2.1 Growing the business Flashcards
What is business growth?
A business grows when it cells more output over a period of time
Why is business growth important?
- Helps increase market share
- Lead to lower costs
- Results in more profit
What is organic business growth?
When a business expands by itself
What are the methods of organic growth?
- More advertising
-New markets - More staff
- More shops/branches
- New technology
- New products
What are the advantages of organic growth?
- Cheaper than inorganic
- More control
What are the disadvantages of organic growth?
- Slower than organic
- Still expensive
- Less competitive
What is inorganic growth?
Expanding by taking over or merging with other businesses
What do you gain from merging?
- Business culture
-Customers - Patents
- Resources
- Expansion/economies of scale
- Staff
- Eliminate competition
What are sources of finance?
Ways in business acquires money
What are the different sources of finance?
- Bank loan
- Crowd funding
- Personal savings
-Retained profit - Trade credit
- Overdraft
- Venture and share capital
What is ‘floating on the stock market’?
When a business offers shares for sale for the first time to general public
What are the advantages of floating on the stock market?
- Large sums of money can be raised
- Capital does not have to be repaid
- No interest - dividend payments can be missed if profits are low
What are the disadvantages of floating on the stock market?
- Possible loss of control if over 30% shares sold
- Need to satisfy shareholders expectations of dividend and share price growth
- Can be costly and time consuming
What is globalisation?
When exports and imports generate revenue for business in different countries leading to business growth
What are the advantages of globalisation?
- Increased markets
- Access to cheaper labour and raw materials
- International specialisation
- Increased efficiency levels as increase in competition
- Transfer of knowledge, skills and tech
