chains of reasoning

• What does high market capitalisation indicate to investors?

  Perceived business stability
• How does high market capitalisation affect access to finance?

  It increases access to equity finance
• What can a business invest in with increased access to equity finance?

  Long-term growth strategies like R&D
• What are the consequences of low market capitalisation for investors?

  It may signal risk and reduce share demand
• What can low market capitalisation lead to in terms of growth opportunities?

  It can limit growth opportunities
• What is a potential outcome of low market capitalisation?

  Long-term stagnation or takeover vulnerability
• What is a benefit of autocratic leadership in crisis situations?

  It leads to fast decision-making
• In what scenario is autocratic leadership particularly essential?

  In high-risk situations
• What is a negative effect of autocratic leadership on employees?

  It reduces employee engagement
• Why is employee engagement important in knowledge-based industries?

  It fosters creativity and autonomy
• What happens to demand if a product is highly price elastic and prices increase?

  Demand drops significantly
• What might businesses rely on if they face reduced revenue due to high price elasticity?

  Cost leadership or promotion strategies
• What is the impact of low price elasticity of demand on pricing strategies?

  Firms can raise prices without losing sales
• How does low PED affect reinvestment in a business?

  It enables reinvestment into quality or branding
• What is a benefit of high capacity utilisation?

  It maximises the use of fixed assets
• How does high capacity utilisation improve profit margins?

  By reducing unit costs through economies of scale
• What is a risk of operating near full capacity?

  Increased risk of delays and quality issues
• What does high gearing indicate about a business's capital structure?

  It increases the proportion of debt
• What is a consequence of high gearing on interest payments?

  It raises interest payments
• When can high gearing be beneficial for a business?

  If returns from borrowing exceed the cost of debt
• What is a negative effect of high labour turnover?

  Increased recruitment and training costs
• What does low labour turnover indicate about employee satisfaction?

  It may reflect strong employee satisfaction
• What is a consequence of a strong exchange rate for exporters?

  It makes exports more expensive abroad
• How does a strong exchange rate benefit importers?

  It lowers the cost of importing raw materials
• What is a potential risk of market development in Ansoff’s Matrix?

  Lack of market knowledge may lead to poor sales
• What is a benefit of horizontal integration?

  It reduces competition and increases market share
• What is a potential downside of horizontal integration?

  It may trigger regulatory scrutiny
• What does delayering improve in an organization?

  Communication speed and cost efficiency
• What is a risk associated with delayering?

  It may overburden managers and reduce supervision
• What are the contrasting effects of high and low market capitalisation?

  High Market Capitalisation:

  • Increases investor confidence
  • Leads to access to equity finance
  • Enables long-term growth strategies

  
  

  Low Market Capitalisation:

  • Signals risk to investors
  • Reduces share demand
  • Limits growth opportunities
• What are the contrasting effects of autocratic leadership?

  Autocratic Leadership (Good):

  • Fast decision-making
  • Essential in crisis situations
  • Maintains performance and stability

  
  

  Autocratic Leadership (Bad):

  • Reduces employee engagement
  • Lowers motivation and productivity
  • Harms innovation and retention
• What are the contrasting effects of high and low price elasticity of demand?

  High Price Elasticity of Demand:

  • Price increase leads to large drop in demand
  • Businesses may rely on cost leadership

  
  

  Low Price Elasticity of Demand:

  • Allows price increases without losing sales
  • Boosts revenue and profit margins
• What are the contrasting effects of high capacity utilisation?

  High Capacity Utilisation (Good):

  • Maximises use of fixed assets
  • Reduces unit costs
  • Improves operating profit margins

  
  

  High Capacity Utilisation (Bad):

  • Reduces flexibility
  • Increases risk of delays and quality issues
• What are the contrasting effects of high gearing?

  High Gearing (Bad):

  • Increases debt proportion
  • Raises interest payments
  • Increases financial risk

  
  

  High Gearing (Good):

  • Amplifies profits if returns exceed costs
  • Funds strategic investment
• What are the contrasting effects of high and low labour turnover?

  High Labour Turnover (Bad):

  • Increases recruitment and training costs
  • Disrupts team dynamics

  
  

  Low Labour Turnover (Good):

  • Reflects strong employee satisfaction
  • Strengthens brand loyalty
• What are the contrasting effects of a strong exchange rate?

  Strong Exchange Rate (Bad for Exporters):

  • Makes exports more expensive
  • Reduces demand from overseas customers

  
  

  Strong Exchange Rate (Good for Importers):

  • Lowers cost of importing raw materials
  • Improves profit margins
• What are the contrasting effects of horizontal integration?

  Horizontal Integration (Good):

  • Reduces competition
  • Increases market share

  
  

  Horizontal Integration (Bad):

  • Triggers regulatory scrutiny
  • May cause integration issues
• What are the contrasting effects of delayering?

  Delayering (Good):

  • Reduces organisational hierarchy
  • Improves communication speed

  
  

  Delayering (Bad):

  • Increases span of control
  • May reduce employee satisfaction
• What are the contrasting effects of market development in Ansoff’s Matrix?

  Market Development (Good):

  • Spreads risk
  • Increases revenue potential

  
  

  Market Development (Bad):

  • May lack market knowledge
  • Can lead to poor sales performance
• What are the contrasting effects of flexible working?

  Flexible Working (Good):

  • Increases employee satisfaction
  • Improves retention

  
  

  Flexible Working (Bad):

  • May reduce collaboration
  • Can harm efficiency