Theme 3 Extrasss 🥳 Flashcards
(31 cards)
What is porters generic strategies? 
tool to help managers position themselves in the market 
What does it help them achieve?
 sustainable competitive advantage - above industry profitability
What does having a cost leadership approach lead to?
 control over supplies - increasing profit margins
What is Portis strategies?
Strategically position The business in the market 
What happens when we achieve cost leadrship
Increase profit margins
Explain purchasing economies of scale 
Business buys a lot from the supplier
can negotiate better deals with supplier because
the business has become important to the supplier
better l - trade credit increase in cash flow 
What is managerial economies of scale? 
When business group grows, they include specialist managers which theoretically increases efficiency 
What are the three interpretation methods when looking at marketing data? 
Correlation - Understanding the strength of a relationship  - cause and effect 
confidence intervals
and extrapolation 
What kind of correlations can we have?
Weak correlation
negative correlation
positive correlation
strong correlation,
no correlation 
What is an example of extrapolation?
Time series analysis using historic trends to predict future trends 
What are the positive and negative of extrapolation? 
Useful to predict the future as it’s stable and consistent trend
Aids decision-making 
Cons external factors, rivals economy fashion trends 
What is a confidence interval? 
When data suggest something is likely to occur within 
Why do we use merges and takeovers? 
Accurate knowledge a scale reduce actual cost per
unit increase market share less rivals and price control secure
point of sale secure how to sell product use rivals as an outlet secure
supplies production risk acquiring knowledge 
What are the four types of growth? 
Backward vertical integration, vertical integration, horizontal integration longcomrate rate integration
What is backwards vertical integration?
Expanding operations by moving closer to suppliers
What are the positives of backward vertical integration
More control over the supply chain ⛓️💥
reduce dependencies on external suppliers 
What is four vertical integration?
by moving close to the end of consumer products 
What are the positives of forward vertical? 
control of outlets and distribution networks 
What is probability ratio?
ROCE - total equity + non-current assets
TE - retainedprofit + share capital 
What is a higher ROCE compared to?
Previous years
rivals
risk free of return 
How can we improve ROCE?
Increase OP faster than capital employed
increase revenue - cost savings
decrease CE - natural happens as no current liabilities are paid down 
What are the pros cons of average rate of return?
Considers total return of payment and can compare to other projects - unlike Payback
Shareholder - profitability

What are the pros and cons of ARR?
Considered returns unlike payback easier to compare project unlike payback shareholder profitability focus
Constantly adjust time value of money does not look at timings for payments no proper liquidity focus

