Paper 2 : Building a Business Flashcards
2.1 to 2.5
List 5 benefits of operating in an inorganic growth?
Gaining a greater market share (1)
Product diversification (1)
Opening a new store
International expansion (new markets)
Investing in new technology/production machinery
What does the term “Inorganic growth” mean?
Internal (Organic) Business Growth is growth that is driven by internal expansion using reinvested profits or loans
What does the term “diversification” mean?
Occurs when firm is able to increase number of products that is produced
Name 1 benefit of diversification?
Reduce risk
How can a business growth
organically, or inorganically (mergers and takeovers)
What does the term “Retrenchment mean?
scaling down its operations as it evolves and can involve
What are some benefits of Retrenchment ?
Reducing the size of the workforce
Closing less profitable outlets
Exiting existing markets
reduce costs(and is particularly relevant for businesses whose objective is to survive)
Why do firms/business spent expenses on research and development?
Firms may spend money on research and development, or innovation to existing products to help create a new revenue stream
