topic 9 (strategic methods)

Question 1

growth objectives are

Answer 1

• Maximizing the amount of profit earned by the organisation.
• Maximizing shareholder wealth – increasing share price
• Growth in the size of the business
• Spreading risk by diversification
• Increasing market share
• Focusing on core capabilities

Question 2

organic growth is

Answer 2

is growing from the businesses core, the growth tends to be slow

Question 3

external growth is when

Answer 3

A business will ‘acquire’ another business – either through takeover or merger, usually quicker than organic growth but more risky

Question 4

retrenchment is

Answer 4

cutting back through the reduction in number of staff or a recruitment freeze, closing factories or devsisions

Question 5

advantages of retrenchment by reduction in number of staff or a recruitment freeze

Answer 5

• a non-threating strategy that will not affect moral.
• can be seen as fair

Question 6

disadvatges of retrenchment by reduction in number of staff or a recruitment freeze

Answer 6

• no opportunities to restructure the business.
• If the market changes then can limit business ability to respond
• Good people always leave and need to be replaced

Question 7

advantages of rentrenchment by closing divisions or factories

Answer 7

• should not affect production lines
• may empower or enrich remain jobs

Question 8

disadvanatges of retrechment by closing devisions or factories

Answer 8

• may intensify work of remaining managers
• could lose a generation of managers
• fewer promotional prospects for those who remain

Question 9

Greiner’s growth model

Answer 9

fast growth can cause problems
as workload grows so does span of control, as well as stress levels for all
phase 2- leadership crisis
phase 3- autonomy crisis
phase 4 - control crisis
phase 5 - red tape crisis
phase 6 - growth crisis

Question 10

economies of scope

Answer 10

a business’s unit cost to produce a product will decline as the variety of its products increases

Question 11

synergy is

Answer 11

The concept that the value and performance of 2 companies combined will be greater than the sum of separate individual business (2+2=5)

Question 12

a merger is

Answer 12

two or more businesses agree to come together under one board of directors

Question 13

a takeover is

Answer 13

one firm buys the majority shareholding in another firm and takes full managerial control. This can be hostile.

Question 14

innovation is

Answer 14

when business exploits new ideas which have been developed

Question 15

businesses who innovate can

Answer 15

• Have access to new markets
• Create new products and demand
• Create new ways of doing business

Question 16

product innovation is

Answer 16

The development and marketing of the introduction of a new or redesigned, goods or services

Question 17

process innovation is

Answer 17

Implementing a new or improved production process, delivery method or communication method

Question 18

advantages of innovation

Answer 18

• Improved quality
• The ability the enter new markets.
• Increase in product range to spread the risk
• Reduce costs and especially unit costs

Question 19

disadvantages of innovation

Answer 19

• Uncertainty of the demand for new products – a lot of money could be spent with little return
• Operational difficulties – especially through the learning curve productivity can be reduced
• Competition – rivals may be tempted to join the new market
• Generic products – copies can be manufactured

Question 20

methods businessess can use to become innovative are

Answer 20

• Introduction kaizen techniques
• Using research & development
• ‘intrapreneurship’
• Benchmarking

Question 21

kaizen is

Answer 21

Kaizen means ‘continuous improvement’ and was an idea which was developed in Japan and then brought to the west

Question 22

kaizen focuses on

Answer 22

• Eliminating waste
• Improving productivity
• Achieving sustained continual improvement in the product and process of an organisation.

Question 23

research and development falls into two forms they are

Answer 23

• Customer orientated business (customer needs identified and then solutions found).
• Product orientated business (products are developed first and then markets sought).

Question 24

Intrapreneurship is

Answer 24

the act of behaving like an entrepreneur while working within a large organisation

Question 25

benchmarking is

Answer 25

identifying the best practice used in the production process and delivery of the product itself. This can be against other industries or used internally.

Question 26

four key steps to benchmarking are

Answer 26

1. Understand in detail the existing business process.
2. Analyse the business processes of others.
3. Compare business performance against others analysed.
4. Implement steps to close the gap.

Question 27

when a business becomes innovative that should concider what factors?

Answer 27

• Protecting ideas
• Planning
• Secrecy
• Customer orientation

Question 28

innovation can affect what functional areas

Answer 28

• Human resources
• Marketing
• Finance
• Operations management

Question 29

what could prevent innovation?

Answer 29

• No money available
• It’s a long term strategy shareholders may require short term rewards
• Bank not willing to lend
• Relatively low success rate

Question 30

big data

Answer 30

A data set which is too large and complex to manipulation or interrogate with standard methods or tools

Question 31

using big data can enable a business to

Answer 31

• Have purchase history information
• Use customer relationship management software effectively
• Link to social media so that likes/dislikes considered
• Uses information from partner business

Question 32

data mining is

Answer 32

The practice of examining large pre-existing databases in order to generate new information

Question 33

Enterprise resource planning (ERP) is

Answer 33

A term used to describe the business management system which integrates the data sources and processes of an entire organisation into one system. A single data base