AQA A Level Business - Unit 9

Retrenchment

When businesses see the need and benefit of becoming smaller.

Internal growth

An expansion from within a business by expanding the range of products and/or markets.

External growth

Where a company expands through mergers or acquisitions.

Horizontal Integration

When two businesses in the same industry at the same stage of production become one.

Vertical Integration

The merging with or acquiring of a business in the same industry but at different stages of production.

Backward Vertical Integration

When a business buys its supplier.

Forward Vertical Integration

When a manufacturing business buys retail shops where its products can be sold allowing for direct access to the retail market.

Diversification/Conglomerate Integration

When a business buys another business in an unrelated industry.

Synergy

The value added by two integrated businesses is far higher than the value contributed by each, whole individual business.

Economies of scope

The cost advantages that result from firms providing a variety of products rather than specialising in the production or delivery of a single product.

Experience curve

The idea that the more experienced a firm is at making a product, the better, faster they become at making that product thus reducing costs.

Diseconomies of scale

When a business grows too large, it may suffer disadvantages that lead to lower efficiency and higher unit costs of production.

Economies of scale

When a unit cost falls as the scale of operation increases.

Overtrading

Overtrading is when a business grows too quickly without organising sufficient long term funds to support the expansion.

Innovation

The successful exploitation of new ideas.

Product Innovation

The creation and launch of a product or service that is new, or a significant change to an earlier good or service.

Process Innovation

The creation of a new way of making, providing, or delivering a particular good or service.

Kaizen (continuous improvement)

A policy of implementing small changes at a time to achieve innovation, better quality/efficiency usually suggested by employees..

Intrapreneurship

Acting like an entrepreneur within a large organisation.

Benchmarking

When a business tries to match the approach and success of a particular process that is used by another organisation.

Research and development (R&D)

The department that undergoes a process that includes discovering new products or manufacturing process and ensure that these products/processes are suited to the needs of the market.

Intellectual property

Invisible assets that arise from human knowledge and ideas. (e.g. songs, software applications)

Patent

An official document granting the holder the right to be the only user or a producer of a newly invented product or process for a specified period.

Copyright

Legal protection against copying for authors, composers and artists.

Trademark

Signs, logos, symbols, words (could include slogans etc) displayed on a company's products or on its advertising which distinguish its brands from those of its competitors.

International markets

The markets outside the borders of a company's country of origin.

Offshoring

When companies outsource business activities abroad.

Reshoring

The transfer of business activities back to the company's country of origin.

Export

Good or services produced in one country are sold in another country.

Licensing

An arrangement whereby one company gives another company permission to use its brand for a fee.

Alliances

Agreements between two or more companies to combine their expertise and resources in order to undertake a mutually beneficial project.

Direct investment

An investment in a business made by another in a different country in order to acquire a 'controlling interest' in the business.

Multinational

A business that operates in several countries but is headquartered in one country.

Bartlett and Ghoshal's international strategy

Involves taking products first produced for the domestic market and then selling them internationally with only minimal local customisation.

Bartlett and Ghoshal's multi-domestic strategy

Focuses on increasing profitability by customising a firm's products so that they provide a good match to tastes and preferences in different international markets.

Bartlett and Ghoshal's global strategy

Focuses on increasing profitability from benefiting from cost reduction that comes from economies of scale, experience curve effects and location economies.

Barlett and Ghoshal's transnational strategy

Tries simultaneously to achieve lower costs through location economies, economies of scale and experience curve effects and to differentiate products across different international markets.

Internationalisation

The tendency of companies to operate across national borders.

Digital Technology

Electronic technology which uses binary numbers to store, generate and process data.

E-commerce

The buying and selling of goods and services and the transmission of funds or data, using the internet.

Big data

Large pools of data that can be captured, communicated, aggregated, stored and analysed.

Data mining

The process whereby a business transforms raw data into useful information, to support the various activities of the business.

Enterprise resourcing planning (ERP)

A business's use of its information system so that it can automate and integrate its core business processes.