2.1 - Growing the business Flashcards
Disadvantage of internal growth? x1
-slow
advantage of internal growth? x3
-cheaper
-slower so quality doesn’t suffer
-less risky
Methods of internal growth? x2
-targeting new markets
-developing new products
How can a firm target new markets? x2
-e-commerce
-set up abroad
Advantage of external growth? x1
-faster
What does external growth involve? x2
- merger or takeover
What is a merger?
when 2 firms join together
What is a takeover?
when a firm buys more than half the shares of another firm
ways to merge or takeover with other firms? x4
-join with supplier
-join with customer
-join with competitor
-join with unrelated firm
Disadvantage of external growth? x3
-high chance of failure
-change in management styles
-cost cutting leads to tension among workers
Internal sources of finance? x2
-retained profit
-fixed asset
External sources of finance?
-loan
-share capital
What is share capital?
money raised by selling shares
Advantage of becoming a public limited company(PLC)? x2
-more capital raised
-owner only loosed money they invested
disdvantage of becoming a public limited company(PLC)? x3
-someone could by enough shared to takeover company
-account have to be made public
-lots of people wanting share of profit
