chapter 3 size of business Flashcards

1
Q

revenue

A

the total value of sales made during the trading period = selling price x quantity sold

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2
Q

capital employed

A

the total value of all long-term finance invested in the business

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3
Q

market capitalisation

A

the total value of a company’s issued shares

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4
Q

market share

A

sales of the business as a proportion of total market sales

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5
Q

organic growth

A

expansion of a business by means of opening new branches, shops or factories. also known as internal growth

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6
Q

external growth

A

business expansion achieved by integrating with another business by either merger or takeover

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7
Q

merger

A

an agreement by owners and managers of two businesses to bring them together in a new combined business. this often referred to as a friendly merger

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8
Q

takeover

A

when a company buys more than 50% of the shares of another company and becomes its controlling owner. it can be called an acquisition

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9
Q

horizontal integration

A

integration with a business in the same industry and at the same stage of production

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10
Q

vertical integration

A

integration with the a business in the same industry

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11
Q

forward vertical integration

A

vertical integration with a customer business

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12
Q

backward vertical integration

A

vertical integration with a supplier business

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13
Q

conglomerate integration

A

integration with a business in a different industry

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14
Q

synergy

A

literally means that ‘the whole is greater than the sum of parts’ - it is often assumed that the new business will be more successful than the original separate businesses.

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15
Q

strategic alliance

A

agreement between two organisations to commit resources to achieving a specific objective while remaining

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