Revision for IB DP Business Management. Remember that this is just the first step in your revision and you will need to apply this knowledge to case studies and real life examples in order to do well on the IB exam. Created by Dan Slaughter
To gain a good brand image
To lower average costs as production increases
To increase market share
To increase sources of finance
Technical economies
Financial economies
Managerial economies
Lack of control and coordination
Lowering average costs as production increases
Complacency
Bureaucracy
Joint venture
Innovative marketing campaign
Mergers
Strategic alliance
Selling in different locations
Takeover
Acquisition
Franchising
% of units sold
% of revenue
% of profits
All are ways to measure market share
Increased profitability
Greater brand recognition
More units sold
All are benefits
True
False
Better control
Maintaining company culture
Relatively inexpensive
Overtrading
Also known as inorganic growth
Fastest way to increase market share
Increases likelihood of gaining economies of scale
Makes for easier control and coordination
Internal growth strategy which effectively allows firms to enter foreign markets by taking advantage of local knowledge
External growth strategy which effectively allows firms to enter foreign markets by taking advantage of local knowledge
Internal growth strategy when a firm buys a controlling interest in another company
External growth strategy when a firm buys a controlling interest in another company
Airline companies working together to offer connecting flights outside their normal operations (Vietnam Airlines and Delta Airlines work together to offer Vietnam to Los Angeles flights
A firm buys a controlling interest in another company.
Two firms agree to form a new company
A company pays a licensing fee to use another firms logo and brand
True
False
True
False
True
False
A benefit potentially gained after an acquisition as the two merged parts create a greater combined effect than could be obtained individually
A negative gained after an acquisition as the two merged parts create a worse combined effect than could be obtained individually
The point on the business cycle where the firm expects to have a large gain in profitability
The point on the business cycle where the firm expects to have a large loss
Less financial risk involved than organic growth
It is a cheaper growth strategy since the franchisee provides financing
Franchisor receives monthly royalty payments which is typically a percentage of sales (whether the franchisee makes a profit or not)
All of the above are advantages of franchising for the franchisor
Relatively low start up costs as the business model has already been established
The franchisor wants the franchisee to succeed and provide the necessary training to increase the likelihood of success
The firm can easily and quickly adapt their offerings if they notice their customers have new tastes and preferences
Will benefit from a large advertising campaign put together by the franchisor
Brand image may be harmed if the franchisee does not follow quality and procedural standards set by the franchisor
Franchisee may not offer the quality service the franchisor expects
Franchisee will have a greater understanding of its market
All of the above are risk for the franchisor
Market penetration
Product development
Market development
Diversification
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