3.9: strategic methods

• What does entrepreneurship involve?

  Starting and managing a new business venture
• What is the primary responsibility of entrepreneurs?

  They manage all aspects of their business
• What does intrapreneurship involve?

  Employees behaving like entrepreneurs within a company
• How do intrapreneurs drive innovation?


  By developing ideas within a larger organization
• What are the key differences between entrepreneurship and intrapreneurship?

  • Work Environment: Independent vs. within an organization
  • Risk: Personal vs. shared by the company
  • Resources: Secured independently vs. company resources
  • Autonomy: Complete control vs. limited autonomy
  • Ownership: Own business vs. company benefits
  • Motivation: Personal ambition vs. professional growth
• What is a key similarity between entrepreneurship and intrapreneurship?

  Both involve creativity and problem-solving
• What is an example of entrepreneurship?

  Jeff Bezos founding Amazon
• What is an example of intrapreneurship?

  Google’s employees developing Gmail
• What do economies of scope refer to?

  Cost advantages from producing multiple products
• What are the key features of economies of scope?

  • Shared Resources: Using existing assets for multiple products
  • Marketing Efficiencies: Single campaigns for multiple products
  • Operational Efficiencies: Expertise supporting various areas
• How does a bakery exemplify economies of scope?

  By using the same ovens for bread and pastries
• What are the benefits of economies of scope?

  Cost savings and increased competitiveness
• What does synergy refer to in business?

  Combined effect greater than individual parts
• What are the types of synergy?

  • Operational Synergy: Improved efficiency or reduced costs
  • Financial Synergy: Better financial health from combined resources
  • Revenue Synergy: Increased sales from shared customer bases
• How does a merged airline demonstrate operational synergy?

  By reducing overlapping flight routes
• What is an example of financial synergy?

  A larger company securing better loan terms
• How does revenue synergy occur in a merger?

  Through cross-selling products to customers
• What are the differences between economies of scope and synergy?

  • Focus: EOS on cost savings; SY on combined effects
  • Application: EOS through diversification; SY in mergers
  • Outcome: EOS lowers costs; SY increases efficiency or revenue
• How does Procter & Gamble exemplify economies of scope?

  By producing various products using shared facilities
• How did Disney benefit from acquiring Pixar?

  By combining distribution with animation expertise
• What do economies of scope focus on?

  Cost savings by producing multiple products
• What is the synergy focus in business?

  Greater combined effect of collaborating businesses
• How can economies of scope be achieved?

  Through diversification or resource sharing
• What is often a goal of mergers or partnerships?

  To achieve synergy
• What is the outcome of economies of scope?

  Lower unit costs across all products
• What are the outcomes of synergy?

  Increased efficiency, revenue, and market power
• What is the definition of business growth?

  Expansion to increase profits
• Why do businesses aim to increase market share?

  To enhance brand recognition and profitability
• What is retrenchment in a business context?

  Cost reduction in response to financial difficulty
• What is a reason for retrenchment related to customer engagement?

  Being out of touch with customers
• What is organic growth?

  Growth without mergers or acquisitions
• What is a method of organic growth?

  Opening new stores
• What is a disadvantage of organic growth?

  High risk and slow ROI
• What is external growth?

  Growth through mergers and acquisitions
• What is a method of external growth?

  Mergers
• What is a potential disadvantage of mergers?

  Cultural clashes and loss of synergy
• What is a consequence of diseconomies of scale?

  Rising costs beyond optimal size
• What are economies of scale?

  Cost savings via larger output
• What is synergy in a business context?

  Combined value greater than individual parts
• What is overtrading?

  Taking on too much without resources