3.9

    Cards (31)

    • Innovation is when something is done in a way that it hasn't been done before
      2 types are product and process innovation
      Product - a product new to us or new to market or something made by someone else but we have added something different
      Process - changing the way we do things, changing the inputs in order to increase efficiency and quality
    • Why we should innovate
      Competitive advantage
      Adding value
      Improving business processes
    • Methods of internationalisation
      Quota - a numerical limit to the amount of imports allowed
      Tariff - a tax on imports
      Domestic subsidy - a subsidy to support businesses to grow within the country
    • Quality assurance is checking the quality at stages throughout production and quality control is checking quality only at the end of production
    • Evaluating Exporting
      + wider range of customers
      +allows internationalisation
      -more competition
      -higher transportation costs
      -customer services process needs to be enhanced
    • Selling via international agents/distributors where they negotiate price and act as a go between for you
    • Types of internationalisation
      International agents/distributors
      Opening overseas
      Joint ventures/overseas takeovers
    • What drives businesses to internationalise
      Deeper specialisation of labour
      Global supply chains
      Expansion of financial capital flows
      Foreign direct investment
      Increased connectivity between businesses and people
    • Retrenchment
      When a business who diversified too much may need to refocus on a narrower range of products
      May be looking to follow a cost minimisation strategy
      Last resort strategy
    • Types of growth
      Organic: internal growth, grow steadily in a managed way, highly technical products where the firm needs to gain experience, costs spread overtime
      External: via integration, mergers or takeovers, faster and riskier than organic
    • Types of integration
      Vertical - 2 businesses at different stages of production in a single supply chain
      Horizontal - 2 businesses in same industry offering very similiar or identical products
      Conglomerate - 2 businesses in unrelated business activities
    • Why businesses grow
      If market is developing
      To develop new products and hire more staff to do so
      If you've seen an increase in demand
    • Why businesses retrench
      If you've introduced a technology so staff can be make redundant
      To become more efficient and centralised and get rid of unneeded departments
      To restore financial stability
      Improve efficiency
      Refocus on core operations
    • The experience curve
      As a business becomes more experienced, they should be able to do things better, faster and cheaper
      Suggests that we become more experienced, our volume of production and direct unit costs decrease
    • Overtrading is when you expand too quickly with no financial resources to support the quick expansion
    • Overtrading most likely occurs when sales are made on credit and customers take too long to pay, when significant growth in inventories is required in order to trade from expanding capacity, if they need to pay long term contracts
    • Symptoms of overtrading
      Increased revenue growth but decreased GPM/OPM
      Increase in bank loans
      Increase in payable days and decrease in receivable days
      Increased current ratio
      Decreased inventory turnover and capacity utilisation
    • Intellectual property
      Ideas that you have or created are your property. Something that is sufficiently unique and unlike anybody else's intellectual property.
    • Ways of protecting intellectual property
      Patents - designs and inventions and manufacturing processes Copyright - text, images, creative work Trademark - names, logos, phrases
    • Benchmarking
      Assessing our performance in an area by a certain standard
      Could be internal or external
      Either inter or Intra comparison
    • Problems with innovation
      Uncertainty as there's no guarantee
      Operational difficulties
      Being equalnto competition rather than having an advantage on them
    • Why is it critical to innovate
      Direct benefits like efficiency and cuts on costs
      Knock on benefits like becoming more flexible
      Organisational culture shifts
    • The objective of benchmarking is to understand and evaluate the current position of a business or organisation in relation to best practice
      To identify areas where performance can improve
      Analysing our performance against others and implement strategies (essentially copying)
    • Synergy is when something is greater than the sum of its parts. Benchmarking has synergistic benefits
    • A going concern is a business worth investing in
    • External benchmarking
      Strategic benchmarking - looking at other companies and comparing
      Process benchmarking - looking at how others follow processes
      Competitive benchmarking - looking at our direct competitors
      International benchmarking - all of above but on an international level
    • Why businesses grow
      To achieve economies of scale
      Greater market dominance
    • Economies of scope
      Production of one good reduces the cost of producing other goods
      Eg Dyson. They have the same motor in every product which means less raw materials and operational costs will be lower and can be spread across production of all their costs
    • Organisational diseconomies of scale means there are difficulties of managing a larger workforce which results from a lack of communication
    • Overtrading is when a business expands too quickly without any financial resources to support the quick expansion
    • Types of international expansion
      Exporting: selling products in other countries that are made in home country
      Alliances: two firms cooperating in a certain way to achieve a common purpose
      Acquisitions: a firm gains control of another firm by purchasing its stock
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