Unit 9 Flashcards
(86 cards)
1
Q
What is innovation?
A
when a new idea is created which leads to the creation of a new good / service
2
Q
What are the two types of pressure of innovation?
A
- internal
- external
3
Q
What creates opportunities for innovation?
A
PEST-C
4
Q
How can PEST-C factors put pressure on innovation?
A
- Political change may open up new geographical markets through trade deals requiring a new approach or changes to the product.
- Economic change may create a pressure for a lower cost solution to a problem.
- Social change may put pressure on businesses for new environmentally-friendly approaches
- Technological developments may create opportunities for new ways of doing business. Just think of the pressure these days to have an online presence.
- Competitive pressure from rivals may require businesses to respond or they will lose market share.
5
Q
What are strategic methods?
A
refers to the methods a business uses to achieve it’s objectives
6
Q
Why is growth important?
A
- shows progress
- financial benefits higher revenue, lower unit costs
- creates momentum - new opportunities for employees -
7
Q
What are the 2 types of growth?
A
internal (organic)
external (inorganic)
8
Q
Give 2 examples of organic growth
A
launch new products
advertising - increasing the sales of existing products
9
Q
Give 2 examples of inorganic growth
A
merge
takeover
10
Q
What are the 4 methods of growth?
A
merger
takeover
franchise
joint venture
11
Q
What is a merger?
A
is when the owners of two or more businesses become owners of a new shared business
12
Q
What is a takeover?
A
is one business gains control of the other - gains ownership of it
13
Q
What is a joint venture?
A
when businesses share information and resources with each other but retain their own identity
14
Q
What is a franchise?
A
selling the right to use its name and sell its products to other organisations
15
Q
What are the advantages of selling a franchise?
A
- quick growth as funds are provided by franchisee
- franchisees may be very motivated as they own part of the business
16
Q
What are the disadvantages of selling a franchise?
A
- lose complete control over what franchises do
- do not gain all profits from the operations
17
Q
What are the advantages of buying a franchise?
A
- less risky - due to it being an established product
- data already exists - reduce costs on R&D
- maybe be provided with training, equipment and finance
18
Q
What are the disadvantages of buying a franchise?
A
- do not have complete independence
- do not get all profits from operations
19
Q
What are the types of integration?
A
vertical
horizontal
conglomerate
20
Q
What is horizontal integration?
A
occurs when a business integrates with another business in the stage of production process
21
Q
What is vertical integration?
A
involves acquiring a business in the same industry but at a different stage of the supply chain
22
Q
What is conglomerate integration?
A
diversification - occurs when one business joins with another business that operates in a different industry.
23
Q
What are the potential benefits of growth?
A
economies of scope
synergy
economies of scale
experience curve
24
Q
What are economies of scale?
A
is when the unit costs fall as the scale of operations increase
25
What are the different types of economies of scale?
purchasing economies of scale
technological economies of scale
financial economies of scale
managerial economies of scale
26
What are purchasing economies of scale?
when a firm gets bigger it will purchase more supplies, this gives it more bargaining power with suppliers. Which means suppliers are more likely to reduce prices to keep orders.
27
What are technological economies of scale?
occur when a large scale of operations enables particular technologies to be used efficiently
28
What are financial economies of scale?
occurs as business gets bigger it has more assets and this may mean a bank is willing to lend to it at lower interest rates as the risk is lower
29
What are managerial economies of scale?
occurs as business expands it may bring in specialists to focus on parts of the business
30
What are economies of scope?
are cost savings from operating in several markets or providing several products
31
What is the experience curve?
as a business grows the more experience everyone will gain
32
What is synergy?
when two businesses come together and perform better combined than they did individually
33
What are the disadvantages of growth?
overtrading
| diseconomies of scale
34
What is diseconomies of scale?
when unit cost increase as the business size increase
35
How might diseconomies of scale occur?
communication problems
motivation issues
control and coordination problems
36
What are strategic methods?
refers to the different strategies used by a business to achieve its objectives
37
Why is growth important?Wha
- shows progress - shows shareholders the value of the business
- financial benefit as higher revenue, lower unit costs
38
What are the 2 types of growth methods?
- internal (organic)
| - external (inorganic)
39
What are examples of organic growth methods?
increase sales of existing products
| launch new products
40
What are examples of inorganic growth methods?
merger
| takeover
41
What is a merger?
when the owners of two or more businesses become owners of a new shared business
42
What is a takeover?
one business gains control of the other - gains ownership of it
43
What is a joint venture?
this when businesses share information and resources with each other but retain their own identity
44
What is a franchise?
a business may decide to grow by selling the right to use its name and sell its products to other organisations
45
What are the advantages of selling a franchise?
- quick growth as funds are provided franchisee
46
What are the disadvantages of selling a franchise?
- lose control
47
What are the advantages of buying a franchise?
- buying an established product so no need for a new idea
| - may be provided with training, equipment etc.
48
What are the disadvantages of buying a franchise?
- do not have complete independence
| - do not get all profits from operations, as have to pay money to franchisor
49
What are the 3 types of integration?
vertical
horizontal
conglomerate
50
What is vertical integration?
when 2 business at the same stage integrates
51
What is horizontal integration?
occurs when a business integrates with another business in the stage of production process
52
What is conglomerate integration (diversification)?
occurs when one business joins with another business that operates in a different industry
53
What are the potential benefits of growth?
synergy
economies of scale
economies of scope
experience curve
54
What is meant by synergy?
when two businesses come together and perform better combined than they did individually
55
What is meant by economies of scope?
are cost savings from operating in several markets or providing several products
56
What is meant by experience curve?
as the a business grows everyone gains knowledge e.g managers and employees
57
What are the problems of growth?
diseconomies of scale
| overtading
58
How does diseconomies of scale?
communication problems
control and coordination problems
motivation issues
59
What is phase 1 of Greiner's growth model?
growth through creativity
60
Explain phase 1 of Greiner's growth model?
business has just started
- few employees
- job descriptions fairly vague which can cause problems with jobs being replicated which leads to phase 2
61
What is phase 2 of Greiner's growth model?
growth through direction
62
What is the order of crisis's?
```
leadership crisis
autonomy crisis
control crisis
red tape crisis
growth crisis
```
63
Explain phase 2 of Greiner's growth model?
need for clearer direction
| - bring in professional managers to define jobs and roles, and create an organisational structure
64
What is phase 3 of Greiner's growth model?
growth through delegation
65
Explain phase 3 of Greiner's growth model?
delegation
| - take more control over operations and performance
66
What is the control crisis?
when senior members feel like they don't have sufficient control and the business is losing shape and direction
67
What is phase 4 of Greiner's growth model?
growth through coordination
68
Explain phase 4 of Greiner's growth model?
coordination
- ensure there's overall control through establishing systems such as budgets to provide targets and monitor processes in place
69
What is phase 5 of Greiner's growth model?
growth through collaboration
70
Explain phase 5 of Greiner's growth model?
collaboration between the different parts of the business without too much central regulation
71
How might collaboration cause growth crisis?
as it's difficult to grow internally with the appropriate level of control - business grow externally to avoid these difficulties
72
What is phase 6 of Greiner's growth model?
growth through alliances
73
What does digital technology involve?
the use of digital resources to find, analyse, create, communicate and use information digitally
74
What are the 4 digital technologies?
- data mining
- big data
- e-commerce
- enterprise resource planning (ERP)
75
What is e-commerce?
refers to the transactions made electronically on the internet e.g buying and selling
76
What are the 3 distribution channels for e-commerce?
B2B
B2C
C2C
77
What are the advantages of e-commerce?
- access to 24 hour markets
- new customers
- relatively cheap set up costs
- greater ease to compare prices
78
What are the disadvantages of e-commerce?
- customers inability to physically touch and use products
- delivery time
- delivery costs
- worries about returns
79
What is enterprise resource planning?
is a business management software system that allows a business to manage data of its activities e.g marketing
80
What are the 5 parts included in enterprise resource planning?
- financial resources
- human resource management
- customer relationship management
- inventory management
- supply chain management
81
What are the advantages of enterprise resource planning?
- improves productivity and efficiency of business by ensuring resources are used fully and not idle
- flexibility of the business and response time by being able to coordinate parts of the organisation more effectively
82
What are the disadvantages of enterprise resource planning?
- investment in systems and technological infrastructure
| - training of staff
83
What is data mining?
is an analytical process designed to explore data and to try and find patterns within it and/or identify systematic relationships between variables
84
What is big data?
when huge amounts of data can be found out
85
What are the advantages of big data?
allows greater access to data, and allows greater speed of analyse
86
What are the impacts of digital technology?
- better management
- enabling new ways to do business
- change in HR issues
