9. Strategic Methods-How to Pursue Strategies

Organic (internal) Growth

Growth from within the business, such as launching new products, expanding into new markets, or exporting.

External Growth

Growth from outside the business, such as takeovers, mergers, acquisitions, or joint ventures.

Retrenchment

The process of deliberately downsizing a business to improve operational control and efficiency.

Economies of Scope

Cost advantages that occur when a business produces a wider range of products, lowering unit costs.

Economies of Scale

Cost advantages that occur when unit costs fall as output rises, increasing efficiency.

Experience Curve

The concept that the more experience a business has in producing a product, the lower its costs become over time.

Synergy

The concept where the combined value and performance of two companies will be greater than the sum of the separate individual entities.

Overtrading

Occurs when a business expands too quickly without having sufficient resources to support the rapid growth.

Merger

A combination of two separate businesses that form a completely new company.

Takeover

When one business acquires control of another business, often by purchasing a majority stake.

Franchising

A business model where a franchisor grants a license to a franchisee to operate a business using the franchisor's brand and business format.

Vertical Integration

When a firm merges with or takes over another business at a different stage in the production process but within the same industry.

Horizontal Integration

When a firm merges with or takes over a rival competitor within the same industry.

Conglomerate Integration

When a firm diversifies into new markets unrelated to their current area of expertise.

Product Innovation

Launching new or improved products (or services) onto the market.

Process Innovation

Finding better or more efficient ways of producing existing products or delivering existing services.

Kaizen

A concept/culture of continuous improvement, encouraging employees to find ways to improve processes.

Research and Development (R&D)

The process of creating new knowledge to develop new products, services, or processes, or to improve existing ones.

Intrapreneurship

Where large businesses enable employees and managers to demonstrate entrepreneurial behavior in their work to benefit their employers.

Benchmarking

The process of understanding and evaluating the current position of a business in relation to best practice, identifying areas for performance improvement.

Patents

Legal protection for an invention, providing exclusive rights to use, sell, and manufacture the invention for a set period.

Copyright

Legal protection for original works, such as media, designs, and publications, giving the owner exclusive rights to control how the work is exploited.

Strategic Benchmarking

Involves examining the long-term strategies and general approaches that have enabled high-performers to succeed.

Multinational Company (MNC)

A business that has operations (not just sales) in more than one country.

Offshoring

Relocating business activities from the home country to a different international location.

Reshoring

The reverse of offshoring; involves repatriating business activities from overseas back to the home country.

Big Data

Large data sets from traditional and digital sources used to identify trends and patterns valuable in decision-making.

Automation

The use of machines to perform tasks instead of people, increasing speed, accuracy, and efficiency.

E-Commerce

Conducting business transactions electronically over the internet

Direct exporting

When a company sells products directly to customers in another country

Indirect exporting

When a company sells products to another country through an intermediary

Continuous improvement

A method aimed at ongoing incremental enhancements in processes, products, or services to increase efficiency and quality.