3.1 Business growth Flashcards
Why do some businesses stay small?
Don’t want to take risks, Might be in a small market, More passion that want for money.
Why do some businesses grow?
Profit maximization, Increase market share and for the economies of scale.
What is a public sector organization?
The organization is run by the government.
What is a private sector organization?
When the organization is owned by private individuals.
What is a profit organization?
An organization that’s main objective is to maximize profit.
What is a non-profit organization?
A business that does it to help the community not for the money.
What is the principle agent problem?
When the board of directors have a different objective to the owners.
How can they overcome the agent-principle problem?
Offer the workers shares so they get money for the success of the business.
What is internal growth?
When a business growth without any external factors.
What is external growth?
When a business grows through a takeover or mergers.
What is horizontal integration?
When two businesses in the same industry merge.
What is forward integration?
When they become closer to the consumers.
What is backward integration?
When they get further from the consumers.
What is conglomerate integration?
A merge within two different industries.
What are the advantages of internal growth?
Economies of scale
Cost saving from rationalisation
Growth at a sensible rate
less risky
