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Flashcards in Understanding business Deck (19)
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1
Q

Internal growth

A

Launch new products- can meet needs of different market segments
Hire more staff- make more sales and better decisions
Expand existing branches- cater for more products/ staff and make more sales

2
Q

Takeover

A

This means one business buying another
Advantages
- can spread risk of failure
- competition is reduced which will increase sales
Disadvantages
- Can be expensive to acquire other business
- Can be bad for customers as less competition which means higher prices

3
Q

merger

A

two businesses agreeing to join forces and become the one organisation
Advantages
- Market share and resources shared which spreads risk of failure and increases profit
-can overcome strong competition to entering market
Disadvantages
- Bad for customers because less competition means higher prices
- customers can be put off if new logo is created

4
Q

horizontal integration

A

when two businesses in the same sector of industry become one.
Advantages
- competition reduced
- can dominate market
- Can raise prices
Disadvantage
-Quality may suffer due to lack of competition

5
Q

Forwards vertical integration

A

when two businesses from different industries become one
Advantages
- cutting out middle man can increase profits
-business can control the supply of their products and could mot supply competition
Disadvantages
-focusing on new activities can harm core activities
- company may not be able to manage activities efficiently, meaning higher costs

6
Q

backwards vertical integration

A

business takes over or merges with supplier
Advantages
- guaranteed and timely supply of stock
-stock is cheaper as no need to pay supplier marked up prices
Disadvantages
- Focusing on new activities can badly effect core activities
- company may be incapable of managing new activities so higher costs

7
Q

Conglomerate integration

A

when business in different markets join together
Advantages
- The firm acquires the assets of other companies
-makes firm larger and more financially secure
Disadvantages
-business may become too large to manage
-May take on business in a market they know nothing about and cause it to fail

8
Q

Tall structure

A

many levels of management and resembles a large pyramid.suits large organisations with many specialised departments
Advantages
- staff know their role and who to report to
-many promotion opportunities which motivates staff
Disadvantages
-slow to react to changes in market
-communication may take time to flow through levels which slows decision making

9
Q

Flat structure

A

Pyramid shape and commands flow from top to bottom. three levels of management and suits small organisations
Advantages
- Info quickly passed between levels
-can respond quickly to external factors
Disadvantages
- Less levels of so less promotion opportunities so quality of staff nay leave to larger organisations
- Wide span of control so less time for planning

10
Q

Centralised

A

decision making and control kept at top of organisation (senior management)
Advantages
-standardised procedures ensures consistency
- Low risk of important info leaking from branches
Disadvantages
-less responsibility given to subordinates which can demotivate staff
- Decisions do not reflect needs of local markets

11
Q

Decentralised

A

decision making delegated to branches or departments
Advantages
-Business reacts to changing external factors quickly
-More subordinates are empowered which encourages creativity
- relieves senior management of burden of constant decision making
Disadvantage
- Local branches may start competing with one another if they’re aloud to make key decisions

12
Q

Line relationship

A

relationship between superior and suborinate

13
Q

Lateral relationship

A

Relationship between two employees on same level of management

14
Q

Functional relationship

A

relationship between two departments

15
Q

Staff relationship

A

An advisory role

16
Q

Authority

A

Power to make important decisions

17
Q

Delegate

A

Passing management tasks to subordinates

18
Q

Span of control

A

The number of subordinates working under a superior

19
Q

Empowerment

A

Staff being given decision making power