Unit 9 Flashcards
What is organic growth?
Growth from within the business
What are 2 examples of organic growth?
Sales increase, innovation
What is external growth?
Growth from outside the business?
What are 2 examples of external growth?
Mergers, takeover
What is retrenchment?
Scaling back business activities
What are some reasons for retrenchment?
DEOS, New leadership, economic downturn
What are economies of scope?
More types of goods/services produced, the lower unit cost
Draw the experience curve?
…
What does the experience curve suggest?
The more experience a business has in producing something, the lower the unit cost
What does the lower unit cost from the experience curve allow?
Cost advantage
What is synergy?
Outcome is greater than the sum of the inputs
What does synergy allow for?
Cost savings, higher sales
What is overtrading?
When a business expands too quickly without having the required financial resources
How can overtrading be spotted?
Low margins, high payables, high gearing
What does Greiner’s Growth model do?
Predicts the six phases and five crises that businesses go through as they grow
What are the 6 phases of the growth model? (in order)
Creativity, direction, delegation, coordination, collaboration, alliances
What are the 5 crises of the growth model? (in order)
Leadership, autonomy, control, red tape, growth
What are mergers?
When two firms integrate into one
What are takeovers?
Acquiring control of another business
What is franchising?
Granting a licence to another business to use their brand
What are the 2 types of innovation?
Product, process
What is kaizen?
Constantly introducing small incremental changes
What is intrapreneurship?
When employees display entrepreneurial behaviour
What is benchmarking?
Evaluating what another business is doing to replicate it in your own
