too loose
Briefly describe what a matrix structure is …
It contains teams of people created from various departments which are created for the purpose of a specific project and is lead by a project manager.
Give examples of costs and benefits of a matrix stucutre …
Employees may have divided loyalties as they report to two line managers.
Co- ordinating meetings can be tricky as employees are from different departments however this does breakdown traditional department barriers and improves communication across the entire organisation.
Puts employees under a lot of pressure as they have two workloads to complete which also disrupts employees usual working routine resulting in a loss of output.
Increases the skill set of employees as learning new skills from each other which increases motivation
State the features of a strategic decision ..
LONG TERM - made by senior managers that affects overall direction of the company.An example of a strategic decision is to increase market share by 20% in the next ten years.This decision are made with regard to the future of the business and doesn’t go into that much detail about how ! they will achieve this goal.
