Business Growth Flashcards
What is Growth?
The increase in the size and status of a business
Why do businesses want to grow?
Maximise profits Increase market share Economics of scale - buy in bulk Expansion of the brand Popularity/ recognition
What is a merger?
When 2 businesse join together and create a larger organisation
e.g. Curry’s and Pc World
What is a takeover?
When a business buys another business to become the dominant business
E.g. Coca cola took over Innocent
Organic growth
A business that grows by itself and they do it independently. They grow though internal, use their own resources
Inorganic Growth
Where a business joins with another to grow. They grow through external
Positives of Organic growth
Not as much money spent
Do it by yourself, build their own reputation
Less risk, control speed of growth
Negatives of Organic growth
Takes longer to build up
Less ideas
Positives of Inorganic Growth
Helps the business grow quicker
Increase in market share
Generation of ideas/ skills
Use resources effectively
Negatives of Inorganic growth
Costs a lot of money
Not making a name for yourself
Difficult to keep image/ tradition
4 types of integration
Forward vertical - buying the stores and premises
Backward vertical - supply chain (e.g. McDonalds buying farms)
Horizontal - buying a similar business (e.g. Adidas bought Reebok)
Diversification - when you buy an unrelated business (e.g. Virgin)
What is a PLC
A public limited company (PLC) is the legal designation of a limited liability company which has offered shares to the general public and has limited liability.
What is a LTD
Trade their shares privately
Chose who they want to sell their shares to
What is Floatation?
Where a plc puts their company onto the stock exchange to try and sell shares of the company
Location
Where a business is geographically situated
