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Edexcel GCSE Business > Growing The Business > Flashcards

Growing The Business Flashcards

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
Two common methods of internal growth
Introducing new products Entering new markets
26
Entering new markets
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
27
Two common methods of external growth
Merger Takeover
28
Merger
When two or more businesses join together to operate as one business
29
Takeover
When one business buys another and incorporates it into their own
30
Public limited company
An incorporated business that can sell shares to the public
31
Advantages of being a PLC
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
Disadvantages of being a PLC
More complex accounting and reporting procedures Risk of hostile takeovers Increased media attention Less privacy in relation to financial performance
33
Multinational
A business with operations in more than one country
34
Advantages of being a multinational
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
Disadvantages of being a multinational
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
Internal sources of finance and examples
* found within the business. * retained profit and selling assets
37
Advantage of retained profit as an internal source of finance
* no need to repay the finance * no interest charges
38
Disadvantage of retained profit as an internal source of finance
* amount of available may be limited * investors may be frustrated by lack of dividends
39
Selling assets
The process by which a business sells items that it owns in order to raise finance
40
External sources of finance
* loan capital * share capital
41
Loan capital
Finance borrowed from a financial institution such as a bank
42
Secured
Guaranteed, because if the business fails to pay back the money the bank can take the asset and sell it
43
Share capital
Finance raised by selling a percentage of the business to external investor
44
Dividends
A percentage of a business’s profits that is paid to shareholders as a reward for their investment in the business
45
Stock market flotation
Process of changing a business to a public limited company by issuing shares for sale on a stock exchange
46
Stock exchange
A place where shares in PLCs can be bought and sold
47
Why business aims and objectives change as businesses evolve
* market conditions * technology * performance * legislation * internal reasons
48
Market conditions
Include the size of the market and the degree of competition
49
Degree of competition
The number and size of businesses competing in a particular market
50
Internal reasons for changing objectives
* culture of the organisation * attitudes of workers
51
Retrenchment
When a business downsizes the scale of its operations by reducing the number of employees or closing less profitable branches
52
Organisational structure
The way in which the workforce is organised, usually a hierarchy with people reporting to managers all the way up to the CEO
53
Product portfolio
The range of goods and services offered by anyone
54
Globalisation
When the businesses operate on an international scale and gain international influence or power
55
How does globalisation affect businesses ?
* imports * exports * business locations
56
Imports
The flow of goods and services into a country from another country
57
Exports
The flow of goods and services out of a country to another country
58
Domestically
At home or within a business’s home country
59
International trade
Buying and selling of goods and services between countries
60
Tariff
A tax imposed on imports or exports
61
Protectionist measure
An action taken by a government to reduce the flow of imports into the country
62
Trading bloc
A group of countries that agree to act together to promote trade between themselves
63
Examples of trading blocs
* the Eu * the association of southeast Asian nations * the North American free trade agreement
64
Localise
Adapt to suit the local area and its needs, particularly in terms of culture, language or geographical location
65
Ethics
Moral principles or standards that guide the behaviour of a person or business
66
Stakeholder
Anyone who has a interest in the activities of a business, such as its workers, its suppliers and the government
67
What does ethical behaviour include?
* treating workers fairly * treating supplies fairly * ethical sourcing of materials
68
Advantages of behaving ethically

Edexcel GCSE Business (9 decks)

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