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Flashcards in Unit One : Understanding business Deck (20)
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Internal growth is also known as ....



Firstly,state what horizontal integration is and then give two advantages and one disadvantages ...

Horizontal integration is where a company joins with another company in the same field of production
Advantages are there is less competition as the customers are no longer fought over and since it's now a bigger firm there will be more customers and therefore larger profit.
Disadvantages are the pricing for customers will increase


State the definition of divestment,management buy in and asset stripping

- Where a company will sell of one of its brands

- this is where a group of managers from outside the business buys over the failing business

- where somebody will but over a company and sell off all the assets such as machinery.You get more money from the assets than you paid for buying he company


Explain why a business may want to grow internally ?

In attempt to attract new customers to their products,eg: by launching a new product, which will then increase sales and profits


Forward vertical integration is where a company will join up with a stage in the next line of production ... What are the advantages and disadvantages of doing so ?

Adv : control the image of your product and increase the profit

Dis: may loose sight of your core activity


State what the term market share means ...

The percentage share of the market a business has


Give one benefit and one loss of backward vertical integration

Benefit is the company can control the amount of raw materials being bought and any surplus can be sold with the profits coming back directly to the business

Loss is that can take always form core activity and may cost a lot to initiate


Give the definition of VISION

Shared direction for the business,shared ideas of what needs to be accomplished to achieve the business objectives


Give the definition of VALUES

Belief in what is best for the organisation,commonly held standards of what is acceptable ,right and important for employees


State the definition of penetration pricing

Prices are lowered for a short period of time which will generate interest among consumers


Give five ways that a business can grow internally ?

Opening up more branches
Launching a new product (for example Mars ice cream )
Employing more staff
Building a bigger factory
Introducing online shopping


State two advantages and two disadvantages of strong corporate culture

A/ employees feel part of the organisation through uniform colours and then their loyalty is increased which means they are happy in their job and save costs on recruiting staff.high quality staff are attracted

D/ it's hard to introduce if it wasn't their originally by the founders and manager may lose control if the culture is too loose


Briefly describe what a matrix structure is ...

It contains teams of people created from various departments which are created for the purpose of a specific project and is lead by a project manager.


Give examples of costs and benefits of a matrix stucutre ...

Employees may have divided loyalties as they report to two line managers.
Co- ordinating meetings can be tricky as employees are from different departments however this does breakdown traditional department barriers and improves communication across the entire organisation.
Puts employees under a lot of pressure as they have two workloads to complete which also disrupts employees usual working routine resulting in a loss of output.
Increases the skill set of employees as learning new skills from each other which increases motivation


State the features of a strategic decision ..

LONG TERM - made by senior managers that affects overall direction of the company.An example of a strategic decision is to increase market share by 20% in the next ten years.This decision are made with regard to the future of the business and doesn't go into that much detail about how ! they will achieve this goal.


State the features of a tactical decision ..

MEDUIM TERM - these are made by the middle managers and are made to support the strategic decisions , there about HOW the strategic decisions are going to be achieved and they go in great detail about what resources will be needed and how pestec might affect the outcome.An example of a strategic decision is to increase the number of staff employed.


Operational decisions are ______ term ..

Short term and routinely day to day decisions that can be made by all employees, an example would be arranging the work rotas.


External factors which impact decision making are PESTEC and the economy , give many examples of other factors which impact the quality of the decision made

Finance available to implement the decision
Time available to make the decision
The quality of information used to make the decisions,if the information is out of date or biased the outcome of the decision is flawed.
The ability and skill of the manager,if the manager has been properly trained or not skilled enough to make decisions then a poor decisions will be made
The appropriate use of decision making models
Level of risk the manager is willing to take
The level of skill and motivation of the employee will dictate how well the decision will be implemented
Availability of technology


SWOT analysis is an example of a continuous decision making model which can be used to look at organisations as a whole , departments within the organisation and a single product or product range - what are the costs and benefits of using a stucutred decisions making model ?

No rash or hasty decisions will be made as time is taken during the decisions making process and all the informations is carefully analysed.
There are a wide range of solutions to choose from which allows for more than one option to be looked at.
It ensures decisions are communicated which means stakeholders will know the decision and it allows for creation of new ideas.
The decisions are made using relevant knowledge of facts and information.

A structured process can stifle creativity
Choosing from a range of possible solutions can be tricky
Can be time consuming to gather the information and therefore slow down decisions making


What is the mnemonic used to remember principles of decision making and what do they stand for ?

P / people - identify the problem
O/ often - identify the objective
G/ go - gather the information
A/ alone - analyse the information
D/ dancing - divise alternative solutions
S/ single - select appropriate solutions
C/ clubs - communicate with staff members
I/ in - implement the decision
E / Edinburgh - evaluate the decisions