Paper 1 Flashcards
(17 cards)
Define the term CSR
When a company runs its business in a way that takes account of all parts of the society and the environment. These companies don’t only focus on making profit.
Outline the difference between internal and external growth
Internal Growth is expansion carried out by a company that does not involve other businesses.
External growth is expansion carried out by a company that involves other businesses.
Define the term multinational company
A business that operates in more than one country with HQuarters being in home country.
State 2 features of a publicly held company
- Listed on stock exchange
- Limited liability, incorporated
Would social media influencers be above or below the line marketing?
Below the line because it is targeted, only the followers of the social media influencer will see it rather than a mass audience.
Explain advantages and disadvantages of diversification as a method of growth.
Pro:
- Spread risk through it. Operating in different markets and having diverse services and products is beneficial as we don’t have to rely on a single market or product as much. If one market performs poorly we can still generate revenue.
- Potential economies of scale, as we are increasing the scale of production are average costs might decrease. Sharing marketing, management costs across many products.
Con:
- High initial costs: Developing products in a new market might be costly. There will be significant R&D costs. And as we are new to the market, there will be high marketing costs
- May lose focus on core business activities
- Potential diseconomies of scale: coordination and control becomes harder as there will be more departments more products, when the management is overworked there could be poor decision making
- Lack of expertise, we don’t have experience in this market, there is a learning curve
What is an advantage of external over internal growth?
By involving other businesses we can benefit from the expertise of the other firms.
- Potential economies of scale
- Grow much faster and bigger after the aquisition has been made (you immedialtely gain access to new customers, new markets, supply chains)
- Gaining access to new geographical markets
- Can benefit from the expertise of the other company
What is a disadvantage of external growth?
- Potential culture clash,
- Potential diseconomies of scale of managing a very large business.
- Costly
- Risky
- Integration disrupts operations
List three advantages of using social media influencers.
- You can target the audience (they have niche and loyal follower base)
- Increased trust and crediblility (people see influencers as more authentic and they trust more than the traditional advertisements)
- Cost-effective (traditional mass media channels are much more expensive)
- Young audience
- Can measure success
Explain two circular business models that Myt uses.
- Circular supply models: using renewable, recyclable or biodegradable materials instead of traditional non-recyclable ones
- Product life extension models: rather than producing a whole new product, lengthen the product life cycle of a product, or improve it
- Resource recovery models: do not throw away the waste produced, aim to re-use them in production
In what ways does Myt carry out Corporate Social Responsibility?
- Factory Modernization: Plans to make factories more sustainable
- Product Reformulation: Efforts to reduce sugar and caffeine levels
- Environmental Impact: Addressing recycling and biodegradable packaging
What is the Triple Bottom Line framework?
- Profit (Economy)
- People (Social)
- Planet (Environment)
A business success is not just measured by profit, but also its impact on society and environment
Analyze the potential pros and cons of green factory modernization
Pro:
- Good brand image, restores customer trust, attracts eco-concious customers, customer loyalty, competitive advantage
- Employee motivation
- Saves on costs in the long-term, it will likely use cheaper, renewable energies, it will be more efficient
Con:
- Costly, lower profit margins in the short-run. (set-up costs)
- Disrupts operations, may cause production delays
- Requires training
What quadrant of the Ansoff Matrix would buying a coffee shop chain fall into?
Diversification - New product: coffee, fresh bakeries
New market: retail food market and beverage service market, you sell to coffee shop customers
What quadrant of the Ansoff Matrix would a bottled-water manufacturer fall into?
Product Development - New product: water, they didn’t produce it before
Existing Market: still the customers are people that buy bottled beverages
List two arguments for accelerating sustainability.
- Rebuilds consumer trust
- Aligns with stricter regulations
Examples of Circular Business Models
Circular supply models: using renewable, recyclable or biodegradable materials instead of traditional non-recyclable ones
Product life extension models: rather than producing a whole new product, lengthen the product life cycle of a product, or improve it
Resource recovery models: do not throw away the waste produced, aim to re-use them in production
Sharing models: A system where consumers share the product rather than owning it individually
Product service system models: Consumers can choose to rent or lease the product rather than buying it
