Disadvantages of External Expansions

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Disadvantages of External Expansions

Mergers and takeovers can be extremely risky. More than half of mergers and takeovers are unsuccessful.

Complicated

The costs of a merger/takeover can outweigh the benefits.
For example, the two businesses’ operations will have to merge.
- If 2 businesses employ 5,000 people in 30 countries, combining this operations would not be easy or straightforward.
- This can lead to diseconomies of scale.

Diseconomies of scale

Diseconomies of scale occur when a business grows so large that its average costs per unit start to increase.
This can happen because communication becomes harder, management becomes less efficient.
- Or workers feel less motivated in a much larger organisation.

Demotivated employees

Employees may be demotivated due to different management style and culture.
When Virgin Active took over Esporta Health Clubs, personal trainers and other gym staff became frustrated with new working practices. Staff turnover increased significantly after this takeover.
Daimler (the company that makes Mercedes cars) merged with Chrysler in the late 1990s. The company had very different cultures and in 2007, Chrysler was sold by Daimler to an investment company.

Tension and lost jobs

-Mergers and takeovers often lead to attempts to cut costs.

Attempts to cut costs often lead many people to lose their jobs and this can create tension in a workforce.
This happened when Morrisons took over Safeways supermarkets in the UK in 2004.

1Understanding Business Activity

1.1Business Activity

1.1.1Purpose of Business Activity

1.1.2Customer Needs

1.1.3Why are Businesses Set Up?

1.1.4Specialisation & Division of Labour

1.2Classification of Businesses

1.2.1The 3 Sectors of Economic Activity

1.2.2Public & Private Sector

1.3Enterprise, Business Growth & Size

1.4Types of Business Organisation

1.4.1Sole Traders

1.4.2Partnerships

1.4.3Limited Companies

1.4.4Private Limited Companies

1.4.5Public Limited Companies

1.4.6Unlimited vs Limited Liability

1.4.7Not For Profit

1.4.8Franchising

1.4.9End of Topic Test - Business Ownership

1.4.10Application Questions - Business Ownership

1.4.11Diagnostic Misconceptions - Company vs Business

1.5Business Objectives & Stakeholder Objectives

1.5.1The Main Stakeholders in a Business

1.5.2The Impact & Influence of Stakeholders on Business

1.5.3Diagnostic Misconceptions - Profit

1.5.4Diagnostic Misconceptions - Owners vs Shareholders

2People in Business

2.1Human Resource Management (HRM)

2.1.1Contracts of Employment

2.1.2Recruitment

2.1.3Benefits of an Effective Recruitment Process

2.1.4Reducing the Workforce

2.1.5Legal Controls Over Employment

2.1.6Training

2.1.7End of Topic Test - The Workforce

2.1.8Application Questions - The Workforce

2.1.9Diagnostic Misconceptions - Recruitment

2.2Organisation & Management

2.2.1Internal Organisational Structures

2.2.2Business Functions & Definitions

2.2.3Centralised vs. Decentralised Structures

2.2.4Tall & Flat Organisations

2.2.5The Impact of Organisational Structure on Managing

2.2.6Leadership Styles

2.2.7Trade Unions

2.2.8End of Topic Test - Org Structure

2.3Methods of Communication

2.3.1Communication in Businesses

2.4Motivating Employees

2.4.1Motivation in the Workplace

2.4.2Financial Methods of Motivation

2.4.3Non-Financial Methods of Motivation

2.4.4Diagnostic Misconceptions - Money

3Marketing

3.1Marketing & the Market

3.1.1Customer Needs

3.1.2Identifying and Satisfying Customer Needs

3.1.3The Market

3.1.4The Market-Driven Approach

3.1.5Competition

3.1.6The Impact of High Competition

3.1.7Diagnostic Misconceptions - Competition

3.1.8Market Segmentation

3.1.9Methods of Market Segmentation

3.2Market Research

3.2.1Market Research

3.2.2Qualitative & Quantitative Research

3.2.3Primary Market Research

3.2.4Secondary Market Research

3.2.5Analyse Market Research Data

3.2.6Application Questions - Marketing

3.2.7End of Topic Test - Marketing

3.3Marketing Mix

3.3.1The Product Life Cycle

3.3.2Product Design

3.3.3Product Portfolio & The Boston Matrix

3.3.4Benefits & Risks of New Products

3.3.5Extension Strategies

3.3.6Price

3.3.7Pricing - Skimming & Penetration

3.3.8Competitive and Cost-Plus Pricing

3.3.9Market Mapping - Price vs Quality

3.3.10Place

3.3.11Manufacturer-Wholesalers-Retailers-Customers

3.3.12Manufacturer-Retailers-Customers

3.3.13Direct to Customers

3.3.14Promotional Methods

3.3.15Reasons for Promotion

3.3.16Advertising

3.3.17Advertisement - Product Placement

3.3.18Public Relations

3.3.19Sales Promotion

3.3.20Sponsorship

3.3.21Social Media

3.3.22Promotional Mix

3.3.23E-Commerce and M-Commerce

3.3.24Benefits & Drawbacks of E-Commerce and M-Commerce

3.3.25End of Topic Test - Marketing Mix

3.3.26Grade 9 - Marketing Mix

3.3.27Diagnostic Misconceptions - Decreasing Price

3.3.28Diagnostic Misconceptions - Advertise vs Promote

3.3.29Diagnostic Misconceptions - Social Media

3.3.30Marketing Strategy

3.3.31Entering Foreign Markets

3.4Legal Controls

3.4.1Legal Controls on Marketing

4Operations Management

4.1Production of Goods & Services

4.1.1Production Processes Overview

4.1.2Job Production

4.1.3Flow Production

4.1.4Batch Production

4.1.5Production Efficiency - Lean Production

4.1.6Managing Stock - Just in Time

4.1.7Technology & Production

4.1.8Factors of Production

4.1.9Diagnostic Misconceptions - JIT vs JIC

4.2Cost, Scale of Production & Break-Even Analysis

4.2.1Costs

4.2.2Costs - Calculations

4.2.3Economies of Scale

4.2.4Diseconomies of Scale

4.2.5Break-Even Analysis

4.2.6Profits and Losses - Calculations

4.2.7Diagnostic Misconceptions - Fixed Costs

4.2.8Diagnostic Misconceptions - Economies of Scale

4.2.9Diagnostic Misconceptions - Break-Even

4.3Achieving Quality Production

4.3.1Importance of Quality

4.3.2Measuring Quality

4.3.3Quality control

4.3.4Total Quality Management

4.3.5Benefits of Maintaining High Product/Service Qual.

4.3.6Costs of Maintaining High Quality/Service

4.3.7End of Topic Test - Operational Decisions

4.4Location Decisions

4.4.1Business Location

4.4.2Nature of Business Activity

5Financial Information & Decisions

6External Influences on Business Activity

6.1Economic Issues

6.1.1Business Cycle

6.1.2Objectives of Government Economic Policy

6.1.3Provision of Public Services

6.1.4Taxation & Constraints on Public Spending

6.1.5The Government & Business Activity

6.1.6Interest Rates

6.1.7Interest Rates - Calculations

6.1.8Diagnostic Misconceptions - Recession

6.2Business & the International Economy

6.2.1Multinational Companies

6.2.2Exchange Rates

6.3Business & the Environment

6.3.1Globalisation

6.3.2Environmental Issues

6.3.3Business and Sustainability

6.4Business & Ethical Issues

6.4.1Ethical Considerations for Businesses

6.4.2Benefits of Being Ethical

6.5Pressure Groups

6.5.1Pressure Groups

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