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Organic Growth - 3.2.3

Organic growth - Where a business expands through increased output, sales and market share via strategies developed within the business causing revenues and profits to grow. Inorganic growth - Growth that comes from outside the business e.g. through a takeover or joint venture. Organic growth Inorganic growth May mean increasing existing production capacity through investment in machinery and technology May mean increasing production capacity through the merger with or takeover of another business May mean developing and launching new products The product range will be expanded through the takeover/merger so new product development is less necessary May mean finding new markets Growth can be achieved relatively quickly as employees, capacity and distribution are already in place Is likely to take longer to achieve, as capacity will need further employees, machinery and distribution resources,...

Objectives of growth - Economies of scale 3.2.1

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Internal economies of scale - The cost savings that can come about from the growth of the business itself e.g. as it increases the scale of its current operations this leads to a fall in unit costs. External economies of scale - The cost savings that come about from growth outside a business but within the market or industry in which it operates. All competitors benefit Growth - A common corporate objective which means expanding the sales revenue of a business, probably in the hope that profits will increase too. One reason for a business wanting to grow it to achieve economies of scale. By growing the scale of output, a business can achieve lower unit costs which can thereby improve a firm's competitiveness. Unit costs = Total production costs in period (£) / Total output in period (units) = £? How can economies of scale provide a Competitive Advantage?    The main types of Internal economies of scale are: Purchasing Technical Managerial Purchasing = B...

SWOT analysis - 3.1.3

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SWOT analysis - An investigation conducted by a business to identify internal strengths and weaknesses and external opportunities and threats within the business, its resources and its environment. S trengths W eaknesses O pportunities T hreats AIM = to discover what the business does better than the competition, what competitors do better, whether the business makes the most of opportunities available and how the business should respond to changes in the external environment. Internal strengths and weaknesses   The business must prioritise those that are important to success. For example, brand image, sales and revenue, market shares and capacity utilisation. They are internal so are within the control of the business They relate to the present situation Strengths = Things the business is good at, giving them a clear advantage over rivals. Distinctive capabilities and resources are also strengths which will help the business achieve its objectives. They also help to ...

Effect of strategic and tactical decisions on human, physical and financial resources 3.1.2

Tactical decision - A short-term response by a business to opportunities or threats. Strategic decision - A long-term plan of action to achieve business aims and objectives Strategic decisions on human resources may include long term plans to build up a workforce, for example hiring more staff to build cars on a production line. This scenario would impact on both the physical and financial resources of the business as it is likely it would have to invest in new machinery (physical) and train and house the new employees to ensure they were productive (financial). All this takes a great deal of planning and time, so cannot be easily reversed.

Achieving competitive advantage through distinctive capabilities 3.1.2

Competitive advantage - An advantage over the competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher price. Distinctive Capabilities - Proposed by Professor John Kay in 1993. The capabilities or special quality a business has which is product of the people employed there, which other firms cannot replicate even after they realise what the benefits are that owning the capability confers. For example, Land Rover's distinctive capability is its mastery of how aluminum can be used to build cars that are string but light. From this, can create a competitive advantage. For Land rover, the benefit has shone through in its Evoque series, which benefits hugely from an aluminum frame. That can feed through to an especially positive consumer image - for technology perhaps, or like Apple, for great design. For example, James Dyson's creation of a unique bag-less vacuum cleaner gave th...