Unit 9 Definitions - Strategic Methods

Question 1

alliance

Answer 1

occurs when two or more companies co-operate on an issue e.g apple and MasterCard, with MasterCard being the first credit card to offer apple pay

Question 2

Bartlett and Ghoshal’s Model

Answer 2

a way of indicating the strategic options businesses wanting to manage their international operations based on two pressures: local responsiveness and global integration

Question 3

the international strategy

Answer 3

producing domestically and exporting from the home country

Question 4

the multi-domestic strategy

Answer 4

fitting products to each country in which a business operates. The product features are tailored to the local domestic environment, taking into account different food preferences, religious customs and other characteristics that define the locality

Question 5

the transnational strategy

Answer 5

maximised local responsiveness but also gaining the benefits from global integration, characterised by an integrated and interdependent network of subsidiaries all over the world. These subsidiaries have a strategic role and act as centres of excellence

Question 6

the global strategy

Answer 6

offering a standardised product worldwide, having. the foal to maximise efficiencies in order to reduce costs as much as possible. Global companies are highly centralised and subsidiaries are often vert dependent on the HQ

Question 7

benchmarking

Answer 7

basing standards on the most efficient producers in the marketplace

Question 8

big data

Answer 8

is a term for statistical sets that are so large or complex that traditional data processing applications are inadequate

Question 9

conglomerate

Answer 9

a company that produces products in a number of different industries e.g Virgin Group or Unilever

Question 10

conglomerate integration

Answer 10

two firms in an unrelated industry merge

Question 11

copyright

Answer 11

legal protection against copying of writing, speeches, music and designs. It doesn’t have to be registered and anyone can put the copyright and date on the work they have created and it is copyrighted. To defend copyright it is necessary to take the infringer to court. It

Question 12

what do copyrights encourage

Answer 12

creativity and they reward individuals for creativity

Question 13

data mining

Answer 13

the analysis of large sets of data to find patterns and relationships between data e.g correlation and causations.

Question 14

what is the benefit of data mining

Answer 14

it effectively helps businesses spot market trends ahead of rivals and understands consumers better

Question 15

direct investment

Answer 15

taking controlling ownership in a company in one country by a company based in another country

Question 16

diseconomies of scale

Answer 16

as a result of increasing output, average costs rise. Becoming a larger organisation may be less technically efficient due to communication, control or morale problems

Question 17

e-commerce

Answer 17

buying and selling products and/or using electronic means (online shopping)

Question 18

economies of scale

Answer 18

as a result of increasing the firm’s output, the average cost falls. In the long run, becoming larger may lead to technical, financial, commercial, managerial and risk-spreading economies

Question 19

enterprise resource planning

Answer 19

is software that allows businesses to connect data from sales, logistics, distribution, marketing, manufacturing and inventory management

Question 20

what is the benefit of enterprise resource planning

Answer 20

it can help make the business more efficient by matching sales and production more closely, potentially avoiding stockpiles of stock and allowing work schedules to be set according to likely demand a bit more precisely.

Question 21

The experience curve

Answer 21

the reduction in average costs that occurs when increased total output allows producers to learn how to produce more efficiently. The larger the production the more experience one has in producing

Question 22

what is the benefit of the experience curve

Answer 22

it means that market leaders have advantages over others

Question 23

external growths

Answer 23

increasing sales and size of business as a result of merger or acquisition

Question 24

franchising

Answer 24

the right to use the name, logos and trading method of another business for a fee

Question 25

greiner's growth model

Answer 25

attempts to predict the six phases and five crises that businesses may experience as they grow.

Question 26

what is the first phase of growth

Answer 26

creativity

Question 27

what is the first crisis

Answer 27

leadership

Question 28

what is the second phase of growth

Answer 28

direction

Question 29

what is the second crisis?

Answer 29

autonomy

Question 30

what is the third phase of growth?

Answer 30

delegation

Question 31

what is the third crisis?

Answer 31

control

Question 32

what is the fourth phase of growth?

Answer 32

coordination

Question 33

what is the fourth crisis?

Answer 33

the red tape crisis

Question 34

what is the fifth phase of growth

Answer 34

collaboration

Question 35

what is the fifth crisis?

Answer 35

growth

Question 36

what is the sixth phase of growth

Answer 36

alliances

Question 37

horizontal integration

Answer 37

a merger of two firms, which operated at the same stage of production e.g ITV and friends reunited

Question 38

intellectual-property

Answer 38

an inventor's idea protected by patent or copyright

Question 39

internationalisation

Answer 39

selling and/or operating in more than one country or that move to enter foreign markets and target new groups of consumers

Question 40

intrapreneurship

Answer 40

occurs when individuals within an organisation set are entrepreneurial by taking risks and generating new ideas

Question 41

licensing

Answer 41

selling the rights to produce to another company for a fee giving the other business the right to manufacture and perhaps sell the original firm's product

Question 42

managerial economies of scale

Answer 42

reduction in average cost due to the specialisation of managerial roles, when organisations grow

Question 43

mergers

Answer 43

occur when two companies cease to be distinct and operate under a single board of directors. Shares in both previous companies tend to be eliminated and new shares for the new company are issued

Question 44

multinational

Answer 44

is a business that has operations in more than one country. Note that a business does not become an MNC simply because it sells its goods and services to more than one country. The key to being an MNC is that the business has business operations in two or more countries

Question 45

off-shoring

Answer 45

companies outsource business activities abroad mainly due to cheaper labour and facility costs

Question 46

on-shoring

Answer 46

transfer back to the country from which a business was originally located

Question 47

organic growth

Answer 47

business expansion through increasing output and sales rather than merger or acquisition e.g expansion by new product development

Question 48

overtrading

Answer 48

expanding beyond the level at which there is a safe level of cash. Growing tends to cause cash outflow for materials and wages before cash from revenue returns. There is a risk this will lead to liquidation despite strong sales

Question 49

patent

Answer 49

a legal right to be the sole user of new technology or invention. Patents are granted by the patent office and last for 20 years

Question 50

process innovation

Answer 50

a novel method of production has been initiated e.g nuclear fusion

Question 51

product innovation

Answer 51

launching an item never seen before

Question 52

purchasing economies of scale

Answer 52

average costs fall in larger-scale operations due to larger purchases attaining bulk buying discounts

Question 53

research and development

Answer 53

investigate activities a business conducts to improve existing products and procedures or to lead to the development of new products and procedures

Question 54

retrenchment

Answer 54

cutting back an organisation's scale of operations

Question 55

sourcing

Answer 55

buying from another company. Where the materials come from

Question 56

synergy

Answer 56

when two companies together are stranger than the sum of individual parts. Illustrated by the equation 2+2=5. E.g economies of scale from a merger

Question 57

takeover

Answer 57

one firm buys more than 50% of the shares of another firm, probably against its will. It is likely to replace the acquired firm's management e.g Tesco took over booker

Question 58

technical economies of scale

Answer 58

reductions in average cost due to the use of large scale machinery

Question 59

ventures

Answer 59

occurs when two or more businesses set up a business division or new company that will be operated jointly. e.g British Sugar (ABF) has a joint venture with Wuxuan sugar mill in China to produce 100m tonnes of sugar p.a.

Question 60

vertical integration

Answer 60

two firms operating at different production stages of the same industry combine to form one firm

Question 61

backwards vertical integration

Answer 61

involves joining with a firm at an earlier stage of the production process e.g a brewery buying a hop farm

Question 62

forward vertical integration

Answer 62

involves joining with a firm at a later stage of the production process e.g a brewery buying a pub