Growing a business Flashcards
How can business growth occur
employing more people; opening more branches; increasing sales/revenue; increasing profits
whats organic growth
when a business expands from within
whats innovation
The act of creating new products or processes.
how can a business attempt to enter new markets
entering overseas markets; amending its marketing mix; taking advantage of technology
what is a domestic market
The supply and demand of goods and services within a single country
what is an advantage of internal growth
low risk, more sustainable
what is disadvantge of internal growth
slow
what are 2 types on external growth
merger (2 businesses form into 1), takeover (an existing business expands by buying more than half the
shares of another business)
what is advantages of external growth
quicker, may get rid of competition, new ideas/expertise
what is disadvantages of external growth
clash of culture, increased costs (short term)
what are PLC’s
public limited companies-
shares are sold to the public on the
stock market
what are advantages of PLC’s
limited liability
what are disadvantages of PLC’s
expensive to set up, greater risk of hostile, rival takeover
internal sources of finance
retained profits, selling of assets, the owners savings
what is advantage of using retained profit as a use of internal finance
cheap, quick and convenient, and there is easy access to the money
what is disadvantage of using retained profit as a use of internal finance
once the money is gone, it is not available for any future unforeseen problems the business might face
what is advantage of selling assets as a use of internal finance
convenient, can create space for more profitable uses, and can be quick
what is disadvantage of selling assets as a use of internal finance
might not get the full market value of the assets or even sell them at all, might also need the assets in the future
what is advantage of owners savings as a use of internal finance
cheap, quick and convenient
what is disadvantage of owners savings as a use of internal finance
the owner might not have enough savings or may need the cash for personal use
what are external sources of finance
trade credit, personal loans, bank loans, overdrafts, share capital
what is advantage of using loan capital as a use of external finance
regular repayments are made over a period of time
what is disadvantage of using loan capital as a use of external finance
takes time, interest/collateral applied,
what is advantage of using share capital as a use of external finance
does not have to be repaid and no interest applied, can choose to whom it offers shares
globalisation meaning
refers to companies operating internationally/ on a global scale
what is a tariff
a tax placed on imported goods from other countries
advantages of tariffs
protect infant industries and allow them to become more competitive globally, increase in government tax revenue, reduces companies selling for low prices and high volume as they can not sell below market price
disadvantage of tariffs
increased costs of imports, reduces competition and customer choice
what is a trade bloc
group of countries that form an agreement to reduce/eliminate protectionist measures between eachother
advantages for businesses inside a trading bloc
wider markets, external tariff walls, infrastructure support, free movement of labour
disadvantages of businesses inside a trading bloc
increased competition, common rules and regulations, retaliation, inefficiency
when competing internationally what should a business take into account
cultural/taste differences, inappropriate branding/promotion/ translations
