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Higher Business > Growth > Flashcards

Growth Flashcards

1
Q

what are reasons to achieve growth

A

increase sales
increase profits
increase market share - market leader

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2
Q

what are the methods of growth

A

internal growth
horizontal integration
vertical integration
lateral growth
conglomerate growth
diversification

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3
Q

what is internal growth

A

when a business grows naturally. can be done through opening new outlets, increasing sales/profits or introducing new products

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4
Q

what are the advantages of internal growth

A

less risky than taking over another business
can be financed through internal sources
build on existing strengths such as brands and customer relations

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5
Q

what are the disadvantages of internal growth

A

slower method of growth
limited by size of existing market

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6
Q

what is horizontal integration growth

A

when two business combine, that were operating in the same stage of production, in the same secetor

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7
Q

what are the advantages of horizontal integration growth

A

eliminates competitors
increase market share
achieve greater economies of scale

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8
Q

what are the disadvantages of horizontal integration growth

A

large firms created can dominate a market
when competitors eliminated, business gets more opportunities to exploit customers
can under cut competitors and push smaller more vulnerable businesses out the market

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9
Q

what is vertical integration growth

A

when a business takes over another at an earlier, or later stage of production, whilst still in the same sector

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10
Q

what are the advantages of vertical integration growth

A

eliminates the middlemen and his profit
gives the business greater economies of scale
secures a source of supply

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11
Q

what are the disadvantages of vertical integration growth

A

expansion may require extensive staff training
increased risk of failure if one part of the business does not perform as expected

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12
Q

what is lateral integration growth

A

when a business moves into a different market but within a related industry (hair dresser merging with beauty therapist)

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13
Q

what are the advantages of lateral integration growth

A

experience and knowledge can be gained from acquired business
targets new markets which increases customer base

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14
Q

what are the disadvantages of lateral integration growth

A

entering new markets may affect core activities and expertise need to be shared
may not have knowledge required to successfully run the new business

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15
Q

what is diversification growth

A

when a business moves into new markets that are different from their core business

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16
Q

what is conglomerate integration

A

when a business merges with another, in a completely different market

17
Q

what are ways of funding growth

A

retained profits
divestment
disintegration/demerger
asset stripping
buy in
buy out
outsourcing

18
Q

what are retained profits

A

when the business uses its own finances to fund growth

19
Q

what is divestment

A

when the business sells of two or more of its subsidiary companies

20
Q

what is disintegration/demerger

A

when two businesses that had previously merged decide to separate and operate on their own

21
Q

what is asset stripping

A

when a business sells off some of its own assets in order to obtain funds for growth

22
Q

what is buy in

A

when a group of managers from outside the business make an offer to buy the business in order to take control and run it themselves

23
Q

what is buy out

A

when a group of managers from inside the business combine forces and make an offer to buy the business

24
Q

what is outsourcing

A

when a business uses the services of another company or specialist to carry out a piece of work for them

25
Q

what are ways to achieve growth

A

merger
takeovers
franchising
multinational
product development/advertising

26
Q

what is a merger

A

when two businesses agree to join forces in order to become one larger business

27
Q

what is a takeover

A

when a larger business takes over a smaller one

28
Q

what is franchising

A

when a business grows by offering individuals to become franchisees

29
Q

what is a multinational

A

when a business opens branches across the world

30
Q

what is product development/advertising

A

developing new products
investing in advertising to make more people aware of produdcts

Higher Business (20 decks)

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