Section 3

Question 1

What are Not For Profit organisations?

Answer 1

An organisation that pursue a social objective (helping people, prevent animal abuse etc)

Question 2

What are the advantages of an NEP organisation?

Answer 2

• helping

- do not invest money into the organisation

Question 3

What are the disadvantages of a NEP organisation?

Answer 3

• No profit (if any made, it is put back to the business)

- no money if people do not donate money

Question 4

What is merging ?

Answer 4

When two companies come together as one

Operate as 1 business
-both have benefits from merging

Question 5

What is a takeover ?

Answer 5

When one business buys another

• only the one who bought the business benefits
• the one that has been bought doesn’t benefit from a takeover

Question 6

What is a horizontal integration?

Answer 6

When both of the businesses merging do the same type of activities and are at the SAME STAGE OF PRODUCTION

(Kfc and mc Donald)

Question 7

What is a vertical integration?

Answer 7

When 2 businesses merging operate at DIFFERENT STAGES OF PRODUCTION but focuses on the same type of product

(Kfc and butcher)

Question 8

What is diversification?

Answer 8

A firm integrating with another firm of a different industry

• completely different from each other

(Virgin media merging with a chicken shop)

Question 9

What are the 2 ways a vertical integration can go?

Answer 9

Backward- firm joining with another firm that is in an earlier stage of production than them

Forward- firm joining with another firm that is in a later stage of production than them

Question 10

What are the advantages of a horizontal integration?

Answer 10

• gain more market share

- less competitors (they are more powerful and bigger)

Question 11

What is a demerger?

Answer 11

When a company divides/break down into more than one company

Question 12

What is outsourcing?

Answer 12

When a company hires another business to do some work for them

Question 13

What does an owner need to consider before locating his shop/business?

Answer 13

Land-
not so expensive, big enough shop.
(With lighting, heating?)

Access to market-
Shop needs to be in a busy area
Many customers needed

Transport links-
Customers can get to you easily
(Buses, trains, parking)

Competition-
Are there complimentary businesses (businesses that could help yours e.g opening a gym near a sports shop)
- No similar shops than yours

Labour supply-
Enough people to work in the business,
Have the right skills for the business