Business Growth and Expansion - Year 12 Past Paper PDF

**Business Growth and Expansion -- Year 12 Business Studies Revision** **The Maturity Stage of the Business Lifecycle** **Definition:** A business is in the **maturity stage** when it has fully established itself in its target market and can no longer experience significant growth in its current...

**Business Growth and Expansion -- Year 12 Business Studies Revision** **The Maturity Stage of the Business Lifecycle** **Definition:** A business is in the **maturity stage** when it has fully established itself in its target market and can no longer experience significant growth in its current state. **Characteristics:** - The business has reached its peak in terms of market share and revenue. - Revenue may **plateau or decline** due to increased competition, changing consumer demands, and rising operational costs. - The risk of business decline increases unless strategic planning is implemented. **Key Business Response -- Strategic Planning** **Strategic planning** refers to the long-term direction of the business, typically spanning **2 to 5 years**, ensuring sustained success and market relevance. **Common Business Objectives in the Maturity Stage:** - Preventing **decline** and remaining competitive. - Increasing **market share** within the existing market. - Expanding into **new markets** to attract new customers. - Innovating products and services to sustain **profitability**. **Growth Strategies** To achieve sustained growth, businesses can adopt different strategies: **📌 Vertical Growth** - Involves expanding within the existing supply chain (either forward or backward). - **Forward integration:** Acquiring distributors or retailers to control the delivery of products. - **Backward integration:** Acquiring suppliers to reduce production costs. - **Example:** A clothing manufacturer purchasing retail stores to sell its products directly. **📌 Horizontal Growth** - Expanding into **new locations, markets, or industries** with similar products or services. - **Example:** A fast-food chain opening restaurants in new countries. **The Ansoff Matrix -- A Strategic Growth Model** The **Ansoff Matrix** is a strategic planning tool that helps businesses identify growth opportunities by focusing on products and markets. It consists of **four strategies**: **Market Penetration (Existing Product, Existing Market) 📈** - **Objective:** Increase market share within the current market. - **Methods:** - Adjust pricing strategies (e.g., discounts, special offers). - Strengthen marketing and promotional efforts. - Improve customer service to build loyalty. - **Example:** Coca-Cola launching aggressive marketing campaigns to increase sales in its existing markets. **Market Development (Existing Product, New Market) 🌍** - **Objective:** Expand into new geographical locations or demographic segments. - **Methods:** - Open new stores in different cities or countries. - Introduce online sales platforms to reach new customers. - **Example:** Starbucks entering the Chinese market by adapting its coffee offerings to local tastes. **Product Development (New Product, Existing Market) 🆕** - **Objective:** Introduce new products or variations to meet evolving customer needs. - **Methods:** - Develop innovative or improved versions of existing products. - Focus on sustainability or technological advancements. - **Example:** Apple releasing new iPhone models each year with improved features. **4️⃣ Diversification (New Product, New Market) 🚀** - **Objective:** Enter a completely new industry or market segment. - **Types:** - **Related diversification:** Expanding into a connected industry. - **Unrelated diversification:** Entering a completely different industry. - **Example:** Amazon expanding from e-commerce into cloud computing (Amazon Web Services). **Expansion into New Markets** **📌 Domestic vs. Global Markets** - **Domestic Market:** Operations and sales occur within the business's home country. - **Global Market:** The business expands internationally, reaching customers beyond national borders. **📌 Benefits of Global Expansion** ✔ Access to larger customer bases.\ ✔ Potential for increased revenue and profitability.\ ✔ Diversification reduces dependence on a single market. **📌 Challenges of Global Expansion** ⚠ Cultural and language barriers.\ ⚠ Compliance with international regulations and trade laws.\ ⚠ Increased logistical and operational complexities. **5️⃣ Emerging Markets** - **Definition:** Rapidly growing economies with increasing consumer demand and investment opportunities. - **Examples:** China, India, Brazil, and the Philippines. - **Strategic Considerations:** - Conducting market research. - Understanding cultural norms and business etiquette. - Adapting products to local preferences. **Expansion Strategies -- Year 12 Business Studies Revision** **1️⃣ Introduction to Business Expansion** Business expansion involves strategies that allow a business to grow beyond its existing market. For mature businesses, expansion is essential to maintain profitability, remain competitive, and adapt to evolving market conditions. **Key Expansion Strategies:** - **Developing a Niche Market** - **Innovation for Expansion** - **Research and Development (R&D)** - **Emerging Technologies** **2️⃣ Developing a Niche Market** **Definition:** A **niche market** is a **small, specialised segment** of a broader market, focusing on a specific demographic, product, or service. **Benefits of Niche Markets:** ✔ Allows smaller businesses to compete against larger corporations.\ ✔ Reduces direct competition by focusing on a unique market need.\ ✔ Enhances customer loyalty due to specialised offerings. **Example:** 🔹 **Floating Images Hot Air Balloon Flights** -- A tourism business offering unique, exclusive hot air balloon experiences for a specific customer base. **3️⃣ Innovation for Expansion** **Definition:** Innovation involves applying **new ideas, methods, or technologies** to improve products, services, or business processes. It is essential in **domestic and global markets** to maintain a competitive advantage. **Types of Innovation:** - **Product Innovation** -- Creating new or improved products. - **Process Innovation** -- Enhancing business operations to increase efficiency. - **Marketing Innovation** -- Developing new promotional strategies. - **Organisational Innovation** -- Improving business structures or workflows. **Example:** 🔹 **HeliMods** -- A company that expanded by innovating its helicopter modification technology, securing contracts in both domestic and international markets. **4️⃣ Research and Development (R&D) as an Expansion Strategy** **Definition:** **R&D refers to activities that businesses undertake to develop new products, improve existing ones, or enhance processes.** It plays a critical role in ensuring sustainability and competitiveness. **Benefits of R&D:** ✔ Encourages **innovation** and new product development.\ ✔ Helps businesses **reduce costs** and improve efficiency.\ ✔ Supports businesses in **adapting to market changes**. **Government Support for R&D:** The **Australian Government** offers an **R&D tax incentive**, providing businesses with tax benefits to encourage investment in research activities. **R&D Strategy Based on Business Size:** - **Small Businesses** -- Focus on **product development** due to budget constraints. - **Large Businesses** -- Can invest in **multiple R&D projects**, including global research initiatives. **Example:** 🔹 **Ford Motor Company** -- Invested over **\$2 billion** in R&D in Australia between 2010 and 2016, helping to improve vehicle technology and sustainability. **5️⃣ The Role of Emerging Technologies in Expansion** **Definition:** **Emerging technologies** are breakthrough innovations that significantly alter industries and create new business opportunities. **Impact of Emerging Technologies on Business:** - **Disrupts traditional industries** and creates new markets. - **Drives business growth** by improving efficiency and reducing costs. - **Enhances customer experiences** through **personalisation and automation**. **Example:** 🔹 **Apple** -- Invests heavily in R&D to integrate emerging technologies into its products, such as **artificial intelligence (AI), augmented reality (AR), and advanced processors**. **📌 1. Modes of Entry into Global Markets** **Definition:** A **planned strategy** to introduce a business into a new country or market.\ **Three main types:** 1. **Moving Goods/Services Across Borders** -- **Exporting & Importing** - **Example:** Australia exports beef to Japan. 2. **Contractual Agreements** -- **Licensing, Franchising, Joint Ventures, Strategic Alliances** - **Example:** **McDonald\'s** franchises its brand worldwide. 3. **Establishing Business Operations in Another Country** -- **Subsidiaries, Manufacturing, Outsourcing** - **Example:** **Nike** owns **Converse** and **Hurley** to expand its market reach. ✍️ **Key Tip:** Businesses choose **entry modes** based on **cost, control, risk, and scalability**. **📌 2. Risk Management** **Definition:** Identifying, evaluating, and reducing business risks.\ 🔺 **Risks in Business Expansion:** - Supply chain disruptions - Loss of customer trust - Damage to reputation - Economic instability - Natural disasters & government changes **✅ The PPRR Model (Risk Management Strategy)** 1. **Prevention** -- Reduce risk **(e.g., install fire alarms)** 2. **Preparedness** -- Create plans **(e.g., staff training for emergencies)** 3. **Response** -- Take action **(e.g., evacuate during a flood)** 4. **Recovery** -- Restore operations **(e.g., rebuild factory)** ✍️ **Key Tip:** Always have a **contingency plan (Plan B)** to stay ahead of risks. **📌 3. Stra Management (HRM) in the Maturity Stage** **Employment Cycle in Maturity Stage:** 1. **Development Stage:** Training & skill growth - **Example:** McDonald\'s **training programs** for new employees. 2. **Maintenance Stage:** Keeping employees engaged - **Example:** Google offers **career growth opportunities & bonuses**. 🚀 **Why HRM Matters?** - **Poor HR = High staff turnover, low productivity.** - **Good HR = Motivated workforce, business success.** **📌 4. Motivation Theories** **1️⃣ Maslow's Hierarchy of Needs (People Move in Steps)** Employees need: 1. **Basic needs** (salary, job security) 2. **Safety needs** (workplace safety, stability) 3. **Belonging** (teamwork, social events) 4. **Self-esteem** (recognition, promotions) 5. **Self-actualisation** (career growth, leadership roles) ✍️ **Key Tip:** Businesses **motivate employees** by fulfilling these needs. **2️⃣ Locke's Goal-Setting Theory (SMART Goals)** **Employees work better when they have:** - **Specific, Measurable, Achievable, Relevant, and Time-bound (SMART) goals.** - **Example:** A sales team aims to increase sales by **10% in 3 months**. **3️⃣ Herzberg's Two-Factor Theory (Hygiene vs Motivation)** - **Hygiene Factors** (Don't motivate but prevent dissatisfaction) → Pay, job security. - **Motivators** (Increase job satisfaction) → Recognition, career growth. 💡 **Example:** A worker won\'t feel motivated just because they have **a clean office**, but they will be if they get **a promotion**! **📌 5. Positive Psychology in Business (PERMA Model)** Employees perform better when they have: 1. **P**ositive emotions (happy work culture) 2. **E**ngagement (interesting tasks) 3. **R**elationships (teamwork) 4. **M**eaning (purpose in work) 5. **A**ccomplishment (sense of success) ✍️ **Key Tip:** Businesses focus on **well-being** to **increase productivity & employee loyalty**.