2.1.1 Business Growth Flashcards
Name 2 Methods That Help Business Expand?
- 1) Internal (Organic) Growth.
- 2) External (Integration) Growth.
Name 4 Ways Business Growth Can Occur?
- 1) Employing more people.
- 2) Opening more branches.
- 3) Increasing Sales.
- 4) Increasing Profit.
Describe What Is Internal Growth?
- This is where a Business Grows because of increased Output and Sales.
- Its called Organic Growth Because the business is Organically Doing it.
Name 4 Ways Why Business Growth is Important?
- 1) Help to Increase Market Share.
- 2) Improve Profit.
- 3) Increase Revenue.
- 4) Help a business to open more branches
Name 2 Methods Of Internal Growth?
- 1) New Products.
- 2) New Markets.
How will A Business Make New products and How will a Business Enter new Markets?
- In order for a Business To Make Products It needs innovation, Research and Development.
- In order for a Business to enter new Markets is Through changing the marketing mix.
Name 2 Methods of External Growth?
- 1) Takeover
- 2) Merger
Write a Definition of Takeover and Merger?
- A Takeover is Where a Business Buys Control of Another Business (at least 51%).
- A Merger Is when 2 Business Join Together to form One New Business. (Often under a New Name).
Write Down the mnemonic To Remember the 4 Ways That firms can integrate Through external Methods?
- Hot - Horizonal Integration.
- Coffee - Conglomerate Integration.
- Brings - Backward Vertical Integration.
- Focus - Forward Vertical Integration.
Write a Definition of Horizonal Integration?
- Horizonal Integration is where a Business integrates with another Business That operates at the same stage in the supply Chain.
Write a Definition of Conglomerate Integration?
- Conglomerate Integration is Where a Business Integrates with others that Operate In Another Industry.
Write a Definition Backward and forward Vertical Integration?
- Backward Vertical Integration is where a business integrates with another that operates at an Earlier stage in the supply chain.
- Forward Vertical Integration is where a Business Integrates With another That Operates at an Later stage in the supply chain.
Write a Definition of a Monopoly?
- A Monopoly is when a business controls a large percentage of the market. It is also when a business has total control over the supply of a particular product.
Write a Definition of a Oligopoly?
- A Oligopoly is when a Small number of companies dominate the market between them.
Give a Benefit Of Internal/Organic Growth (3 Marker)?
One Benefit of Internal growth is that it allows the business to grow at a sensible rate (P) This is Because A Business Can Grow When They Have The finance available to do do without having to lend money from the bank or other sources of finance (S) Therefore Business Can Develop Their Products and Brand Gradually with less risk Involved (S)
Give a Drawback Of Internal/Organic Growth (3 Marker)?
One Drawback Is That If The Business Growth Is too Slow Then Shareholders May not be Happy (P) This Is Because They may prefer more rapid Growth because they will receive a higher dividend Payment for their investments (S) Therefore if shareholders are not happy with the speed of growth they might invest elsewhere (S)
Give a Benefit Of External/inorganic Growth (3 Marker)?
One Benefit Of External growth Such as merger or takeover is the reduction in competition (P) This will lead to an increase in market Share (S) Therefore allowing a business to have more security and possibly increase prices (S)
Give a Drawback Of External/inorganic Growth (3 Marker)?
One drawback is that it could create possible redundancies (P) This is Because the business now has to double the amount of staff (S) As a Result the business might look to lower its costs by letting some staff go (S) This can then reduce the level of motivation of those remaining staff (S)
Write Down a mnemonic Of The 3 Internal Sources of Finance?
- Rabbits - Retained Profit.
- Sell - Selling assets.
- Pies - Personal Saving.
Write Down a mnemonic Of The 3 External Sources of Finance?
- Little - Loan Capital
- Shrimp - Share Capital
- Smell - Stock Market floatation
Give a advantage of a Business Obtaining Internal Sources of Finance - Selling assets ( 3 Marker)?
An advantage of using this method will mean that no finance needs to be repaid (P) This is because businesses are selling off spare assets that are no longer required (S)
Give a Disadvantage of a Business Obtaining Internal Sources of Finance - Selling assets ( 3 Marker)?
A Disadvantage of selling assets is that it is unlikely to be long-term solution for most business that need to raise finance (P) This is because money will be raised on a one-off basis (S) Once the assets are sold it reduces the value of the business as the business will no longer own these assets to sell again in the future (S).
Give a advantage of a business obtaining External Sources Of Finances - Share Capital (2 marker)?
An Advantage of Selling Shares is that Large Sums of Money Can Be Raised (P) This is because PLC can sell their shares on the stock exchange (S)
Give a Disadvantage of a business obtaining External Sources Of Finances - Share Capital (2 marker)?
One Disadvantage of Selling Shares is Possible loss of control if the original owners sell more than 50% of the total shares (P) This is Because Business are at Threat of takeover (S)
Write a Definition of a Public limited company and write a example of a public limited company?
- A Public Limited company is a company that commonly offers its shares to the general public via the stock exchange.
- Ford is a example of a public limited company.
What do Shareholders have In a PLC and what’s the Minimum amount of share capital a PLC can have?
- Shareholders have limited liability.
- The Minimum of Share capital it can have is £500,000.
Analyse The Impact of a Business Becoming a Public Limited Company (3 Marker)?
Worker Employed on permanent Contracts are more likely to feel Secure in their job (P) Therefore Motivation may be higher Which May Increase The Productivity of the business (S) This Will Reduce the cost per unit (S)
Give a advantage of a business operating as a PLC (3 marker)
One Advantage of Being a PLC is that Shareholders have Limited liability (P) This is an advantage because investors are more likely to invest in shares due to less risk (S) This Leads to a PLC being able to raise large sums of money through issuing shares (S)
Give a Disadvantage of a business operating as a PLC (3 marker)
One disadvantage of being a PLC is a Greater risk of Hostile takeover by a rival company (P) This is because the shares in a PLC are sold on the stock exchange to the general public (S) Therefore if an individual of a business is to gain more than 50%of the shares they would gain control of the business (S)
