9.1.1

Growth & Retrenchment

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Business Growth

Growth can occur organically or externally.

Organic growth

Organic growth

  • Organic growth occurs when a business expands its own product portfolio or its number of retail stores.
  • For example, Tesco introducing Tesco Mobile is organic growth.
External growth

External growth

  • External growth occurs when a business expands by purchasing or taking over other businesses.
  • For example, Morrisons purchased Safeway which is external growth.
Impact of growth on a business

Impact of growth on a business

  • Increased demand for goods and services which affects the decisions made within each business function.
  • Increased motivation for the management through a sense of achievement which improves employee retention.
  • Increased market share, sales revenue, and profit.
  • Investment (for growth) increases the need to secure capital. -The business’ need for labour may increase, which affects workforce planning.
  • There can be an increased focus on marketing and promotion to ensure the generation of increased demand.

Retrenchment

Retrenchment occurs when a business reduces the scale of a specific business area or element within the business operation.

Retrenchment

Retrenchment

  • Retrenchment can allow a business to re-focus on growing a core activity within its operation.
    • For example, Morrisons removed a layer of supervisors from its hierarchy to reduce cost so that it could focus on growing its core business offer.
Impact on HR

Impact on HR

  • Retrenchment affects human resources as workforce planning, redundancy and redeployment will need to be considered.
Impact on operations

Impact on operations

  • Retrenchment affects operations as it can offer economies of scale through addressing diseconomies of scale which may have arisen, and this reduced unit cost.
Impact on marketing

Impact on marketing

  • Retrenchment affects marketing as promotional campaigns are likely to be refocused on the refined business offer which may include selling from a smaller product portfolio.
Impact on finance

Impact on finance

  • Retrenchment affects finance as the business will need to ensure it is able to fund the short-term increase in the cost of redundancy payments.
Jump to other topics
1

What is Business?

1.1

Nature & Purpose of Business

1.1.1Why Businesses Exist1.1.2Business Aims & Objectives1.1.3End of Topic Test - The Nature of Business
1.2

Different Business Forms

1.2.1Key Business Terms1.2.2Sole Traders1.2.3Limited Liability1.2.4Non-Profit Organisations & Social Enterprises1.2.5Social Enterprises1.2.6Franchising1.2.7Shareholders1.2.8End of Topic Test - Different Businesses1.2.9A-A* (AO3/4) - Franchising at Blockbuster
1.3

Businesses Operate Within an External Environment

1.3.1External Environments1.3.2A-A* (AO3/4) - Interest Rates in the UK
2

Managers, Leadership & Decision Making

2.1

Management, Leadership & Decision Making

2.1.1Managers2.1.2Management Theories2.1.3Management vs Leadership2.1.4Leadership Styles2.1.5End of Topic Test - Management
2.2

Management Decision Making

2.2.1Scientific Decision Making2.2.2Influences on Decision Making2.2.3Intuition Decision Making2.2.4A-A* (AO3/4) - Cost Leadership2.2.5End of Topic Test - Management Decisions
2.3

Role & Importance of Stakeholders

2.3.1Stakeholders
3

Marketing Management

3.1

Setting Marketing Objectives

3.1.1Setting Marketing Objectives3.1.2Market Calculations
3.2

Understanding Markets & Customers

3.2.1Market Research3.2.2Methods of Market Research3.2.3Interpreting PED & YED
3.3

Segmentation, Targeting, Positioning

3.3.1Segmentation3.3.2Niche & Mass Markets3.3.3Market Mapping
3.4

Using the Marketing Mix

3.4.1Marketing Mix3.4.2Pricing Decisions & Price Skimming3.4.3Pricing Decisions & Price Penetration3.4.4Promotional Decisions3.4.5Promotional Decisions 23.4.6Promotional Decisions 33.4.7Distribution Decisions3.4.8Distribution Decisions 23.4.9Social Media & Influencers3.4.10Digital Marketing3.4.11Evaluating Digital Marketing3.4.12A-A* (AO3/4) - The Marketing Mix & Promotion3.4.13A-A* (AO3/4) - Pricing & Competition
4

Operational Management

4.1

Setting Operational Objectives

4.1.1Setting Operational Objectives
4.2

Analysing Operational Performance

4.2.1Operations Data4.2.2Capacity4.2.3A-A* (AO3/4) - The Problem with Operations Data
4.3

Increasing Efficiency & Productivity

4.3.1Productivity & Efficiency4.3.2Lean Production4.3.3Technology & Efficiency4.3.4A-A* (AO3/4) - Toyota Production System
4.4

Improving Quality

4.4.1Measuring & Identifying Quality4.4.2Total Quality Management4.4.3Evaluating Total Quality Management4.4.4Quality Assurance & Quality Control
4.5

Managing Inventory & Supply Chains

4.5.1Inventory4.5.2Improving the Supply Chain4.5.3Outsourcing
4.6

Business & The External Environment

4.6.1Business Considerations from Globalisation
5

Financial Management

5.1

Setting Financial Objectives

5.1.1Setting Financial Objectives5.1.2Influences on Financial Objectives5.1.3Profit5.1.4Revenue & Costs5.1.5Cash-Flow & Budgets
5.2

Analysing Financial Performance

5.2.1Break-Even & Profitability Analysis5.2.2A-A* (AO3/4) - Assessing Financial Performance
5.3

Sources of Finance

5.3.1Internal Sources of Finance5.3.2External Sources of Finance5.3.3Crowdfunding5.3.4Factors for Financing5.3.5A/A* (AO3/4) - Debt
5.4

Improving Cash Flow & Profits

5.4.1Improving Cash Flow & Profits
6

Human Resource Management

6.1

Setting Human Resource Objectives

6.1.1Setting Human Resource Objectives6.1.2Human Resource Management
6.2

Analysing Human Resource Performance

6.2.1Analysing Human Resource Performance6.2.2Analysing Human Resource Performance 2
6.3

Improving Org Design & Human Resource Flow

6.3.1Organisational Design6.3.2Human Resource Flow
6.4

Improving Motivation & Engagement

6.4.1Motivating & Engaging Employees6.4.2Different Incentives6.4.3Evaluating Incentives6.4.4Taylor's Theory6.4.5Maslow's Theory6.4.6Herzberg's Theory6.4.7A-A* (AO3/4) - Amazon & Netflix Org Design6.4.8A-A* (AO3/4) - Taylorism & Jack Welch
6.5

Improving Employer-Employee Relations

6.5.1Improving Employer-Employee Relations
7

Strategic Position of a Business (A Level Only)

7.1

Mission, Objectives, Strategy

7.1.1Business Mission & Corporate Objective7.1.2Mission, Corporate Objectives & Strategy7.1.3SWOT Analysis7.1.4A-A* (AO3/4) - SWOT Analysis
7.2

Financial Ratio Analysis

7.2.1Financial Ratios
7.3

Assessing Overall Performance

7.3.1Non-Financial Data7.3.2Core Competences7.3.3Assessing Business Performance
7.4

Assessing Political & Legal Change

7.4.1Political & Legal Change
7.5

Assessing Economic Change

7.5.1Economic Environment
7.6

Assessing Social & Technological Change

7.6.1Social & Technological Environment7.6.2Lifestyle & Technological Environment7.6.3Corporate Social Responsibility
7.7

The Competitive Environment

7.7.1Choosing Areas of Competition7.7.2Choosing How to Compete
7.8

Investment Appraisal

7.8.1Investment Appraisal
8

Choosing Strategic Direction (A Level Only)

8.1

Markets to Compete & Products to Offer

8.1.1Product Decisions
8.2

How to Compete

8.2.1Porter's Five Forces8.2.2A-A* (AO3/4) - The 5 Forces
9

Pursuing Strategies (A Level Only)

9.1

Assessing a Change in Scale

9.1.1Growth & Retrenchment9.1.2Challenges of Growth9.1.3Sourcing Resources & Entering Markets9.1.4A-A* (AO3/4) - Diversification9.1.5A-A* (AO3/4) - Diseconomies of Scale
9.2

Assessing Innovation

9.2.1Assessing Innovation
9.3

Globalisation & Internationalisation

9.3.1Internationalisation9.3.2Managing Internationalisation9.3.3Impact of Internationalisation9.3.4A-A* (AO3/4) - Internationalisation in Guatemala
9.4

Greater Use of Digital Technology

9.4.1Assessing Use of Digital Technology9.4.2Impact of Digital Technology
10

Managing Strategic Change

10.1

Managing Change

10.1.1Managing Change
10.2

Managing Organisational Culture

10.2.1Managing Organisational Culture10.2.2Organisational Structures
10.3

Managing Strategic Implementation

10.3.1Managing Strategic Implementation
10.4

Problems with Strategy & Why They Fail

10.4.1Problems with Strategy

Practice questions on Growth & Retrenchment

Can you answer these? Test yourself with free interactive practice on Seneca — used by over 10 million students.

  1. 1
    Coca Cola took over Innocent Drinks. What type of growth is this?Multiple choice
  2. 2
    Impact of growth on a business:Fill in the list
  3. 3
    Which department is most affected by workforce planning, redundancy, and redeployment?Multiple choice
  4. 4
    How will retrenchment impact a business' product portfolio?Multiple choice
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A-A* (AO3/4) - The 5 Forces

Challenges of Growth