1.5 And 1.6 Flashcards
What are some positives of growing internally
Keep control
Keep culture
What are some positives of growing externally
Quick way to grow
Skills from both businesses
What are some negatives of growing internally
Slower
Less known
What are some negatives of growing externally
Loss of control
Take on other firms costs
What is a merger
Is when 2 or more businesses agree to join together
What is a takeover
When a business takes a controlling interest (50%+) in another business
What is organic growth
Is the growth internally by increasing sales . Sales can be increased in a number of ways
What can growing organically / internally do
Increase output
Increase in market share
Developing new products
Gaining new customers
Name the 4 types of merger / takeover
Horizontal
Backwards verticals
Forwards vertical
Diversification
Explain horizontal merging/takeover
When 2 businesses join together and are the same type of business
Explain backwards vertical merging/takeover
Joining with a supplier
Explain what forwards vertical merging/ takeover is
Joining with the shop selling the goods
Explain diversification merging/takeover
Joining sign a business with no connection to current business
What is an advantage of horizontal merging /takeover
Bulk discounts
Removes competition
What is an advantage of backwards verticals merging / takeover
Control over the supply
Reduces cost
What is an advantage of forwards vertical merging / takeover
Ensures somewhere to sell
What is an advantage of diversification merging / takeover
Spreads risk
What is a disadvantage of horizontal merging / takeover
Loss of control
What is a disadvantage of backwards vertical merging/ takeover
Loss of control
What is a disadvantage of forwards vertical merging/ takeover
Loss of control
What is a disadvantage of diversification merging / control
No understanding of new activity
Example of horizontal merging / takeover
Kraft or Cadbury
Example of backwards vertical merging / takeover
Innocent smoothies buying farms
Example of forwards vertical merging / takeover
A shoe manufacturer taking over schuh
Example of diversification merging / takeover
Nestle buying a broadband company
What are stakeholders
Groups or individuals thag have an interest in the business
What are internal stakeholders
Business owners and people who work in the business
What are external stakeholders
The local community , suppliers , customers and government
What is a stakeholder group
Are owners , employees, customers , suppliers , government and local community
What do the main stakeholders of a business want
Customers - low prices good service , provide product or service
Owners -depends : profit , growth or security
Employees- security , pay , good working conditions
Suppliers - **regular orders that are payed on time **
Government- **pay taxes , create jobs **
Local community -**provide jobs and no pollution **
Who are the main stakeholders of a business
Customers
Owners
Employees
Suppliers
Government
Local community
What’s the effect stake holder have on the business from the owners
Focus on profit , may make redundancies , may want to grow
What’s the effect stake holder have on the business from the employees
Can go on strike , pressure for good pay
What’s the effect stake holder have on the business from the customers
Cannot survive without customers , price / quality
What’s the effect stake holder have on the business from the suppliers
Quality of goods , reliability of supplier
What’s the effect stake holder have on the business from the government
Changing taxations levels (. Income tax / tax on business ) , Grants , law changes , spending
What’s the effect stake holder have on the business from the local community
Protest regarding environment / impact
