Business growth and decline

Question 1

What is the Business cycle?

Answer 1

The different stages a business and/ or its product will often go through over the course of its existence

Question 2

What is the establishment stage of the business?

Answer 2

The establishment stage of the business life cycle is when the business first enters the market.

Question 3

What are the four stages of the business

Answer 3

Establishment, Growth, Maturity and post maturity

Question 4

What is the growth stage of the business?

Answer 4

The growth stage of the business life cycle offers the business many exciting opportunities and presents it with new challenges

Question 5

What is the maturity stage of the business?

Answer 5

In the maturity stage of the business life cycle the businesses growth and market share begin to slow. The business faces increased competition

Question 6

What is the post maturity stage of the business?

Answer 6

The post-maturity stage is the final stage of the business life cycle. during this stage key decisions will be made that ultimately will affect the long-term survival of the business.

Question 7

What are the four paths a business can take after post-maturity?

Answer 7

Steady state, Renewal, decline and cessation

Question 8

What is the definition of steady state?

Answer 8

The path in the post-maturity stage of the business life cycle when the business maintains its position

Question 9

What is the definition of decline?

Answer 9

The path in the post-maturity stage of the business life cycle when a business experiences falling sales and has been unsuccessful in developing new strategies

Question 10

What is the definition of renewal?

Answer 10

The path in the post-maturity stage of the business life cycle when a business develops new marketing strategies or releases new products to help increase sales.

Question 11

What is the definition of competitive advantage?

Answer 11

Those features of a product or business that provide it with an advantage over its competitors.

Question 12

What is the definition of cessation?

Answer 12

The path in the post-maturity stage of the business life cycle when the business closes. Cessation can be voluntary or involuntary.

Question 13

What is the definition of Just in time method

Answer 13

A stock-control system whereby the business is able to access stock just when it needs it.

Question 14

What is cessation?

Answer 14

Cessation refers to the closure of a business. The owner may decide to cease the operation of the business for a number of reasons.

Question 15

What is the Post-maturity stage?

Answer 15

The challenges for the business during the post-maturity stage are dependent on the path that its managers decide to follow. It is important that the business:

Question 16

What is the Maturity stage?

Answer 16

Challenges faced by a business during the maturity stage include: • needing to develop strategies to maintain customer loyalty and interest in its product • motivating employees and management so that tasks do not become routine and boring • the need to develop new products or revitalise existing products • ensuring the financial position of the fi rm at this stage is suffi cient to cover short- and long-term expenses and provide investors with a suffi cient rate of return • maintaining an active interest in the external environment of the business in order to be aware

Question 17

What is the definition of Involuntary Cessation

Answer 17

Occurs when the closure of a business is forced on its owner.

Question 18

What is the definition of the voluntary cessation?

Answer 18

Occurs when the owner of a business decides to cease its operations. The decision is not forced on the owner.

Question 19

What is the definition of insolvency?

Answer 19

When a business cannot pay all its liabilities, both current and non-current. Abusiness that is insolvent will most likely fail because creditors will demand repayment and the business cannot afford to pay loans without selling assets.

Question 20

What is the definition of Receivership?

Answer 20

p A situation whereby an independent manager (receiver) has been appointed by the court to administer a business that has become insolvent. A receiver can either trade the business out of financial trouble or liquidate its assets and close the business to recover an outstanding debt

Question 21

What is the definition of liquidation?

Answer 21

Occurs when all the assets of a business are sold to generate cash to pay liabilities and creditors.

Question 22

What is the definition of Bankruptcy?

Answer 22

A legal declaration that a person or business has more liabilities than assets