Paper 2 : Building a Business Flashcards by Miracle Ewaleifoh

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

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What does the term “organic growth” mean?

Internal (Organic) Business Growth is growth that is driven by internal expansion using reinvested profits or loans

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What does the term “diversification” mean?

Occurs when firm is able to increase number of products that is produced

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Name 1 benefit of diversification?

Reduce risk

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How can a business growth

organically, or inorganically (mergers and takeovers)

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What does the term “Retrenchment mean?

scaling down its operations as it evolves and can involve.

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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)

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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

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Name the 2 ways inorganic growth usually takes place when firms merge in one of two ways

Horizontal Interrogated (forward or backwards)
Vertically Interrogated

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What does the term Merger?

Occurs when TWO or More companies combine to form a new company

(Assets and liabilities are TRANSFERRED to the newly created entity)

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What does the term Take-over?

Occurs when ONE companies purchase another company AGAIST their will.

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List 2 advantages and disadvantage of becoming a private limited company?

ADVANTAGES
- Able to control workers (Retrain Control)
-Able to raise money

DISAVANTAGES
- High set-up price
- Face difficulty in motivating and controlling workers/staffs

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What does SMART stand for?

S - Smart
M - Measurable
A - Achievable
R - Relevant
T - Time bond

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What does the term “Import” mean?

Import - goods or services brought from people & business in ONE country to ANOTHER

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What does the term “export” mean?

Exporting goods/services outside country region to another.

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why do business change aim and objective change as they evolve?

Market Changes - Businesses may adjust their objectives to align with changing customer demands.
OR
New market opportunities: As new markets emerge, a business might refocus its objectives to explore these growth opportunities.

Technological Advancements
Innovation: As technology advances, businesses may need to adjust their objectives to leverage new tools, systems, and efficiencies.

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List 2 internal source of finance

retrained profit
selling assets

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List 3 external source of finance

loan capital
share capital
stock market floatation (public limited companies)

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What does the term “Ethical” mean?

Understanding what’s morally right or wrong

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What does the term “Barrier” mean?

Way of stopping OR limiting trades tax placed on importing and exporting to increase price and decrease demand

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What does the term “Multinational”

A business which trade in more that 1 country (Example Apple)

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What does the term “Off-shoring” mean and give an example of one

The work is done overseas
Example - Call Centers

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What does the term “Outsourcing” mean and give a example of one?

Someone else does the job for us
Example: Food industry

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List the 9 Protected Characteristics (Equality Act 2010)

Marriage
Religion
Age
Disability
Race
Gender orientated
Sex
Pregnancy
Belief

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What must business who choses to be ethical have to pay?..

Corporations tax.. a financial loop hole to avoid tax

What does the term "Pressure Group" mean?

A group of people to try to influence what consumer think about the business and the environment.

What are some advantages and disadvantages of globalisation

advantages +Relatively cheaper +Consumers have access to richer good/wide range of options disadvantages - Release carbon emission harmful for the environment - Lost of jobs due to unethical working ethics as pay unfairly to workers in certain country

What does the term "Globalisation" mean?

A business and culture *work* together and communicate via trade a global network

What does the term "Exporting" mean?

Product made in the UK that the UK sells overseas

What does the term "Importing" mean?

Buying products/services overseas for use

What are some advantages and disadvantages of importing?

Advantages +Richer/better quality +Able to leave it to the expects Disadvantages - Difficulty in accessing goods - Ability to import good lead to COMPETITORS arise from oversea

List 2 type of barrier

T-ariff Trade block

What are the other word use to describe barrier

Protectionism Protection Measure

What does the term "Trade-off" mean?

give up one thing in order to gain something else. In business, it often involves balancing limited resources

define "ethics"?

Ethics is knowing right from wrong. *Such as respecting workers and paying them fair wages.*

What is a benefit of increasing a product range?

It attracts new customers. It increases sales opportunities.

What are 2 potential impacts of pressure group activity on a business?

loss of customers or sales Damage to reputation

What are 2 drawbacks to a business reducing its workforce?

Lower staff morale. Increased workload for remaining staff. Loss of expertise Damage for company rep

Give 2 benefits to a business from becoming a multinational?

Access to new market Reduce risk Economic of scale Increase profitability Expansion in brand rep Gain new customers worldwide

Give 2 benefits of globalisation?

Increase revenue Lower cost Access to higher quality goods/services Access to cheaper recourses

Give one drawback to a business in increase in globalisation

Increase competitors Culture differences Supply chain complexion

Give one drawback of a business pf improving it ethical responsibility

Increase in cost (Have to buy multiple eviromental friendly product) Reduce competitors Time consuming

What does the term trade off mean?

achieving one objectives involve sacrificing another

Give 2 drawback to a business if it deicide to raise finance by selling assets

Loss of vulnerable assets One-off solution Reduce operation capacity

Give 2 benefits of raising finance thought a stock market floatation

Increase in shareholders Access to larger capitals Enhances credibility Improve public profile

List one importance objective a business focused on survival

Improving cash flow High cost Change in market condition Stragic focus

List 2 drawback to a business from increasing it product range(diversify)

Sales staff may require training Higher research and development

What does the term "Ethical Responsibility" mean?

Ethical Responsibility: The duty of a business to act in ways that are morally right, considering the impact on stakeholders, society, and the environment

What does the term "Multinational" mean?

A company that trades/operate in multiple countries, with facilities, offices, or operations outside its home country.

Define the term "Marketing mix"

balancing of functions, aesthetic, cost of production in a product to meet market needs.

List the 5 stages of a life cycle?

Research and Development (1) Introduction (2) Growth (3) Maturity (4) Decline (5)

Define the term "Product life cycle"

A business model that represent the sales of a product thought different stages of its life

What stages in the Product life cycle represent product being outdated/fall in sales

Decline

What stages in the Product life cycle represent the launch being successful

Growth

What stages in the Product life cycle represent sales growth slows down but repeat customer continuing to buy

Maturity

What are some benefits of differentiation a market/product/servers

Attract customers/new market Can offer high cost/premium prices Make's it appealing to a niche market

List some type of method of promoting

Social media Prints (Newspaper, magazine) Radios Television advert Internet Advert Leaflets,flyers,business cards Posters and Billard

List the 3 Type of Business operation

Job Production Flow Production Batch Production

What does the term "Job production" mean?

when a single, custom-made product is created for a specific customer, often involving high skill and quality.

What does the term "Flow production " mean?

method of manufacturing where products are made in *large quantities* using a *continuous* production process, with little to no interruption. It's efficient and usually involves assembly lines.

What does the term "Batch production " mean?

goods are produced in groups or batches, with each batch going through the production process before starting the next one.

List 3 purpose of Business operation

Producing goods or services – Ensuring the business creates what customers need. Efficiency – Maximizing output while minimizing costs. Quality control – Ensuring products meet required standards.

List 2 Short-term Promotion a business can use

Social media On-print newspaper

Paper 2 : Building a Business Flashcards

2.1 to 2.5