2.1-growing The Business Flashcards
What are the two ways business growth can be achieved
-internal growth
-external growth
What is internal (organic)growth
When the business expands by itself,by bringing out new products or entering new markets
What is external(inorganic)growth
When a business expands joining with another business
What are examples of internal growth and how can it be done
INTRODUCING NEW PRODUCTS
-research and development
-innovation
ENTERING NEW MARKETS
-opening shop/factory in different county
-e-commerce
What are sone examples of external growth
-mergers
-takeover/acquisitions
What is a multinational
A business with operations in more than one country
What is the advantages of a multinational
-wider target market
-can spread risk between operations in different countries
-can take advantage of cheap labour
What is the disadvantages of a multinational
-cultural and language differences
-exchange rate fluctuations
-damage to reputation if found to be unethical
What is a stock market flotation
The process of changing a businesses ownership from private limited company to public limited company
What is a Private limited company(Ltd)
Shares can only be sold to friends,family and investors who are invited
What is a Public limited company(PLC)
Shares can be sold to the public through stock exchange
What is the advantage of being a PLC
-the business has the ability to raise additional finance through share capital
-the shareholders have limited liability-
What is the disadvantages of being a PLC
-Risk of hostile takeovers
-more complex accounting
What is the two main internal sources of finance
-retained profit
-selling assets
What are the two main external sources of finance
-loan capital
-share capital
What is the advantage and disadvantage to retained profit
-ADV no need to repay it
-DIS may not be enough for expansion
What is the advantage and disadvantage to selling assets
ADV - If they are no longer needed it is worth selling them
DIS- may not be any buyer or it may take a long time to sell
What is the advantages and disadvantages of loan capital
ADV- the business can access big amounts of money
DIS- has to be paid back with interest
What are the advantages and disadvantages of a share capital
ADV- can raise big amounts
DIS- loss of control and shareholders get dividends
How do business aims and objectives evolve
-at first a business is likely to focus on short term survival
-over time it will change to profit and growth
How do business aims and objective evolve if competition increases
-if competition increases or economic conditions are poor a business may focus on survival by finding cheaper suppliers or reducing its workforce
What is retrenchment
When a business downsizes by reducing the number of employees or closing less profitable branches
What are internal reasons business change aims and objectives
-new leaders
-change in business culture
-previous performance in profit
-cash flow or market share
What are external reasons businesses change aims and objectives
-competition,market conditions, technology, legislation
What are targets for a growing business
Targets that focus on growth eg
-expand product range
-enter new market
-increase sales
-open new stores
What are targets for a struggling business
Targets that focus on survival eg
-decrease product range
-exit markets
-achieve enough sales to break even
-reduce costs
What is globalisation
A process by which more and more businesses operate on an international scale and gain a lot of power
What ways does globalisation affect a business
-imports
-exports
-business location
What are the benefits of globalisation
-increased markets
-access to cheaper labour and raw materials
-international specialisation
-increased levels of efficiency
What are drawbacks of globalisation
-international competitors with cheaper costs
-power of multinational brands
-while industry closures
-effects of events in other countries
What are trade barriers and free trade
Trade barriers-measure which restricts free trade
Free trade-no barriers to trade between countries
How do businesses compete internationally
Using the internet - e-commerce
Changing the marketing mix
What is business ethics
What is considered morally correct in business situations
What do ethical behaviours in business include
-Treating workers fairly
-treating suppliers fairly
-treating consumers fairly
What is the trade off between ethics and profit
Acting ethically can raise costs therefore reducing profit margins
However some businesses raise sales by using there ethical policies as a marketing tool
What are the possible advantages of ethical behaviour
-add value
-sources of product differentiation
-gives USP
-improved reputation and consumer loyalty
-motivated workers
What are the possible disadvantages of ethical behaviour
-higher costs therefore decreases profits
-consumers not willing to pay for higher priced products
-cannot compete on price
What is a green audit and why do businesses carry it out
A green audit is a detailed review of a businesses impact on the environment
-large businesses usually carry it out to set environmental targets
How does reducing a business’s impact on the environment effect the business
Costs may increase decreasing their profits
How do business reduce environmental problems
-recycling
-renewable energy
-replenishing and conserving natural resources
What opportunity does businesses becoming more environmentally aware create
Creates opportunities to meet customers needs and make them greener
What is a pressure group
A pressure group is a group of people who join together with the aim of influencing the public opinion or governments or business for a particular case
What methods do pressure groups use
-boycott
-protest
-social media campaign
-protests
-viral marketing
-lobbying (trying to imfluenve government)
