3.1.7- expanding a business

Question 1

internal growth

Answer 1

internal growth (also known as organic growth) occurs when a business gets bigger by selling more of its products

Question 2

external growth

Answer 2

external growth (also known as integration) occurs when a business gets bigger by joining or buying other businesses

Question 3

market capitalisation

Answer 3

the market capitalisation of a company measures the value of all its shares: market capitalisation = market price of a share x the number of shares

Question 4

franchise

Answer 4

a franchise occurs when a franchisor sells the rights to its products to a franchisee; this is usually in return for a fee and percentage turnover

Question 5

franchisee

Answer 5

a franchisee buys a franchise usually in return for a fee and percentage of turnover

Question 6

franchisor

Answer 6

a franchisor sells a franchise usually in return for fee and percentage of turnover

Question 7

e-commerce

Answer 7

e-commerce (or electronic commerce) is the act of buying or selling product using an electronic system such as the internet

Question 8

outsourcing

Answer 8

outsourcing occurs when a business uses another business to produce for it

Question 9

merger

Answer 9

a merger occurs when two or more businesses join together to form a new business

Question 10

takeover

Answer 10

a takeover occurs when one business buys control of another one

Question 11

economies of scale

Answer 11

economies of scale occur when a business’ unit costs of production fall as its output rises and the business expands

Question 12

diseconomies of scale

Answer 12

diseconomies of scale occur when the cost per unit increases as a business expands