2.1 Growing the business

Question 1

What is internal/ organic expansion?

Answer 1

Business growth by expanding its sales or their operations and is financed through its own profits

Question 2

What is external/ inorganic growth?

Answer 2

business joins or buys other businesses, not necessarily of the same type.

Question 3

Examples of internal growth

Answer 3

Opening new stores, launching new products, increase production capacity

Question 4

Advantages of external expansion

Answer 4

Spread risk, rapid expansion, reduce competition.

Question 5

Disadvantages of mergers and takeovers?

Answer 5

Demotivated employees, tension and lost jobs, complicated

Question 6

Internal sources of finance?

Answer 6

Selling assets, retained profits, personal savings

Question 7

Aims of induction training?

Answer 7

Familiarization, get to know colleagues, learn about products and job duties, health and safety

Question 8

Benefits of induction traning?

Answer 8

Settle in quickly, less mistakes, improves retention, increases engagement, boosts morale, consistence, less supervision needed, promotion

Question 9

What is informal traning?

Answer 9

On the job traning done in the workplace - shadowing, projects, mentors

Question 10

What is formal traning?

Answer 10

Off the job traning that is doe outside of the workplace in return for qualifications or a certificate - online, classroom, apprenticeships, conferences

Question 11

Advantages of informal training?

Answer 11

Can ask questions, inexpensive, workers feel appreciated, learn from mistakes, see them in real environment.

Question 12

Disadvantages of informal training?

Answer 12

Risky, mentor could do the job quicker, scared of mentor, dangerous, ineffective

Question 13

Advantages of formal training?

Answer 13

Feel more prepared for the job, reeive qualifications

Question 14

Disadvantages of formal training?

Answer 14

expensive, they could be doing the job in real life, cant see them in real environment

Question 15

Benefits of traning?

Answer 15

Increase motivation, challenge high performers and target low performers, aids retention

Question 16

Benefits of on-going traning?

Answer 16

New technology, new health and safety, supports staff, refresh workers, improve skills

Question 17

What is an appraisal?

Answer 17

A performance review

Question 18

Benefits of new outlets?

Answer 18

prevents competition, more customers, larger market, more branding

Question 19

Benefits of new products?

Answer 19

Raise awareness, fill market gap

Question 20

Benefits of international?

Answer 20

larger market, less risk, more customers

Question 21

If a businesses merge is backwards vertical what did they merge with?

Answer 21

The supplier

Question 22

If a businesses merge is forwards vertical what did they merge with?

Answer 22

The distributor

Question 23

If a businesses merge is horizontal what did they merge with?

Answer 23

A business of the same type

Question 24

If a businesses merge is conglomerate what did they merge with?

Answer 24

A completely different business

Question 25

Negatives of mergers?

Answer 25

Diseconomies of scale, stakeholder reaction, infelxibility, loss of focus, company cultures

Question 26

What are economies of scale?

Answer 26

They occur when mass producing a good, resulting in lower average costs

Question 27

What is a gross profit?

Answer 27

Sales revenue - cost of goods sold

Question 28

What is gross profit margin?

Answer 28

(gross profit / sales revenue) x 100

Question 29

What is net profit?

Answer 29

Sales revenue - total business expenses

Question 30

What is net profit margin?

Answer 30

(net profit / sales revenue) x 100

Question 31

What is average rate of return?

Answer 31

average annual profit / cost of investment x 100

Question 32

What is a PLC?

Answer 32

A public limited company - a company that has floated its shares on the stock market so anyone can buy shares

Question 33

Positives of being a PLC?

Answer 33

Can raise large amounts of finance, limited liability, prestige, stable structure

Question 34

Negatives of being a PLC?

Answer 34

Risk of takeover, expensive, greater costs, public can see info, shareholder response, separation from ownership and control

Question 35

What is finance neede for?

Answer 35

To start up, run and expand the business.

Question 36

Top 4 sources of finance for growth?

Answer 36

Retained profit, loan capital, sale of shares, sale of assets

Question 37

Positives of retained profit?

Answer 37

Control, quick, no cost

Question 38

Negatives of retained profit?

Answer 38

Limited amount, cant be spent on other things

Question 39

Positives of loan capital?

Answer 39

Unimited, fixed interest

Question 40

Negatives of loan capital?

Answer 40

Interest, debt potential

Question 41

Positives of sale of shares?

Answer 41

Raise large amounts, bring people you knwo

Question 42

Negatives of sale of shares?

Answer 42

Loss of control, takeover

Question 43

Positives of sale of assets?

Answer 43

Lease if only needed sometimes

Question 44

Negatives of sales of assets?

Answer 44

Company value lowers

Question 45

3 different packaging company processes?

Answer 45

Job production, batch production, flow production

Question 46

Advantages of job production?

Answer 46

Worker satisfaction, USP, variety, adaptable, higher price, higher customer satisfaction

Question 47

Disadvantages of job production?

Answer 47

time consuming, quality varies, struggle to produce more, labor intensive

Question 48

Advantages of batch production?

Answer 48

Quality standardised, back up if struggling, easy to increase production, different batches

Question 49

Disadvantages of batch production?

Answer 49

lower price, not bespoke, overproduction

Question 50

Advantages of flow production?

Answer 50

Quick - specialisation, easier to train, capital intensive, quality standardised, easy to increase production

Question 51

Disadvantages of flow production?

Answer 51

Repetitive, slow start, reliance on previous workers, high investment.

Question 52

Benefits of introducing technology?

Answer 52

Consistent quality, less waste, increased producivity, higher customer satisfaction, cost effective, safer, flexible

Question 53

Mass customisation chain

Answer 53

personalised products, flexibility, reputation, higher prices