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AS business > 1.3 > Flashcards

1.3 Flashcards

1
Q

Methods of measuring business size (5)

A
  1. Number of Employees - more
  2. Revenue - high sales
  3. Capital Employed - long term finance invested
  4. Market Share% - company sales/market sales x100
  5. Market Capitalization - total value of shares = current share price x total number of shares issued, only on plc
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2
Q

Advantages of owning a small business (7)

A
  1. Easy to control - easy to manage
  2. Adapt to changing demand - retain customers
  3. Profits can be high - overheads tend to be low.
  4. Strong relationship with customers - repeat sales.
  5. A small business may flourish in a niche - charge high prices.
  6. Better working atmosphere - employees know each other
  7. Choose to stay small
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3
Q

Disadvantages of owning a small business (7)

A
  1. Unable to take advantage of market growth - lose market
  2. Share to competitors.
  3. No economies of scale
  4. No diversity - more risk of failure
  5. Greater focus - motivate
  6. Less chance of specialization
  7. Less sales and awareness
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4
Q

Family owned business

A

A business that is owned and managed by at least two members of the same family

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5
Q

Advantages of Family owned business (3)

A
  1. Committed - longer hours lower rates
  2. Pass knowledge - maintain quality
  3. Give finance - less reliance on external , interest and control
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6
Q

Disadvantages of Family owned business’s (3)

A
  1. Newer gen incompetence - conflict and failure
  2. Less formal practice - inefficiency
  3. Tradition operation method - no innovation
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7
Q

Internal growth

A

Expansion of business by expanding through opening new branches shops or factories by reinvesting profits

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8
Q

Advantages of Internal growth (3)

A
  1. Economies of scale
  2. More awareness - more sales
  3. Retain control - takeover difficult
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9
Q

Disadvantages of Internal growth (3)

A
  1. Diseconomies of scale
  2. Reduce short term capital - buying fop
  3. Slow growth - difficult competition
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10
Q

External Growth

A

Expansion of a business by means to merge or takeover and other firms from either the same or a different industry

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11
Q

Horizontal Intergration

A

Intergration with a business in the same industry and same stage of production

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12
Q

Advantages of horizontal integration (3)

A
  1. Eliminates competitors - increase market share and power
  2. economies of scale - less cost of production
  3. Rationalize - concentrating production on one site
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13
Q

Disadvantages of Horizontal integration (3)

A
  1. Bad publicity- rationalize
  2. customer opposition - less choice
  3. monopoly investigation - gov intervention
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14
Q

Foward vertical integration

A

Intergration with a business in the same industry but with the retailer

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15
Q

Advantages of forward vertical integration (3)

A
  1. control promotion and prices
  2. eliminate competitor - increase sale and build brand name
  3. Adds to profit margin
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16
Q

Disadvantages of vertical Integration (2)

A
  1. lack in experience - inefficiency
  2. uncompetitive - bad brand image
17
Q

Backward Vertical integration

A

Intergration with a business in the same industry but with the supplier

18
Q

Advantages of backward vertical integration (3)

A
  1. control over quality, time and price
  2. joint research - better quality
  3. Control over supply - prevent competitors
19
Q

Disadvantages of Backward vertical integration (2)

A
  1. lack experience - inefficiencies
  2. Not innovate - poor quality
20
Q

Conglomerate Integration

A

Intergration with a business in a different industry

21
Q

Advantages of conglomerate integration (2)

A
  1. diversify - spread risk
  2. attract new customers - more sales
22
Q

Disadvantages of conglomerate integration (2)

A
  1. lack experience - inefficiencies
  2. Hard to maintain brand image
23
Q

Strategic Alliance

A

agreement between two organizations to commit resources to achieving a specific objective while remaining Independant

24
Q
A

AS business (11 decks)

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