Business Strands To Memorise!!

Question 1

growth —»> ? sales —»> increased market ? —»> ? market power —»>able to increase ? without a ? fall in sales —»> improved ?

Answer 1

increased, share, increased, price large, profitability

Question 2

growth —»> ? sales —»> ? revenue —»> increased cash ? —»> if the cash ? are greater than the ? outflows then an increased ? cashflow —»> decreased risk of ? —»> survival

Answer 2

increased, increased, inflows, inflows, cash, net, insolvency

Question 3

(in a competitive market)
growth —»> ? sales —»> ? of scale —»> ? per unit decreases —»>able to decrease ? —»> competitive ? —»> increased market ? or ?

Answer 3

increased, economies, cost, prices, advantage, share, growth

Question 4

(if the business has control of the market)
growth —»> ? sales —»> ? of scale —»> ? per unit decreases —»>able to keep the same ? —»> ?

Answer 4

increased, economies, cost, price, profitability

Question 5

growth —»> increased ? —»> diversification —»> more ? streams —»> more ? inflows —»> greater net ? (if ? inflows are greater than ?) —»> decreased risk of ? —»> ?

Answer 5

sales, revenue, cash, cashflow, cash, outflows, insolvency, survival

Question 6

increased market ? —»> increased brand ? —»> greater trust from ? —»> able to ? price without a large ? in sales —»> profitability

Answer 6

share, awareness, customers, increase, fall

Question 7

increased sales —»> increased ? —»> increased ? inflows —»> increased net ? —»> lower risk of ? so therefore ?

Answer 7

revenue, cash, cashflow, insolvency, survival

Question 8

increased sales —»> increased ? share —»> increased market ? —»> able to increase ? —»> increased ?

Answer 8

market, power, prices, profitability

Question 9

increased sales —»> more output ? —»> able to respond to ? of scale —»> reduced ? per unit —»> profitability/ drop ? and get a ? advantage

Answer 9

needed, economies, cost, prices, competitive

Question 10

decreased productivity —»> decreased output per ? —»> increased ? per unit —»> decreased ?

Answer 10

worker, price/cost, profitability

Question 11

decreased productivity —»> decreased output per ? —»> increased ? per unit —»> may have to ? price —»> lose their competitive ?

Answer 11

worker, price, increase, advantage

Question 12

equation for profitability and if a business has a high profitability what does that mean?

Answer 12

profit/revenue, they have lots of profit to allow for growth and normally have a low product range

Question 13

6 main objectives of large businesses
1. Growth of ? or market ?
2. Improving ?
3. Entering or ? markets
4. ? or decreasing product ?
5. Growing or reducing the ?
6. Focus on survival - ? cashflow

Answer 13

sales, share
profitability
exiting
increasing, range
workforce
improving

Question 14

diversity —»> more ? —»> more revenue ? —»> more ?

Answer 14

markets, streams, revenue

Question 15

definition of economies of scale? (and example)

Answer 15

occurs when mass producing a good, resulting in a lower average cost in the long run, eg: a small bakery makes 1000 loaves of bread per week with traditional bread-making technique, while a big factory makes thousands with expensive machinery. small bakery will have lower production costs(but higher costs per unit) but overall it will cost less per unit for the big factory

Question 16

what is diversification?

Answer 16

a strategy to reduce risk by spreading into new products or markets - DONT KEEP ALL OF YOUR EGGS IN ONE BASKET!!!

Question 17

what is internal/ organic growth?

Answer 17

where a business grows gradually through innovation and attracting new customers

Question 18

what is external/inorganic growth?

Answer 18

where a business grows by joining with or taking over another business

Question 19

what is a takeover (inorganic growth)

Answer 19

where one company acquired another business (normally through acquiring a majority stake in that company) and the original company doesn’t function on its own anymore

Question 20

what is a merger?

Answer 20

an agreement between the owners of two businesses to come together and create one larger company

Question 21

how does a merger benefit both the companies involved?

Answer 21

they both gain knowledge and assets

Question 22

way to write a six marker using COMPS

Answer 22

choose an example -> type of growth -> they did this because..? -> which leads to -> and therefore
also use context - so who are the customers, what are their objectives, what market are they in, what product and what situation?

Question 23

what is a ‘vertical backwards’ business merger?

Answer 23

when a business buys a supplier of the business, like Netflix buying a tv production company

Question 24

what is a ‘conglomerate’ business merger?

Answer 24

when a business buys a completely different business

Question 25

what is a ‘vertical forwards’ business merger?

Answer 25

when a business buys a distributor of the business, eg: a brewery buying a chain of pubs

Question 26

what is a ‘horizontal’ business merger?

Answer 26

when a business buys another/ same type of business, eg: B&Q merging with Homebase

Question 27

why do businesses do ‘vertical backwards’ mergers? (2 reasons)

Answer 27

• to keep costs low
• to ensure supplies don’t run out

Question 28

why do businesses do ‘conglomerate’ mergers? (2 reasons)

Answer 28

• to get into a new market
• to spread their risk

Question 29

why do businesses do ‘vertical forwards’ mergers? (2 reasons)

Answer 29

• to understand customers better
• to keep control of their brand image

Question 30

why do businesses do ‘horizontal’ mergers? (2 reasons)

Answer 30

• to negotiate bulk buying
• to get rid of the competition (and increase market share)