help with any corrections - chasing strategic direction

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1. Give two reasons why businesses grow.
• It may be one of their objectives, based on a mission statement
• To utilize economies of scale

2. Give two consequences of a business retrenching.
• Closing a factory
• Leaving a market

3. Explain technical economies of scale.
When a business is able to buy the most advanced equipment in order to operate expensive, integrated systems, such as stock control

4. Explain the difference between vertical and horizontal integration.
Horizontal integration is when a business reduces competition by combining with another in the same industry/stage of production process, when vertical in a different stage of production process.

5. Explain the term process innovation.
Process innovation can be an introduction of a completely new product/service or development applied to an existing product/service to an already existing market.

6. Explain why falling average costs due to increased production is not an economy of scale.
Because as the their productivity increases, the quality and quantity of the work increases within. As workers get more practice and experience, they become more efficient. Workers find better ways to make the product, with less waste, often using improved technology.

7. What is meant by CAM?
Computer aided manufacturer

8. Explain the importance of R&D for a manufacturer of smartphones.
Smartphone is a product in a very fast growing and developing market- every day there’s something brand new coming up, meaning there is a lot of competition due to big variety of substitutes. To have a competitive advantage it’s important to know the tastes, trends and fashions of the target market, which is done by big data, or perhaps data mining.

9. Give three reasons why a clothes manufacturer should offshore its production.
They should off shore their manufacturing in order to:
• Gain production cost advantages, as manufacturing overseas has lower interest rates and therefore less costs
• Broaden the target market and increase demand therefore gaining much more potential customers
• Have freedom of expansion whilst following strategies to meet the growing objectives

10. What is the impact of a weakening pound on an importer?
Many imported items like food, petrol and electrical goods will become more expensive as the Pound weakens, causing less demand due to lack of funds

11. What is the impact of a weakening pound on an exporter?
Their prices would be lower and therefore they will be more competitive/ have an advantage of a weaker pound

12. Is data mining a new concept?
Data mining is a new concept of innovated technology, which is fast way of getting information for market mapping, decision trees and etc. by linking production systems/inventories to sales data. It has previously been done, however in a much slower, harder way.

13. What would be the impact on a shoe manufacturing business of creating an online shop?
A high increase in demand, as now they’ve made it easier and more comfortable for their customers to make purchases, along with its competitors (13 marks)

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