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Business > 1.5 Growth and evolution > Flashcards

1.5 Growth and evolution Flashcards

1
Q

PEST

A

Political
Economic
Social
Technological

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2
Q

PESTLE

A

Political
Economic
Social
Technological
Legal
Ecological

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3
Q

STEEPLE

A

Sociocultural
Technological
Economic
Environmental
Political
Legal
Ethical

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4
Q

assessment advice 1

A

remember when citing numbers, to compare it to other data otherwise it has no meaning

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5
Q

assessment advice 2

A

when doing a STEEPLE analysis, remember that the analysis is of external factors, not internal factors

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6
Q

economy of scale

A

the decrease in per unit production cost as an output or activity increases

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7
Q
A
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8
Q

diseconomy of scale

A

the increase in unit production cost as output or activity increases

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9
Q

assessment advice

A

when defining the economies of scale be sure to include the phrase “per unit” or “per average cost” in your definition

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10
Q

advantages of big businesses

A
  • survival
  • economies of scale
  • higher status
  • market leader status
  • increased market share
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11
Q

advantages of small businesses

A
  • greater focus
  • greater prestige
  • greater motivation
  • competitive advantage
  • less competition
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12
Q

internal growth

A

sometimes referred to as organic growth, this occurs when a business grows by relying on its own resources and capabilities: investment in new products, or new sales channels, or more stores etc to increase sales

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13
Q

external growth

A

occurs when a business expands with the aid of resources and capabilities not internally developed by the company itself - instead, the company obtains these new resources and capabilities by acquiring another company or forming some type of relationship, like a joint venture, with another organzation

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14
Q

merger

A

occurs when two companies that are theoretically “equal” legally become one company

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15
Q

acquisition

A

when one company purchases a majority or all the shares of another company

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16
Q

takeover

A

when one company acquires a majority or all the shares in another company
when the word “takeover” is used, the situation usually means that the company being acquired does not welcome the transaction

17
Q

examples of external growth

A

mergers and acquisitions
takeover
joint venture
strategic alliance
franchise

18
Q

horizontal integration

A

occurs when the two businesses being integrated are not merely in the same broad industry, but are actually in the same line of business and in the same chain of production

19
Q

vertical integration

A

occurs when one business integrates with another at a different stage in the chain of production, or when a business begins operations in an earlier stage through internal growth
occurs for various reasons, including to ensure reliable supply, avoid government regulation (such as price control or taxes), reduce transaction costs and eliminate the market power of other businesses

20
Q

what is backwards vertical integration

A

if a business becomes involved in an earlier stage in the chain of production

21
Q

what is forwards vertical integration

A

when one business integrates further forward (to a later stage) in the chain of production

22
Q

conglomeration

A

when two business in unrelated lines of business integrate - this type of integration is known as diversification

23
Q

joint venture

A

an organisation created, owned, operated by two or more other organisations
the joint venture is legally distinct from the organisations that created it

24
Q

strategic alliance

A

occurs when two or more businesses cooperate in some legal way that enhances the value for all parties
members of the alliance retain their independence
a strategic alliance is less binding than a joint venture, as new organisation is created

25
Q

franchising

A

a method of distributing products and services, where the franchiser develops products or services and its brand and then sells the right to use the brand and its products or services to franchisees
the franchisee pays a fee and typically some percentage of revenue or profits to the franchiser

26
Q

advantages franchisee

A
  • product exists and is well known
  • format for selling the product is already established
  • set up costs are reduced
  • franchisee has a secure supply of stock
  • franchisor can provide legal, financial, managerial and technical help
27
Q

disadvantages franchisee

A
  • unlimited liability for the franchise
  • has to pay royalties to franchisor
  • has no control over what to sell
  • has no control over supplies
28
Q

advantages franchisor

A
  • gains quick access to widening markets
  • makes use of local knowledge and expertise
  • does not assume the risks and liability of running the franchise
  • gains more profits and sign up fees
  • makes all the global decisions
29
Q

disadvantages franchisor

A
  • loses some day to day control in the running of a business
  • can see its image suffer if a franchise fails or does not perform properly
30
Q

for which reasons may globalisation have a significant impact on the growth of domestic businesses

A
  • increased competition
  • greater brand awareness
  • skills transfer
  • closer collaboration
31
Q

globalisation

A

is the process by which the world’s regional economies are becoming one integrated global unit

32
Q

what does “pot-national” mean

A

means that although these companies have a home of record, the businesses are otherwise transnational; apart from their legal home of record (the “home” office is legally registered in one country, these business consider no place their home (or every place their home)

33
Q

multi national corporation (Mnc)

A

a company that operates In two or more countries
it is a generally large company, but it does not have to be
sometimes referred to as multinational enterprises (mne’s)

34
Q

four factors that allowed multinational companies to grow rapidly

A
  • improved communications
  • dismantling of trade barriers
  • deregulation of the worlds financial markets
  • increasing economic and political power of the multinational companies
35
Q

advantages for host country

A
  • economic growth
  • new ideas
  • skills transfer
  • greater choice of products
  • short term infrastructure projects
36
Q

disadvantages host country

A
  • profits being repatriated
  • loss of cultural identity
  • brain drain
  • loss of market share
  • short term plans

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