business unit 9

• what is organic growth 


  when a business expands its own portfolio or retail stores e.g tesco introducing tesco mobile
• what is external growth

  when a business expands by taking over or purchasing other business for example Morrisons purchasing safeway
• 4 impacts of growth on a business


  -increased demands for goods, effects decision making

  -increased motivation, increases productivity and retention

  -increased need for capital

  -increased focus on promotion and marketing
• what is retrenchment 


  removing employees to re focus on a core activity for example morrisons removing a layer of supervisors to focus on growing core business offer
• impact of retrenchment on HR


  workforce planning, redundancy and redeployment will need to be considered
• impacts of retrenchment on operations

  can offer economies of scale through addressing dis-economies of scale that have come up, reducing unit cost
• impacts of retrenchment on marketing 


  promotional campaigns likely to be refocused on the core business offer which may include selling a smaller product portfolio
• impact of retrenchment on finance

  the business will need to ensure it has the capital to afford redundancy payments
• what are technical economies of scale

  when a business can advance their technological production as a result of scale and size
• an example of a business using technological economies of scale

  coca cola
• what are purchasing economies of scale


  when a business can benefit from ordering in bulk to save on costs
• an example of a business using purchasing economies of scale

  amazon
• what are mangerial economies of scale 


  when a business is big enough to have specialist staff for each of its functions
• an example of a business using managerial economies of scale


  tesco
• what is economies of scope


  when a business is able to spread its costs over several markets or products
• an example of a business using economies of scope

  mcdonalds in advertising
• what is dis-economies of scale

  when a business expands and unit costs increase for reasons such as:

  -slower communication

  -control issues causing mistakes

  -harder to manage and motivate
• what are the axis of the experience curve


  x is cumulative quality produced and y is cost per unit
• what does the experience curve suggest

  a business with better knowledge resulting from experience can make better decisions with a cost advantage
• what is overtrading 


  when a business experiences liquidity problems with the cost of growth
• what is greiners model of growth


  offers solutions to overcoming the problems of growth
• what is stage 1 of greiners model of growth

  growing through creativity with informal structure and few employees causing the problem of overlapping roles resulting in the 'leadership crisis'
• what is stage 2 of greiners model of growth

  growth through direction and managers request autonomy, causing the 'autonomy crisis'
• what is stage 3 of greiners model of growth

  growth through delegation with a 'control crisis'
• what is stage 4 of greiners model of growth

  growth through co ordination and centralised systems are introduced causing the 'lack of autonomy' or 'red tape' crisis
• what is stage 5 of greiners model of growth


  growth through collaboration and internal growth becomes hard causing the 'growth crisis'
• what is stage 6 of greiners model of growth

  growth through alliances