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Business aqa a level > Strategic methods > Flashcards

Strategic methods Flashcards

(58 cards)

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1
Q

Technical EOS

A

large volumes are more efficient as large business can afford to buy better machinery and employ fewer staff.

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2
Q

Managerial EOS

A

Large businesses can employ managers with specialist skills.

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3
Q

Purchasing EOS

A

when large businesses bulk-buy they get discounts.
Borrow money at lower rates of interest

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4
Q

Marketing EOS

A

marketing costs are usually fixed so a business with a large output can spread the costs over more units.
Also mor effective forms of advertising eg TV

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5
Q

External EOS

A

Large number of suppliers
Good skilled local labour force

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6
Q

Economies of scope

A

Arise when a business produces multiple products rather than specialising in just one.
- allows them to charge lower prices and lower unit costs
- competitive advantage

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7
Q

Diseconomies of scale

A

Communication in businesses with tall structures as there is long chains of command
Motivational

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8
Q

Retrenchment

A

business has to downsize
- cutting jobs
- reducing output
-withdrawing from markets

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9
Q

why may retrenchment occur

A

Diseconomies of scale
Declining markets
Economic recession

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10
Q

Organic growth

A

when a business grows from within
- able to finance their growth (increased capacity, more staff ) by reinvesting profits

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11
Q

ADV of organic growth

A

Can maintain current management style,culture,ethics
Less risk
Less disruptive changes mean that workers efficiency, productivity and morale remain high

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12
Q

Disadvantages of organic growth

A

Can take a long time
Businesses may miss out on ambitious opportunities

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13
Q

Problems with growing in size

A
  • large companies can suffer from diseconomies of scale so they may need to retrench
    -CMA
    -switching to a PLC
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14
Q

Franchising

A

an agreement which allows a new business to use the business idea, name or reputation.

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15
Q

Example of franchising

A

Subway increased number of restaurants in UK & Ireland from 100 in 2002 to over 2000 by 2015

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16
Q

Synergy

A

where the business after the merger is more profitable than all the businesses before the merger. This is a result of the merged business generating more revenue or cost savings due to EOS

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17
Q

Hostile takeovers

A

when one PLC buys the majority of the shares in another PLC against the will of the directors of that company.

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18
Q

Ventures

A

small businesses or projects that are set up by existing businesses in the hope of making a profit.

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19
Q

Joint venture

A

Businesses share their resources but there is no change in ownership

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20
Q

Horizontal integration

A

happens when a firm combines with a firm in the same industry at the same stage of the production process
e.g. vodafone india and Idea Cellular merged in 2018

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21
Q

Vertical integration

A

when a firm combines with another firm in the same industry but at a different stage of the production process

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22
Q

Forward vertical integration

A

combines with a business that is further on in the production process e.g. a manufacturer merging with outlets where its product are sold.
This gives them direct access to the retail market

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23
Q

Backward vertical integration

A

when a business combines with another business at an earlier stage of the production process eg a retailer taking over its suppliers

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24
Q

Conglomerate mergers

Study These Flashcards
A

between unrelated firms

25
Product extension mergers
between firms making similar products eg hairspray and hairbrushes
26
Geographic market extension mergers
between firms in the same industry, but competing in different geographical markets
27
Reasons for external growth
reduce the amount of competition Benefit from economies of scale and scope In the car industry companies such as BMW bought out car manufacturers overseas so they can switch production from country to country where labour costs are cheaper but expertise exists.
28
Why external growth can be risky
tension between staff May lead to redundancy costs different objectives leading to inefficiency and diseconomies of scale CMA
29
Product innovation
making or improving new goods or services
30
Process innovation
Putting in place new or improved production and delivery methods e.g. amazon prime in 2007 launched in UK
31
benefits of innovation
Can initially use price skimming Good for firms reputation Added value Economies of scope
32
Drawbacks of innovation
Can be costly and time consuming - investing in R&D No guaranteed ROI
33
6 stages of new product development
1 Idea - eg R&D department 2 Analysis - potential market, profits 3 development -working on prototype 4 Value analysis 5 Test marketing - sells in certain region 6 Launch - promotional campaign
34
Kaizen method as a form of innovation
small incremental improvement by improving the processes they use all the time - won't lead to innovative new products
35
Intrapreneurship
Encourages employees to be innovative and take risks. For example , Google does this - lead to Gmail being created
36
Patent
no one else can copy unless you give them a license
37
Trademarks
Protect business name, logo or slogan eg Mcdonalds
38
Copyright
Illegal to reproduce work without permission
39
Reasons for globalisation
Containerisation Internet Air travel Increased free trade
40
Emerging economies
Increased growth of middle-class - opportunity to expand into market
41
Benefits of international markets for UK firms
extend product life cycle increase market size eg Netflix saturated UK so can move on to Asia Reduce costs by offshoring
42
Factors affecting attractiveness of international markets
Size of market eg population, wealth Political and economic factors eg exchange rates, inflation , free trade Tax and employment laws Culture - languages, exploit environmental restrictions
43
Methods of entering international markets
X and I Licensing Alliances FDI
44
Licensing
Can get foreign firms to produce their products under license - benefits from the infrastructure
45
Alliances
Businesses can join forces with similar companies abroad combining local knowledge with a product that has already proved successful in their own country - spread out costs and risks and help overcome trade barriers - business loses control over venture
46
Benefits of offshoring
Reduce costs- lower wages Target the market Helps avoid trade barriers eg to India, china phillipines due to specialisation
47
Reshoring
Moving parts of business back to country of origin - reputation, quality - wage gap decreases
48
Multinationals
A business that has branches or departments in more than one country
49
Benefits of multinational to developing country
Increased employment opportunities Increase standard of living FDI economic growth Increased government tax revenue
50
Cons of multinationals to developing countries
exploited to maximise profits low wages- sweatshops employment laws - safety Government may overlook unlawful behaviour
51
Transfer pricing
When a multinational buys and sells products between parts of the company based in different countries. Can be used to make all the profits appear in a country with low tax rates. However, CSR issues
52
Glocalisation
Adapting product to local consumer preferences
53
Local responsiveness
Adapting products or processes for different locations
54
What happens when local responsiveness and cost reduction is low
Business structure will remain centralised
55
What happens when local responsiveness is low but cost reduction is high
centralised and it will co-ordinate operations to take advantage of economies of scale.
56
When local responsiveness and cost reduction is high
strike a balance of structure and develop knowledge and ideas locally and sharing them globally to benefit business
57
Local responsiveness high cost reduction low
business becomes decentralised and business allows managers in different branches to glocalise
58
E-commerce
given businesses greater access to international markets Manufacturers can sell directly to consumers through a website customer service However, customers are able to compare prices easily

Business aqa a level (12 decks)

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