Unit 9 Chapter 11 Flashcards Preview

Business Year 2 - Keywords > Unit 9 Chapter 11 > Flashcards

Flashcards in Unit 9 Chapter 11 Deck (20):
1

Strategic methods

Refers to the different strategies a business might pursue to achieve its objectives

2

Economies of scale

Occurs when unit costs fall as a business expands; these economies relate to the volume of output

3

Economies of scope

Occurs when a business gains cost advantages by sharing costs between different products and divisions; these economies relate to the scope of the activities of the business

4

Experience effect

The cost advantage that occurs having been in an industry for some time and, therefore, being able to make better decisions

5

Diseconomies of scale

Occurs when unit costs increase as a business expands

6

Overtrading

Occurs when there are liquidity problems linked to the financing of rapid growth

7

Franchise

Occurs when one business sells the rights to another business to use its name and sell its goods or services in return for a fee

8

Franchisor

Sells the franchise to the franchisee

9

Vertical integration

Occurs when one business joins together with another business at a different stage of the same production process

10

Horizontal integration

Occurs when one business joins together with another business at the same stage of the same production process

11

Conglomerate integration

Occurs when one business joins together with another business in a different production process

12

Retrenchment

Occurs when a business reduces the scale of its operations

13

Organic growth

When a firm expands its existing capacity from its own resources

14

External growth

When a firm expands by integrating with another firm as a result of either a merger or a takeover

15

Merger

Where two or more firms agree o come together under one board of directors

16

Takeover

Where one firm buys a majority shareholding in another firm and therefore assumes full management control

17

The experience curve

The more experienced a firm gets at making a product, the better, faster and cheaper it is likely to be at making it

18

Synergy

The whole is greater than the sum of the different parts

19

Greiner's model of growth

A model describing different phases of company growth, each of which includes calm periods of evolutionary development and growth that ends with a period of crises and revolution

20

Ventures

Arrangements between two or more firms