1.7 - Expanding A Business Flashcards
Internal growth (organic growth)
A business gets bigger by selling more of its products
External growth (intergration)
When a business gets bigger by joining or buying another business
Market Capitalisation
- A way of measuring the value of a company
- Market Cap = Market Price of Share X Num. of Shares
What is a Franchise?
When a franchisor sells the rights of it’s products to a franchisee; usually in return of a fee and percentage of turnover.
What is a franchisee?
Buys a franchise in return for a fee and percentage of turnover
What is a franchisor?
Sells a franchise usually in return for a fee and percentage of turnover
What are the advantages of selling a franchise?
- Can grow quickly
- Franchisee provides some of the finance
- Franchisees motivated as they are running their own business
What are the disadvantages of selling a franchise?
- Lose some control
- Danger of one franchisee’s problems affecting the entire brand
- Have to share profits
Advantages of buying a franchise
- Established brand
- Access to training and supplies
- Share marketing costs
- Learn from other franchisees
Disadvantages of buying a franchise
- Have to share profits
- Have to follow guidlines
- Have to contribute to group marketing
- Sales suffer if other franchisee gets a bad reputation
Types of Internal Growth
- Opening new stores
- E-Commerce
Opening new stores
A type of internal (organic) growth
E-commerce
A type of internal (organic) growth, naturally grow the number of customers that you have access to
What is outsourcing?
When a business used other organisation to produce it’s product for it
What are the types of external growth?
- Merger
- Takeover (acquisition)
