business term 2

what is internal growth

when a business grows using its own resources and capabilities to increase operations and sales revenue

what is external growth

growth of a business achieved through other firms such as mergers, acquisitions or partnerships

methods of internal growth

changing prices, effective promotions, product innovation, increased distribution, preferential credit, capital expenditure, staff training, and providing value for money

advantages of internal growth

better control/coordination, relatively inexpensive, maintains corporate culture, less risky

disadvantages of internal growth

diseconomies of scale, possible ownership restructuring, slower growth

advantages of external growth

faster than internal growth, product diversification, entering new markets, new knowledge

what is a merger

when two firms agree to form a new company with its own legal identity

what is acquisition

when a company buys controlling interest in another with the target firms board approval

benefits of M&A

greater market share, economies of scale, synergy, survival, diversification, entry to new markets

drawbacks of M&A

redundancies, conflict, culture clash, loss of control, diseconomies of scale, regulatory issues

what is a takeover?

when a company purchases a controlling stake in another with or without permission

what is a joint venture

when two or more firms split costs, risks, control and rewards, creating a new legal entity

what is a strategic allience

cooperation between two or more firms for mutual benefit, they share costs but remain independent 

benefits of jv and sa

synergy, spreading costs, entry to new markets, competitive advantage, local knowledge

drawbacks of jv and sa

dependence on partners, high branding costs, potential culture clashes

what is franchising

a business model where a franchisee buys a license to trade using the franchisors brand, logo and trademarks

franchisor

the company selling the license

franchisee

the entrepreneur buying the license

benefits of franchisor

cheaper, faster growth, entry to new markets, royalty income, growth without operating costs

drawbacks to franchisor

damage to brand if franchisees fail, difficult to monitor quality, slower than M&A

benefits for franchisees

lower risks, lower start up costs, training, advertising by franchisor, higher success chance

drawbacks for franchisees

limited creativity, expensive to buy, no guaranteed ROI, royalties paid to franchisor

what is delegation

empowerment of a person lower down in the organizational structure by passing control and decision making authority

what is span of control

number of subordinates overseen by a manager

what is chain of command

refers to the formal line of authority shown in an organizational chart through which orders are passed down

what is bureaucracy

official administrative and formal rules of an organization that governs business activities

what is centralization

when the majority of decision making is done by a very small number of people

advantages of centralization

rapid decisions, better control, clear direction, efficient, better decisions

disadvantages of centralization

stress for top staffs, inflexibility, delays, demotivating

what is decentralization 

when decision making authority and responsibility are shared with others in the organization

advantages of decentralization

staff input, faster decisions, teamwork, motivating

disadvantages of decentralization

costly, inefficient, more mistakes, loss of control, communication issues

what is delayering

removing levels in the hierarchy to flatten the organizational structure

advantages of delayering

lower costs, faster communication, promotes empowerment

disadvantages of delayering 

anxiety, overload, slower decisiosn

what is a matrix structure

flexible type of organizational structure of representatives from different departments, temporarily working together on a particular project

advantages of a matrix structure 

better communication, maximize skills, cost effective 

disadvantages of matrix structure

extra workloads, difficult coordination, time consuming

what is a flat structure

short hierarchy, wide span of control

benefits of flat structure

more delegation, better communication, cheaper, less power distance

benefits of tall structure

clear control, specialization, efficiency promotion opportunities

what is HRM

management function of deploying and developing people within and organization to meet its business objectives 

human resource/workforce planning

management process of anticipating and meeting an organizations current and future staffing needs 

hr problems

5R - recruitment, resoures, reservations, returns, reputation

HR planning factors

demographic change, labour mobility, immigration, flexitime, gig economy, teleworking, homeworking

what is flexitime

staff choose working hours as long as deadlines are met

teleworking vs homeworking

teleworking: away from office using ICT

homeworking: working specifically from home

advantages of teleworking n homeworking for EMPLOYEE

more job opportunities, flexible hours, less commuting

disadvantages of teleworking n homeworking for EMPLOYEE

ict issues, long hours, fewer training opportunities

advantages of teleworking n homeworking for EMPLOYERS

flexible hours, continuity, less salaries

disadvantages of teleworking n homeworking for EMPLOYERS

high setup costs, tough recruitment and tech breakdown

what is the gig economy

labour markets where workers are typically on short term, temporary contracts to carry out freelance work as independent contractors 

advantages of gig econmy

flexibility, varied work, work life balance

disadvantages of gig economy

no job security, no benefits, burnout

reasons for resistance to change

self interest, low tolerance, misinformation, different point of views

changes to approach for resistance

education and communication, participation and involvement, facilitation and support, negotiation and agreement, manipulation and co-option, explicit and implicit coercion

what is an MNC

an organization that operates in two or more countries where the mother company stays in an original country

reasons for MNC

increased customer base, economies of scale, cheaper production, spread risks, protectionist policies

host countries

a nation that allows an MNC to set up in its country

positive impacts of MNC on host countries

job creation, higher national income, increased competition for domestic companies

negative impacts of MNC on host countries 

job losses, vulnerability, social responsibilities