Strategic methods: how to pursue strategies (definitions)

Question 1

Organic growth

Answer 1

Expansion achieved through internal development
Increasing sales, expanding product lines or entering new markets without acquisitions

Question 2

External growth

Answer 2

Expansion achieved through acquisitions, mergers or partnerships with other companies rather than through internal development

Question 3

Technical economies of scale

Answer 3

Cost advantages obtained by increasing the scale of production, leading to lower average costs per unit due to efficiencies in technology and processes

Question 4

Purchasing economies of scale

Answer 4

Cost advantages achieved through bulk purchasing of materials or supplies, allowing for longer unit costs due to volume discounts or reduced transaction costs

Question 5

Economies of scope

Answer 5

Cost savings resulting from producing a variety of products or services together more efficiently than producing them separately
Often by sharing resources or infrastructure

Question 6

Diseconomies of scale

Answer 6

Increasing average costs per unit as production levels rise beyond a certain point
Typically due to inefficiencies or complexities in managing larger operations

Question 7

Synergy

Answer 7

Combine value and performance of two businesses will be greater than the sum of the individual parts

Question 8

Overtrading

Answer 8

Situation where a company expands its operations too rapidly without adequate financial resources or operational capacity
Leading to cash flow problems

Question 9

Retrenchment

Answer 9

Strategic response to financial difficulties or poor performance, involving reducing the scale or scope of operations to improve efficiency and profitability

Question 10

Merger

Answer 10

Combination of two or more companies into a single entity
With the aim of achieving synergies, expanding market share or increasing competitiveness

Question 11

Takeover

Answer 11

Acquisition of a controlling interest in a company by another company

Question 12

Venture

Answer 12

Business arrangement where two or more businesses agree to share their resources for mutual benefit

Question 13

Franchising

Answer 13

Business model
Individuals or groups are granted the right to to operate under the brand and business model of a larger company in exchange for fees and royalties

Question 14

Vertical integration

Answer 14

Expansion of a company’s operations into different stages of the supply chain
Such as acquiring suppliers or distributors, to gain control over productions or distribution processes

Question 15

Horizontal integration

Answer 15

Expansion of a companies operations into the same stage of the supply chain or industry
Such as acquiring competitors, to increase market share or consolidate market power

Question 16

Conglomerate integration

Answer 16

Diversification strategy of expanding into unrelated industries or businesses to spread risk and capture new opportunities
Often through mergers or acquisitions

Question 17

Kaizen

Answer 17

Japanese business philosophy
Focused on continuous improvement in processes, products and services through incremental changes and employee involvement

Question 18

Research and development (R&D)

Answer 18

Systematic process of creating, testing and improving products, services or processes through scientific investigation and experimentation

Question 19

Intrapreneurship

Answer 19

The practice of fostering entrepreneurial behaviour and innovation within a business
Encouraging employees to develop and implement new ideas or projects

Question 20

Benchmarking

Answer 20

Comparing a company’s performance, processes or practices with those of competitors or industry leads to identify areas for improvement and best practices

Question 21

Patent

Answer 21

Legal protection granted to investors for their intentions
Giving them exclusive rights to make, use or sell the invention for a limited period

Question 22

Copyright

Answer 22

Legal protection granted to creators of original works
Such as literature, music or software
Giving them exclusive rights to reproduce, distribute or perform the work for a limited period

Question 23

Globalisation

Answer 23

Process of increased interconnectedness and integration of economies, cultures and societies worldwide, facilitated by advances in technology, communication and trade

Question 24

Emerging economy

Answer 24

Developing country with rapidly growing industrialisation, infrastructure and economic potential
Characterised by high growth rates and increasing integration into the global economy

Question 25

Export

Answer 25

The sale of goods or services produced in one country to customers or markets in another country, contributing to international trade and economic growth

Question 26

Licensing

Answer 26

A business arrangement where one company grants another company the right to use its intellectual property Such as patents, trademarks or copyrights in exchange for fees or royalties

Question 27

Alliances

Answer 27

Collaborative partnerships between companies to achieve common goals Such as sharing resources, technology or market access While maintaining autonomy and independence

Question 28

Direct investment

Answer 28

Establishment of business operations in a foreign country by a company based in another country, involving long term ownership and control of assets

Question 29

Off shoring

Answer 29

Relocation of business processes, operations or production to another country

Question 30

Re shoring

Answer 30

The reverse of off shoring Involving the return of business processes, operations or production to the original country

Question 31

Big data

Answer 31

Large volumes of structured and unstructured data collected from various sources Such as social media, sensors or transcripts, used for analysis and decision making

Question 32

Data mining

Answer 32

Process of discovering patterns, trends and insights from large datasets using statistic, mathematical or machine learning techniques