9. Decision making to improve marketing performance Flashcards
(41 cards)
benefits of growth
economies of scale
economies of scope
experience curve
synergies
what is retrenchment
a strategy used by a business to reduce its overall size or diversity of operations
5 internal economies of scale
purchasing managerial technical financial marketing
what is the experience curve
the idea that the more experience a business has in producing a particular product, the lower it costs
what is a synergy
the idea that the value and performance of two businesses combined will be greater than the sum of the two parts
what is overtrading
the situation where a business grows too quickly, undertaking more business than its working capital can cope with
5 phases of greiner’s model of growth
creativity direction delegation coordination collaboration
5 crisis of greiners growth model
leadership autonomy control red tape growth
4 reasons why growth is an important objective
- increased profit
- survival
- reduce risk: move into new markets
- increase market share
what is economies of scope
the reduction of unit costs because of producing a wider variety of goods and services
what is diseconomies of scale
when a business grows too large that costs per unit increase
3 reasons why diseconomies of scale may occur
- poor communication
- lack of control and coordination
- alienation of the workforce
what is vertical integration
when a business merges with or takes over another business in the same production chain but at a different stage (earlier stage - backward - suppliers) or (later stage - forward - pub chain)
what is horizontal integration
when a business merges with or takes over another business in the same stage of the production chain (another brewery)
what is a conglomerate
when a business merges with or takes over a firm in a total unrelated business area
what is a joint venture
where two or more businesses agree to pool their resources for the accomplishment of a specific task
what is franchising
a method of growth when an existing business (franchisor) grants another party (franchisee) the right to use its trade name and sell its products and services.
benefits for the franchisor of franchising
- relatively quick
- finance is provided by the franchisee
- franchisee is likely to be highly motivated
- organisational structure is less complex
what is innovation
when a new product or process is launched to make a profit
what is product innovation
launching a new or improved product or service
what is process innovation
developing more efficient production methods or ways of delivering of service
value of innovation 3
- competitive advantage
- aligned to strategic positioning
- stakeholder value
3 benefits of product innovation
- opportunity to build early customer loyalty and benefit from “first mover advantage”
- premium or skimming pricing strategy (high profit margin)
- publicity
7 benefits of process innovation
- greater efficiency
- improved quality
- faster production time
- reduction in unit cost
- enables mass customisation
- greater flexibility
- better customer service
