Internal Expansion Flashcards
What is Internal Expansion?
when a business grows by expanding its own activities
What is good about Internal Expansion?
relatively inexpensive
less likely to go wrong
quality doesnt suffer
new staff trained well
What are bad things about Internal Expansion?
can take a long time to achieve growth
owners don’t want to wait long to start making more money.
What are the advantages of opening new stores?
if operated similarly to existing store, it shoule be a success.
business can increase sales
What is the disadvantage of Opening a New Store?
lots of extra costs, e.g. rent and staff pay.
What is an E-commerce?
Where a firm sells products via the internet.
What are advantages of E-commerce?
Lots of people can buy product’s from the firm, even if not near shop. access to much larger market.
cheaper than setting up a new store
What is a disadvantage of E-commerce?
technology has to be regularly updated. technical problems can cause customers to be unsatisfied.
What is outsourcing?
business paying another firm to carry out tasks it could do itself
What is the advantage of outsourcing?
The outsourcing firm may be able to do tasks more quickly, cheaply or to a higher standard than the business can do itself.
What are the disadvantages of outsourcing?
business loses some control over parts of its operations.
business could also get bad reputation if firm it outsources to has poor standards.
What is Franchising?
where a company expands by giving other firms the right to sell its products in return for a fee or percentage of the profits.
What are the product manufacturers called?
Franchisors
What is the firms selling their products called?
Franchisees
What are the advantages of Franchising?
increases franchisor’s income
increases market share and brand awareness of products
firm doesn’t have usual risks and costs
