Organisation Flashcards
Name 4 benefits of growth
More profit/capital
More market share
Economies of scale so lower unit costs
Better reputation/ recognition
Name 4 risks of growth
Harder to manage/ risky
Lose customer service/personal touches
Strain on resources
Could go into debt or prove too challenging
Difference between organic and inorganic growth
Organic growth is internal, so it grows from within the business. Such as opening new stores, extending product range. Slow and steady growth
Inorganic growth is outside the business. Such as a merger or a takeover of another business. Large, almost immediate growth.
Describe and give examples for the four types of inorganic growth (merger or takeover)
Horizontal integration: Buy a business which is very similar and at the same stage of production. Pub buys a pub.
Backwards vertical integration: Buying a business that is a stage before your business. Pub buys a brewery.
Forward vertical integration: Buying a business that is a stage after your business. Pub buys an Alcohol Anonymous group.
Diversification: Buying a business that is completely different to the current one. Pub buys a pet clothes store.
What are the advantages of HI, BVI, FVI and D
HI: More market share, reduces competition
BVI: Secures a supplier, limits supplies to competition
FVI: Secures an outlet, excludes competitors
D: Spreads the risk, different seasons
What is franchising
Selling the licences for other businesses to trade using their brand name and usually products
3 advantages and 3 disadvantages of franchising
A: Provides finance to fund a growth, Workload shared, brand recognition
D: Loss of control/quality, shared profits, could be a risk to the reputation
Name 2 similarities between ltd’s and plc’s
Limited liability
Separate legal identity
Name 2 differences between ltd’s and plc’s
Shares can be sold on the stock market and can be bought by anyone not just friends and family
The shares sold and bought have to be listed on the stock exchange so competition can see how they’re doing
Name 3 advantages and disadvantages of an ltd becoming a plc
A: Larger source of finance available, larger and usually more stable, gains exposure through stock exchange
D: Competitors can see your stocks, conflicting ideas, large share of profits.
What does smart stand for?
Specific, measurable, achievable, realistic and timed objectives
Name 4 new objectives of an expanding business
Market share
International expansion
Economies of scale
Ethical considerations
3 Issues related to overseas expansion
Language barriers
Cultural differences
Time zones (meetings)
Exchange rate
3 benefits related to overseas expansion
Enormous market potential
Lower labour costs
Cheaper land and materials
