2.1-Growing the Business

Question 1

What are the ways of internally growing a business?

Answer 1

• Introducing a new product

- Entering the market

Question 2

What are the ways of externally growing a business?

Answer 2

• Mergers (merging two businesses)

- Takeovers (being bought out by another company)

Question 3

What are the advantages and disadvantages of being a public limited companies?

Answer 3

\+
-Ability to raise additional finance
-Limited liability
-May be able to negotiate better with suppliers due to reputation
—
-More complex accounting and reporting procedures
-Risk of hostile takeovers
-Increased media attention

Question 4

What are the internal sources of finance?

Answer 4

• Retained profit

- Selling assets

Question 5

What are the external sources of finance?

Answer 5

• Loan capital
• Share capital
• Stock Market flotation (people can buy into the business- becomes a public LC)

Question 6

What factors change the businesses aims and objectives?

Answer 6

• Market conditions
• Technology
• Performance
• Legislation
• Internal reasons

Question 7

What are some examples of how businesses change aims and objectives?

Answer 7

• Focus on survival or growth
• Entering or exiting markets
• Growing or reducing workforce
• Increasing or decreasing product range

Question 8

How does globalisation affect businesses?

Answer 8

• Imports (competition form overseas, buying from overseas)
• Exports (selling overseas)
• Changing business location (in search of cheaper labour)

Question 9

What are the barriers to international trade?

Answer 9

• Tariffs (tax on imported and exported goods)

- Trade Blocs (when governments make a trade agreement between themselves only)

Question 10

How do businesses compete internationally?

Answer 10

• Use e-commerce

- Change the marketing mix in order to compete internationally

Question 11

What are the impacts of ethical and environmental considerations on a business?

Answer 11

• A decrease in profit margin in order to meet moral standards
• Investing in reducing emission of greenhouse gases

Question 12

What are the negative impacts of pressure groups on a business?

Answer 12

• Boycotting businesses
• Social media campaigns
• Viral Marketing (using the internet to spread a message)
• Public protests
• Lobbying (attempting to influence governments and other businesses)

Question 13

Define the term takeover

Answer 13

This is when a business buys a majority of the shares of another business and therefore has control of it

Question 14

How do businesses compete internationally?

Answer 14

Use of internet and e-commerce:
24/7 service
Across the world

Change marketing mix: (4p’s)
Changes to … is caused by:

Price: tariffs, different currencies, exchange rates changing

Place: availability of tech such as mobile phones to actually shop online, culture difference so like where people prefer to shop-online or in a shop

Promotion: language differences so advertising needs to be translated correctly, colours animals or gestures in an ad may mean something different across the world

Product: differences in family size weight and height means the product needs to adapt(clothing), tech differences so like type of socket (electrical appliances), tastes and dietary needs eg halal (food).