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 “organic 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
Name the 2 ways inorganic growth usually takes place when firms merge in one of two ways
Horizontal Interrogated (forward or backwards)
Vertically Interrogated
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)
What does the term Take-over?
Occurs when ONE companies purchase another company AGAIST their will.
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
What does SMART stand for?
S - Smart
M - Measurable
A - Achievable
R - Relevant
T - Time bond
What does the term “Import” mean?
Import - goods or services brought from people & business in ONE country to ANOTHER
What does the term “export” mean?
Exporting goods/services outside country region to another.
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.
List 2 internal source of finance
retrained profit
selling assets
List 3 external source of finance
loan capital
share capital
stock market floatation (public limited companies)
What does the term “Ethical” mean?
Understanding what’s morally right or wrong
What does the term “Barrier” mean?
Way of stopping OR limiting trades tax placed on importing and exporting to increase price and decrease demand
What does the term “Multinational”
A business which trade in more that 1 country (Example Apple)
What does the term “Off-shoring” mean and give an example of one
The work is done overseas
Example - Call Centers
What does the term “Outsourcing” mean and give a example of one?
Someone else does the job for us
Example: Food industry
List the 9 Protected Characteristics (Equality Act 2010)
Marriage
Religion
Age
Disability
Race
Gender orientated
Sex
Pregnancy
Belief
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
