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Edexcel GCSE Business > Growing The Business > Flashcards

Growing The Business Flashcards

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1
Q

How can a business grow?

A

Add new products and services
New markets
E-commerce
Partner with other business
Acquire a new business

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2
Q

How is the size of a business measured ?

A

Number of employees
Revenue/turnover
Volume of sales

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3
Q

Organic growth

A

When a business grows naturally

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4
Q

How can businesses achieve natural growth?

A

By achieving a greater volume or value of sales following the growth of the market

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5
Q

Advantages of internal growth

A

Low risk if growing steadily with the market
Builds on business’s strengths such as brand and reputation

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6
Q

Disadvantages of internal growth

A

Growth may be dependent on the size and growth trend of the overall market
Hard to build market share if the company is already a market leader

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7
Q

External growth

A

Occurs when a company grows by joining with another company

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8
Q

Advantages of growing externally

A

Could double market share overnight and both old combine their strengths to form a stronger company
Could potentially be joining with a competitor, strengthening their market power significantly

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9
Q

Merger

A

An agreement that unites two companies into one new company

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10
Q

Disadvantages of mergers and inorganic growth

A

Duplication of one roles leading to redundancies
The company may join with another that has a completely different style of management ad control leading to difficulties and divisions between employees

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11
Q

Takeover

A

The act of gaining control of another company by buying ownership shares (aka acquisition)

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12
Q

Hostile takeover

A

When the company being taken over doesn’t want the acquisition to occur

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13
Q

Friendly takeover

A

When the smaller company does agree to be purchased by the larger company

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14
Q

Growth by selling shares

A

Shares in certain business structures can e bought and sold by the general public

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15
Q

Wat might happen to the value of existing shares if new shares are issued ?

A

Existing shareholders may feel the value is being diluted
Can be seen as a company desperate for some new money - so could be treated with caution by some stockbrokers

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16
Q

Disadvantage of retained profit

A

Amount available may be limited
Investors may be frustrated by the lack of dividends

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17
Q

Advantages of selling assets

A

Immediately available

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18
Q

Advantage of loan capital

A

Repayment amount may be constant over the duration of the loan to allow cash flow planning

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19
Q

Disadvantage of Ioan capital

A

Loan will need to be paid back with interest

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20
Q

Business growth

A

When a business increase the scale of its operations

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21
Q

Internal growth

A

Occurs when the business expands itself, by bringing out new products or by entering new markets

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22
Q

Research and development

A

Research into brew products or processes and developing the ideas that are generated from research

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23
Q

Innovation

A

The act of creating new products or processes

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24
Q

Entering new markets

A

Selling existing products to a new group of people

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25
Q

Two common methods of internal growth

A

Introducing new products
Entering new markets

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26
Q

Entering new markets

A

Selling existing products to a new group of people, ca be achieved by changing elements of the product’s marketing mix or changing the promotion strategy in order to attract new customers

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27
Q

Two common methods of external growth

A

Merger
Takeover

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28
Q

Merger

A

When two or more businesses join together to operate as one business

29
Q

Takeover

A

When one business buys another and incorporates it into their own

30
Q

Public limited company

A

An incorporated business that can sell shares to the public

31
Q

Advantages of being a PLC

A

Ability to raise additional finance

Limited liability

Seen as more prestigious and potentially more reliable

May be able to negotiate better prices with suppliers

32
Q

Disadvantages of being a PLC

A

More complex accounting and reporting procedures

Risk of hostile takeovers

Increased media attention

Less privacy in relation to financial performance

33
Q

Multinational

A

A business with operations in more than one country

34
Q

Advantages of being a multinational

A

Wider target market

Ability to take advantage of cheaper labour and utilities abroad

Can spread risk between operations in different countries

Reputation as a market leader

35
Q

Disadvantages of being a multinational

A

Loss of focus on key markets

Cultural and language differences between different countries

Uncertainty regarding profits based on exchange rates that change on a regular basis

Potential damage to reputation if found to be operating unethically

36
Q

Internal sources of finance and examples

A
  • found within the business.
  • retained profit and selling assets
37
Q

Advantage of retained profit as an internal source of finance

A
  • no need to repay the finance
  • no interest charges
38
Q

Disadvantage of retained profit as an internal source of finance

A
  • amount of available may be limited
  • investors may be frustrated by lack of dividends
39
Q

Selling assets

A

The process by which a business sells items that it owns in order to raise finance

40
Q

External sources of finance

A
  • loan capital
  • share capital
41
Q

Loan capital

A

Finance borrowed from a financial institution such as a bank

42
Q

Secured

A

Guaranteed, because if the business fails to pay back the money the bank can take the asset and sell it

43
Q

Share capital

A

Finance raised by selling a percentage of the business to external investor

44
Q

Dividends

A

A percentage of a business’s profits that is paid to shareholders as a reward for their investment in the business

45
Q

Stock market flotation

A

Process of changing a business to a public limited company by issuing shares for sale on a stock exchange

46
Q

Stock exchange

A

A place where shares in PLCs can be bought and sold

47
Q

Why business aims and objectives change as businesses evolve

A
  • market conditions
  • technology
  • performance
  • legislation
  • internal reasons
48
Q

Market conditions

A

Include the size of the market and the degree of competition

49
Q

Degree of competition

A

The number and size of businesses competing in a particular market

50
Q

Internal reasons for changing objectives

A
  • culture of the organisation
  • attitudes of workers
51
Q

Retrenchment

A

When a business downsizes the scale of its operations by reducing the number of employees or closing less profitable branches

52
Q

Organisational structure

A

The way in which the workforce is organised, usually a hierarchy with people reporting to managers all the way up to the CEO

53
Q

Product portfolio

A

The range of goods and services offered by anyone

54
Q

Globalisation

A

When the businesses operate on an international scale and gain international influence or power

55
Q

How does globalisation affect businesses ?

A
  • imports
  • exports
  • business locations
56
Q

Imports

A

The flow of goods and services into a country from another country

57
Q

Exports

A

The flow of goods and services out of a country to another country

58
Q

Domestically

A

At home or within a business’s home country

59
Q

International trade

A

Buying and selling of goods and services between countries

60
Q

Tariff

A

A tax imposed on imports or exports

61
Q

Protectionist measure

A

An action taken by a government to reduce the flow of imports into the country

62
Q

Trading bloc

A

A group of countries that agree to act together to promote trade between themselves

63
Q

Examples of trading blocs

A
  • the Eu
  • the association of southeast Asian nations
  • the North American free trade agreement
64
Q

Localise

A

Adapt to suit the local area and its needs, particularly in terms of culture, language or geographical location

65
Q

Ethics

A

Moral principles or standards that guide the behaviour of a person or business

66
Q

Stakeholder

A

Anyone who has a interest in the activities of a business, such as its workers, its suppliers and the government

67
Q

What does ethical behaviour include?

A
  • treating workers fairly
  • treating supplies fairly
  • ethical sourcing of materials
68
Q

Advantages of behaving ethically

A

Edexcel GCSE Business (9 decks)

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