Growing the business (2.1) Flashcards
Revision
Name some methods of external growth…
- Merger
- Takeovers
What are the advantages of merger…
- Able to grow quickly
- quick money
What are the disadvantages of mergers…
- Creates unemployment problems a
- gives you less control
- different objectives
What are the advantages of a Takeover…
- rapid growth
- increased efficiency
- less competition
- more customers
What are the disadvantages of Takeovers…
- Really costly
- reputation risks
- customers may not trust the business
What is the difference between mergers and takeovers…
a merger is two companies making a mutual decision to combine into one business but a takeover is a larger company purchasing a smaller company.
What are some features of public limited companies(PLC)…
- limited liability
- unlimited no. of shareholders
- share capital restrictions
Name some advantages of a PLC..
- the share holders have limited liability
- lower taxation
- easier access to growth funds
- anyone can get a share
Name some disadvantages of a PLC…
- expensive to set up
- loss of as much control
- lack of flexibility
- people that join shares may have different goals
- anyone can join shares
What are the two internal sources of finance…
- retained profit
- selling assets
What is retained profit…
Retained profit is the amount of net income that is kept within its accounts.
Name examples of external sources of finance…
- loan capital
- share capital
- stock market flotation
What is loan capital…
loan capital is money that is used to build a business out of loans or donations
What is share capital…
the money a company raises by producing common or preferred stock
What is stock market flotation…
it is the process of selling shares to public investors
