Flashcards in Unit 9- strategic methods and how to pursue them Deck (44):
What are strategic methods?
Different strategies a firm can use to try to achieve its objectives
What are the 4 different strategic methods
Innovation, increasing the use of digital tech, internationalisation, changing the scale of the business
What is organic growth?
Where a business expands on its own
What is inorganic growth?
Involves linking up with other businesses
What are 5 advantages of business growth?
Economies of scale
More sales and profits
Synergy (external only)
What are 5 disadvantages of growth?
Diseconomies of scale
More public scrutiny
Management less in touch with customers and staff
What are the 4 types of external growth?
What is a merger?
When 2 or more businesses come together to make 1 new businesses and all shareholders of old businesses become shareholders of new one
What is a takeover?
When 1 business buys a controlling interest in another
What is a joint venture?
Where 2 businesses work together on a project but are still totally separate
What is franchising?
Where new business owners purchase the right to use another name and business model for free
What is horizontal integration?
Integrating with a business that does exactly the same thing
What is backwards vertical integration?
Joining up with a supplier
What is forwards vertical integration?
Joining up with a firm that is a customer of you
What is conglomerate integration?
Joining up with a completely different business
What is retrenchment?
This is reducing the scale of a business
What are economies of scope?
Cost savings from sharing costs between a range of products
What is synergy?
The combined new business is better than the sum of the old two parts
What is overtrading?
Cash flow issues caused by taking in too much new work
What is the experience curve?
Cost savings from having been in an industry for some time
What are the 3 types of economy of scale?
Purchasing economies, managerial economies and technical economies
What are the 3 types of disceconomy of scale!
Coordination, communication, motivation
How can you manage diseconomies scale?
Invest in tech
Training of managers
How can you manage more public scrutiny?
Careful scrutiny of supply chain
Publicise CSP/ethical behaviour
What does Greiner's model of growth say?
Growth goes through several stages and at the end of each smooth stage of growth a firm will hit a crisis, against which the firm needs to do something before it can grow again
What Is innovation?
The successful exploitation of new ideas
What are the 2 types of innovation?
Product and process
What are some pressures on a firm to innovate?
Reduce costs, be greener, meet changing consumer needs
What're 6 ways of becoming and innovative organisation?
R and D
Ensuring funding for new idea development
No blame culture
Promote callaborative working
What are some advantages of innovation as a key strategy?
Gain a monopoly position
Gain competitive advantage
Create a USP
Enter new markets
What a Rep some disadvantages of innovation as a key strategy?
No guaranteed payback
CN be easier and cheaper to copy others
Risk of IP theft
What is internationalisation?
A strategy of operating in more than one country
What are 4 methods of entering international markets?
Exporting, licensing, alliances/ventures, direct investment
What did Bartlett and Ghosal devise?
A Matrix to help managers decide on the best approach for their situation
What are are the 4 quarters of Bartless and Ghosalls Matrix?
Global approach, international approach, multi-domestic approach, transnational approach
Where are the 4 different things on the grid?
Global - high integration low responsiveness
International - low integration low responsiveness
Multi-domestic - low integration high responsiveness
Transnational - high integration high responsiveness
WHat is offshoring?
Moving part of a firm's operations abroad
What will it deoend on as to where to produce?
Which markets being targeted
Economic and political situation
What is digital technology?
Electronic technology that uses computer chips
What is e-commerce.
Buying and selling on the internet
What is data mining?
Sifting through huge quantities of data to find patterns that can benefit the business
What is big data?
This refers to the huge a,punts of data firms can now access
What is an ERP system?
This is software that coordinates data from all of the business functions allowing managers to view it in real time and make better, faster decisions