9 - Strategic Methods 🏃‍♀️

Question 1

Why do business grow?

Answer 1

• to meet objectives
• external/internal factors
• competitive advantage

Question 2

Why do businesses retrench?

Answer 2

• increase efficiency
• turn around poor performance
• focus on core of business

Question 3

How will retrenchment affect cash flow?

Answer 3

Outflows will decrease

Question 4

What are methods of growth?

Answer 4

• mergers/takeovers
• ventures
• franchises
• joint venture

Question 5

What is a horizontal merger/takeover?

Answer 5

2 business at the same stage of production

Question 6

What is a forward vertical merger/takeover?

Answer 6

Joining with a business at the next stage of production

Question 7

What is a backward merger/takeover?

Answer 7

Joining with a business at an earlier stage of production

Question 8

What is conglomeration?

Answer 8

2 unrelated business merge/takeover

Question 9

What is economies of scale?

Answer 9

The benefits of increasing output so unit costs decrease

Question 10

What is economies of scope?

Answer 10

The benefit of having a wide portfolio of products, so costs are spread across multiple producys, decreasing unit costs

Question 11

What is diseconomies of scale?

Answer 11

The unit costs rise as more is produced past the optimum efficiency level as the business begins to work above optimum capacity

Question 12

What is the experience curve?

Answer 12

How the costs per unit decrease over time as experience increases

Question 13

What is the technical economies of scale?

Answer 13

The benefits when a business spends more on efficient machinery so decrease in average costs

Question 14

Why is technical economies of scale important?

Answer 14

Increases competitiveness and efficiency and spreads FC over greater output

Question 15

What is purchasing economies of scale?

Answer 15

The benefits when a business negotiates greater discounts for bulk buying

Question 16

Why is purchasing economies of scale important?

Answer 16

Increase the buying power of the business

Question 17

What is managerial economies of scale?

Answer 17

The benefits when a business employs specialist personnel leading to a fall in average costs

Question 18

Why is managerial economies of scale important?

Answer 18

Can employ specialists rather than external organisations eg. Accountantss

Question 19

Define overtrading?

Answer 19

When more money leaves the business than comes into it

Question 20

What is synergy?

Answer 20

2 business combine resources and efforts to create a higher combined value and performance than by themselves

Question 21

What are greiner’s model of growth’s phases?

Answer 21

Growth through…

Creativity
Direction
Delegation
Coordination + monitoring
Collaboration
Alliances

Question 22

Which one of Greiner’s Model of Growth involves inorganic growth?

Answer 22

Growth through alliances

Question 23

What are the crisis’ in Greiner’s Model of Growth?

Answer 23

• leadership crisis
• autonomy crisis
• control crisis
• red tape crisis
• growth crisis

Question 24

What are the two types of innovation?

Answer 24

Product and process

Question 25

Why do businesses want to innovate?

Answer 25

- provides competitive advantage - customer perception

Question 26

Pros to innovation

Answer 26

- competitive advantage - increase efficiency - attracts new customers - increases market share - high prices

Question 27

Cons to innovation

Answer 27

- costly - time consuming - legal implications - opportunity cost

Question 28

Define kaizen as a way to innovate

Answer 28

focus on small and frequent improvements to production process

Question 29

What is intrapreneurship?

Answer 29

When employees act in the same way as entrepreneurs do to drive the large company forward

Question 30

What is benchmarking?

Answer 30

The process of identifying the best practise within an industry

Question 31

What are 4 methods of innovation?

Answer 31

- kaizen - R&D - intrapreneurship - benchmarking

Question 32

What do patents do?

Answer 32

Protects new inventions

Question 33

How do you get a patent?

Answer 33

Granted by individual companies where you apply through the IPO

Question 34

Do you have to pay for patents?

Answer 34

Yes

Question 35

What does copyright protect?

Answer 35

Authors, composers, and artists’ logos computer programs and recordings

Question 36

How long does copyright last?

Answer 36

For 70 years after the death of the inventor

Question 37

How does technology help a business?

Answer 37

- boosts revenue - reduces costs

Question 38

What are some problems on introducing technology?

Answer 38

- substantial initial investment - staff training - investment appraisal - changes to way business operates

Question 39

What is big data?

Answer 39

describes the vast amount of data generated by the technology

Question 40

What is data mining?

Answer 40

the process of sifting through the data to try and identify trends and relationships

Question 41

Give an example of operational big data

Answer 41

- suppliers research - distribution channels - customer perception of quality

Question 42

Give an example of marketing big data

Answer 42

- demographics - promotion strategies - pricing

Question 43

Give an example of HR big data

Answer 43

- employee statistics - social media accounts

Question 44

Give an example of financial big data

Answer 44

- spending habits - competitor facts and figures

Question 45

What is Enterprise Resource Planning?

Answer 45

software used by businesses to collect, store, manage and interpret data from different business functions

Question 46

Methods of entering international markets What is licensing?

Answer 46

a business gives permission for a third party to sell their goods or services abroad

Question 47

Methods of entering international markets What are alliances?

Answer 47

forming partnerships with one or more businesses

Question 48

Methods of entering international markets What is direct investment?

Answer 48

capital expenditure to establish a physical presence in another country

Question 49

Methods of entering international markets Which is the most risky method?

Answer 49

direct investment

Question 50

What factors influence where a business will locate?

Answer 50

- trade agreements - political stability - GDP - cultural differences - competition - opportunities

Question 51

Bartlett and Ghoshal's Strategies What is cost pressure also known as?

Answer 51

global integration

Question 52

Bartlett and Ghoshal's Strategies What has high cost pressure and low local responsiveness?

Answer 52

global

Question 53

Bartlett and Ghoshal's Strategies Name a global business

Answer 53

Pfizer = no need to change products based on area

Question 54

Bartlett and Ghoshal's Strategies What is a low cost pressure and low local responsiveness?

Answer 54

International

Question 55

Bartlett and Ghoshal's Strategies What is an example of an international strategy business?

Answer 55

eg Netflix

Question 56

Bartlett and Ghoshal's Strategies What is a high cost pressure and high local responsiveness business?

Answer 56

Transnational

Question 57

Bartlett and Ghoshal's Strategies Name a transnational business

Answer 57

Starbucks = have to change products to local area

Question 58

Bartlett and Ghoshal's Strategies What is a low cost pressure and high local responsiveness?

Answer 58

Multi-domestic

Question 59

Bartlett and Ghoshal's Strategies Name a multi-domestic business

Answer 59

Nestle = need to local business but don't need to focus on costs