2.1: Growing the business Flashcards
What is internal growth
When a business expands by itself
What are some methods of internal growth
- Changing marketing mix
- Expansion overseas
- New products
- Research
- New technology
What is external growth
When a business grows by joining with another
What are some benefits of being a Public Limited Company
- Can raise lots of finance through share capital
- Limited liability
- Prestige and reliablity
- Suppliers may be willing to pay less
- Greater public awareness
What are some drawbacks to being a PLC
- Complex to set up & run
- Takeovers
- Increased media attention->less privacy & higher focus on ethics
- Less financial privacy
- Shareholders have a large influence on decisions
What are some pros of selling assets
- Convenient
- Relatively quick
- Makes space for more profitable assets
What are some cons of selling assets
- risky
- assets may have depreciated (selling price has fell)
- May be tricky to sell old equipment
What factors can affect objectives
- Performance
- Leadership
- Culture
- Market
- Competition
- Technology
- Legislation
What are some potential objectives for a flourishing business
- Expand product range
- Enter new market
- Up sales/profits/market share
- Takeover
- Open new branches
- Grow workforce
What are some potential objectives for a struggling business
- reduce product range
- Exit markets
- Achieve enough sales
- Improve efficiency
- Maintain market share
- Reduce costs
What are ethics
The moral principles that guide our behaviours
What are some ethical behaviours
- Fair treatment of workers/suppliers
- Honestly
- Ethical sourcing
- Community investment
- Following legislation
- Sustainability
How can business impact the environment
Short-term:
* Congestion through deliveries
* Pollution by manufacturing
Long-term:
* Climate change
* Resource depletion
How can businesses reduce environmental impacts
- Recycling
- Renewable energy
- Conserving resources
- Biodegradable packaging
- Reducing food miles
What is globalisation
Where business operate internationally and gain a lot of influence
What are multinationals
Large companies with facilities/markets worldwide
What are some benefits of globalisation
- New market opportunities
- Access to tech and resources
- Cheaper labour
What are some drawbacks of globalisation
- Threat from foreign competition
- Challenge of adapting products to meet foreign customer needs
- Multinationals are very powerful
What is protectionism
When governments try to protect local firms by discouraging foreign competition
What are some methods of protectionism/trade barriers
- Tariffs (import taxes)
- Quotas (physical limits)
- Subsidies (money to help domestic businesses)
- Trade blocs (groups of countries that promote trade amongst themselves)
What are some reasons to set up trade barriers
- Protecting local jobs
- Protecting emerging industries
- Stopping undesirable goods entering
- Raising government revenue (tariffs)
- Higher demand for domestic goods
What is glocalisation
Changing a product in order to adapt to the preferences and laws of other countries