2.1 Flashcards
What is internal growth also known as ?
Organic growth
What is external growth also known as ?
Inorganic growth
What are the benefits to internal growth?
- less risk
- can be financed through internal funds
- business grows at sensible rate
What are the negatives to internal growth?
- hard to build market share if business is already a leader
- slow growth
Give examples of internal growth?
- opening new outlets
- overseas expansion
- new products
Give examples of external growth?
- merger
- takeover
What are factors that effect a business’ method of growth?
- business size
- nature of product
- financial position
What is the benefit to opening new outlets?
- access to wider markets
- increases brand awareness
What are the benefits to external growth?
- reduced competition
- more knowledge + skills
- cost saving
What are the disadvantages to external growth?
- staff redundancies
- resentment
Why do business objectives change?
- technology
- legislation
- business performance
What are imports?
Good or services bought from overseas
What are examples of imports?
- goods we don’t grow/make
- goods that require low skilled labour
- goods that require high skilled labour
What are exports?
UK produced goods or services bought by an overseas customer
Why might a business change location?
- to reduce tariffs
- to reduce costs
- to gain more skills
What are tariffs?
Taxes charged on imports
What are the effects of tariffs?
- protects home producers
- encourages local products sales
What are trade blocs?
Groups of countries which have agreed to have free trade within external tariff walls
What are the benefits to globalisation?
- increased markets
- access to cheaper labour + raw material
- more efficiency
What are negatives of globalisation?
- whole industry closures
- power of multinational brands
Why would a business want to be a multinational company?
- operate closer to target international markets
- gain access to lower production costs
What are quotas?
A limit to the volume of imports allowed into a country in a given time period
What are the Effects of barriers to trade ?
- protect jobs
- increase demand for UK goods
What are the effects of trade blocs?
- greater trade
- economies of scale
- market efficiency
