2.1 Growing the business Flashcards
What is internal/ organic expansion?
Business growth by expanding its sales or their operations and is financed through its own profits
What is external/ inorganic growth?
business joins or buys other businesses, not necessarily of the same type.
Examples of internal growth
Opening new stores, launching new products, increase production capacity
Advantages of external expansion
Spread risk, rapid expansion, reduce competition.
Disadvantages of mergers and takeovers?
Demotivated employees, tension and lost jobs, complicated
Internal sources of finance?
Selling assets, retained profits, personal savings
Aims of induction training?
Familiarization, get to know colleagues, learn about products and job duties, health and safety
Benefits of induction traning?
Settle in quickly, less mistakes, improves retention, increases engagement, boosts morale, consistence, less supervision needed, promotion
What is informal traning?
On the job traning done in the workplace - shadowing, projects, mentors
What is formal traning?
Off the job traning that is doe outside of the workplace in return for qualifications or a certificate - online, classroom, apprenticeships, conferences
Advantages of informal training?
Can ask questions, inexpensive, workers feel appreciated, learn from mistakes, see them in real environment.
Disadvantages of informal training?
Risky, mentor could do the job quicker, scared of mentor, dangerous, ineffective
Advantages of formal training?
Feel more prepared for the job, reeive qualifications
Disadvantages of formal training?
expensive, they could be doing the job in real life, cant see them in real environment
Benefits of traning?
Increase motivation, challenge high performers and target low performers, aids retention
Benefits of on-going traning?
New technology, new health and safety, supports staff, refresh workers, improve skills
What is an appraisal?
A performance review
Benefits of new outlets?
prevents competition, more customers, larger market, more branding
Benefits of new products?
Raise awareness, fill market gap
Benefits of international?
larger market, less risk, more customers
If a businesses merge is backwards vertical what did they merge with?
The supplier
If a businesses merge is forwards vertical what did they merge with?
The distributor
If a businesses merge is horizontal what did they merge with?
A business of the same type
If a businesses merge is conglomerate what did they merge with?
A completely different business
Negatives of mergers?
Diseconomies of scale, stakeholder reaction, infelxibility, loss of focus, company cultures
What are economies of scale?
They occur when mass producing a good, resulting in lower average costs
What is a gross profit?
Sales revenue - cost of goods sold
What is gross profit margin?
(gross profit / sales revenue) x 100
What is net profit?
Sales revenue - total business expenses
What is net profit margin?
(net profit / sales revenue) x 100
What is average rate of return?
average annual profit / cost of investment x 100
What is a PLC?
A public limited company - a company that has floated its shares on the stock market so anyone can buy shares
Positives of being a PLC?
Can raise large amounts of finance, limited liability, prestige, stable structure
Negatives of being a PLC?
Risk of takeover, expensive, greater costs, public can see info, shareholder response, separation from ownership and control
What is finance neede for?
To start up, run and expand the business.
Top 4 sources of finance for growth?
Retained profit, loan capital, sale of shares, sale of assets
Positives of retained profit?
Control, quick, no cost
Negatives of retained profit?
Limited amount, cant be spent on other things
Positives of loan capital?
Unimited, fixed interest
Negatives of loan capital?
Interest, debt potential
Positives of sale of shares?
Raise large amounts, bring people you knwo
Negatives of sale of shares?
Loss of control, takeover
Positives of sale of assets?
Lease if only needed sometimes
Negatives of sales of assets?
Company value lowers
3 different packaging company processes?
Job production, batch production, flow production
Advantages of job production?
Worker satisfaction, USP, variety, adaptable, higher price, higher customer satisfaction
Disadvantages of job production?
time consuming, quality varies, struggle to produce more, labor intensive
Advantages of batch production?
Quality standardised, back up if struggling, easy to increase production, different batches
Disadvantages of batch production?
lower price, not bespoke, overproduction
Advantages of flow production?
Quick - specialisation, easier to train, capital intensive, quality standardised, easy to increase production
Disadvantages of flow production?
Repetitive, slow start, reliance on previous workers, high investment.
Benefits of introducing technology?
Consistent quality, less waste, increased producivity, higher customer satisfaction, cost effective, safer, flexible
Mass customisation chain
personalised products, flexibility, reputation, higher prices
