Business expansion Flashcards
Internal/organic growth
selling more of your own products
External growth / integration
by joining with another business
Benefits of internal growth
more manageable
drawbacks of internal growth
slower process than external growth
Value of sales
Revenue and turnover.
bigger turnover means bigger business
Value of the business
Value of assets - liabilities
Higher value, more owners are worth
Market capitalisation
measure the value of all of a business’s shares
Number of employees
when a business sells service instead of goods, number of employees are used to measure business size.
Franchising
when business sells right to another business to sell their product
Advantages of franchising
Business growth
More finance provided
Disadvantages of franchising
Loss of some control
Having to share profit
Advantages of buying a franchise
Established brand
Access to supplies
Disadvantages of buying a franchise
Sales may suffer if another franchisee gets bad reputation
Outsourcing
when a business uses another business to produce for it
Backward vertical integration
When a firm joins with another business’s suppliers
