Business Growth Flashcards
Signs of success
Increasing profit (more customers and sales)
Increased publicity ( satisfied customers)
Expansion (growing and enlarging premises)
Signs of failure
Loss of profit (lack product and inventory)
Loss of customers
To achieve internal/ organic growth
Reinvest profits
Expand product range
Increase sales activity
External growth
Takeover
Merger
Franchising integration
Merger advantages
No duplication in running costs
Larger economies of scale
Working together rather than being competitors
Merger disadvantages
Staff redundancies
Competition reduced
4 types of integration
Horizontal(businesses same level)
Vertical (same industry different production stages)
Lateral ( similar products )
Conglomerate (completely different products)
Factors which may limit growth
Lack of finance
Competition
Lack of demand
Advantages of growth
Increased profit ( larger business means larger volume of sales)
Economies of scale ( buy stock in larger quantities for cheaper and better tech)
Greater market influence
Disadvantages of growth
Poor communication ( larger business means each department difficult to communicate)
Lack of motivation ( decreased morale “small cog , big wheel”)
Ethical implications of growth
Business make sure all trade done fairly and legally
Respect environment
