summary session 24

                                                                                                                                                        Gabriela Hartanto

                                                                                                                                                        LC02/2301851471

Summary session 24

Strategies For Firm Growth

                Internal and external growth strategies

-          Internal Growth strategies : Involve efforts taken within the firm itself, such as :

§  new product development  ->  Involves the creation and sale of new products (or services) as a means of increasing firm revenues.

§  other product related strategies  

§  international expansion -> International new ventures are businesses that, from their inception, seek to derive significant competitive advantage by using their resources to sell products or services in multiple countries.

-          External growth strategies : Rely on establishing relationships with third parties, such as  :

§  Mergers & acquisitions -> An acquisition is the outright purchase of one firm by another .A merger is the pooling of interests to combine two or more firms into one.

§  Strategic alliances & joint ventures -> A strategic alliance is a partnership between two or more firms developed to achieve a specific goal.Strategic alliances tend to be informal and do not involve the creation of a new entity.Participating in strategic alliances can boost a firm’s rate of product innovation and foreign sales.

§  Licensing -> The granting of permission by one company to another company to use a specific form of its intellectual property under clearly defined conditions.Virtually any intellectual property a company owns that is protected by a patent, trademark, or copyright can be licensed to a third party.

§  Franchising

Advantages & Disadvantages

-          Internal growth strategies : 

Ø  Advantages :

·         Incremental, even-paced growth.

·          Provides maximum control.

·          Preserves organizational culture.

·          Encourages internal entrepreneurship.

·          Allows firms to promote from within.

Ø  Disadvantages :

·         Slow form of growth.

·          Need to develop new resources.

·          Investment in a failed internal growth

·           strategy can be difficult to recoup.

·          Adds to industry capacity.

-          External growth strategies :

Ø  Advantages :

·         Reducing competition.

·          Access to proprietary products.

·          Gaining access to new products.

·          Gaining access to new markets.

·          Access to technical expertise.

·          Access to an established brand name.

·          Economies of scale.

·          Diversification of business risk.

Ø  Disadvantages :

·         Incompatibility of top management.

·          Clash of corporate cultures.

·          Operational problems.

·          Increased business complexity.

·          Loss of organizational flexibility.

·         Antitrust implications.

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summary week 11

                                                                                                                                                        Gabriela Hartanto

                                                                                                                                                        LC02 / 2301851471

Summary gslc week 11

Preparing for and evaluating the challenge of growth

                Sustained growth is defined as growth in both revenues and profits over an extended perios of time.Successfully growing a business is a function of preparation,good management and an appreciation of the issues involved.The three primary things that a business can do to prepare for growth are :

·         Appreciating the nature of business growth

·         Staying committed to a core strategy

·         Planning for growth

The six most common reasons that firms grow in an effort to increase their profit ability and valuation are to :

1.       Capture economies of scale (which are generated when increasing production lowers the average cost of each unit produced)

2.       Capture economies of scope (similar to economies of scale,scope economies are advantages a firm generates through the range of its operations)

3.       Achieve market leadership (which happens when a firm holds the top or second position in its industry or the segment of an industry in which it competes)

4.       Maintain influence,power, and survivability (conditions through which a firm is able to affect the setting of an industry’s standards as well having the scale and scope that will allow it to make a mistake and continue operating )

5.       Accommodate the growth of key customers (which is the ability to serve an important customer’s expanding demand for the firm’s product or service)

6.       Maintain an ability to attract and retain talented employees (the most desirable employees want to work for a firm in which learning and growth opportunities will be readily available to them)

Firms are collections of productive resources that are organized in an administrative framework.As a firm goes about its routine activities, it recognizes opportunities to grow.The problem with this scenario is that firm’s are not always prepared or able to grow, because of limited “managerial capacity." A firm’s administrative framework consists of two kinds of services that are important to firm growth.Entrepreneurial services generate new market, product, and service ideas, while managerial services administer the routine functions of the firm and facilitate the profitable execution of new opportunities.New product and service ideas require substantial managerial services (or managerial capacity) to be successfully implemented.This is a complex problem because if a firm has insufficient managerial services to properly implement its new product and service ideas, it can’t grow. Continuation From Previous SlideThe reason a firm can’t quickly increase its managerial services (to take advantage of new product or service ideas) is that it is expensive to hire new employees, it takes time for new hires to be socialized into the culture of a firm, and it takes time for new employees to acquire firm-specific skills and establish trusting relationships with other members of the firm.When a firm’s managerial resources are insufficient to take advantage of its new product and service opportunities, the subsequent bottleneck is referred to as the managerial capacity problem. As a firm grows, it is faced with the dual challenges of adverse selection and moral hazard.Adverse selection means that as the number of employees a firm needs increases, it becomes increasingly difficult for the firm to find the right employees, place them in appropriate positions, and provide adequate supervision.Moral hazard means that as a firm grows and adds personnel, the new hires typically do not have the same ownership incentives as the original founders, so the new hires may not be as motivated as the founders to put in long hours and may even try to avoid hard work.

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summary session 20-21

                                                                                                                                             Gabriela Hartanto

                                                                                                                                             LC02/2301851471

Summary session 20-21

The Importance of Intellectual Property

            When a business is establishing its presence in the marketplace, protecting and managing its intellectual property is critical as it can mean the difference between success or failure. That is why it is important for businesses to understand the different forms of intellectual property because some involve a formal application and examination process before a right can be registered while others come into play without the need for a registration process. Below is a glossary explaining the various rights which businesses may find beneficial.

Confidential information

Obligations of confidence can arise under contract or under the general law. Duties under the general law may arise from a particular relationship (employer-employee) or where information has been received by a person who was aware, or should have been aware, that the information was confidential. Confidential information can be the most valuable asset of a business. The information can relate to any subject matter and be stored in any form. Examples include a new product design, a marketing strategy and software code.

Copyright

Copyright is the right to prevent copying (and certain other acts) in relation to works that qualify for protection. Copyright can subsist in literary, musical, artistic and dramatic works as well as original databases, sound recordings, films, broadcasts, cable programmes and typographical arrangements of published editions.

The duration of protection will vary depending on the work. For example, copyright in literary, musical, artistic and dramatic works, a film or an original database expires 70 years after the death of the author while in the case of sound recordings, broadcasts, cable programmes and typographical arrangements, the duration is 50 years.

Database right

The owner of the database right has the right to undertake or authorise others to extract or re-utilise all or a substantial part of the contents of a protected database. A database is protected where there has been a substantial investment in obtaining, verifying or presenting the contents of the database. This right is separate to copyright.

The duration of the database right is 15 years from the end of the calendar year in which the making of the database was completed or it was first re-utilised.

Designs

A design can be registered if it is new and has individual character. A design is “new” when nothing like it has been previously made available to the public and has “individual character” if the overall impression it produces on an informed user differs from that produced by a design which has previously been made available to the public.

A design can be registered (in Ireland or Europe) for a period of 5 years and then renewed, for periods of 5 years, to a maximum period of 25 years.

Patent

A patent gives the inventor the exclusive right, for a limited period, to prevent others from using his invention without permission. An invention is patentable if it is:

·         Novel

·         Capable of industrial application

·         Involves an inventive step

A full term patent is registered for 20 years. In Ireland, it is also possible to register a short term patent for 10 years. It is not possible though to hold both a full and short term patent for the same invention. Therefore, when both patents are granted, the short term patent will be deemed void.

Trade mark

A trade mark identifies goods or services as those produced or provided by a specific person or enterprise.

The period of protection is 10 years but a trade mark can be renewed indefinitely on payment of renewal fees.

Having a reasonable knowledge of intellectual property will help businesses to incorporate these assets into their planning and strategy.

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