Economies of scale
Cost advantages that enterprises obtain due to their scale of operation (typically measured by amount of output produced), with cost per unit of output decreasing with increasing scale.Formula: TOTAL COSTS = FIXED COST + VARIABLE COST
Fixed costs are costs that do not change as production changes.
Variable costs are costs that vary as production changes
Diseconomies of scale
Sometimes when a business expands, it starts to experience inefficiencies that increase average unit costs. This situation refers to diseconomies of scale.
Efficiency is not related to production alone.
A business can become more efficient if it can lower average unit costs, regardless of the area of the business in which the savings per unit occur.
Survival, Higher status, Market leader status, Increased market share
Greater focus, Greater cachet, Greater motivation, Competitive advantage, Less competition
It occurs slowly and steadily and occurs out of the existing operations of the business. The business expands by simply selling more products or by developing its product range.
A quick and riskier method of growth than internal growth
Also called fast-track growth because it is faster than the internal method.
Two business become integrated, either by joining together and forming a bigger combined business (a merger) or by one business taking over the other (an acquisition).
Horizontal,Backward vertical, Forward vertical, Congloregation (two businesses in unrelated lines of business integrate)
2 businesses agree to combine resources for a specific goal and over a finite period of time.
More than two businesses may be part of the alliance, No new business is created, Individual businesses in the alliance remain independent, Strategic alliances are more fluid than joint venture.
Franchisor (Original), franchisees (Sucursales)
Globalization is the process by which the world´s regional economies are becoming one integrated global unit.
Globalization can have a significant impact on the growth of domestic businesses for the following reasons: Increased competition, Greater brand awareness, Skills transfer, Closer collaboration, Meeting customer expectations, Increased customer base, Economies of scale, Greater choice of location, Increased sources of finance
It is one of the business functions, and it is essential to its success. Marketing is not JUST selling or advertising, it englobes a lot more
INTANGIBLITY,( goods are tangible (physical), services are not) INSPARABILITY,( services are consumed at the time of purchase) HETEROGENITY,( mass production of goods (they are all the same, homogeneous) but services are heterogeneous because they are all different) PERISHABILITY(Services cannot be stored or re used)
Benefits of being product-orientated
·It is associated with the production of high-quality products such as luxury sports cars and safety products such as crash helmets.
·It can succeed in industries where the speed of change is slow, and the firm has already built a good reputation.
·It has control over its activities, with a strong belief that consumers will purchase its products.
Limitations of being product-orientated
·Since the firm ignores the needs of the market, it takes risks that may lead to eventual business failure or closure.
·Spending money on research and development without considering consumer needs could be costly and not yield any promising results (as not being sure that what you are trying to sell is something people would want to buy).
Benefits of being market-orientated
·As a result of market research, firms have increased confidence that their products will sell, therefore reducing the risk of failure.
·Access to market information means that firms can respond more quickly to changes in the market and are also able to anticipate market changes.
·Firms will be in a strong position to meet the challenge of new competitors entering the market as a result of regular feedback from consumers brought about by market research.
Limitations of being market-orientated
·Conducting market research can be costly and therefore weigh heavily on a firm’s budget.
·Due to frequently changing consumer tastes, firms may find it difficult to meet every consumer’s needs with its available resources.
·Uncertainty about the future could also have a negative influence on market-planning strategy.
It is the “normal” marketing you know. It involves creating, developing, and exchanging goods or services that customers need and want.
This involves the use of marketing approaches that help bring about changes in behavior that ultimately benefit society.
Marketing approach adopted by businesses that uses social networking websites from the Internet to market its products.
Direct feedback while still appealing to them personally (interactive). Provide customers with the opportunity to ask questions and voice their complaints. This is known as social customer relationship management.
Low-cost and reach a large target audience.
It can enhance a firms brand.