Topic 1: business growth and decline Flashcards

bussiness prelim

1
Q

what is the business life cycle

A

it shows the phases that every business will go through during it’s life

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2
Q

name the phases in the business life cycle(4)

A

establishment
growth
maturity
postmaturity

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3
Q

what happens in the establishment phase

A

when the business enters the market

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4
Q

what are some key considerations during the establishment phase(4)

A

location
products
staff
legal structure

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5
Q

what are sales like during the establishment phase(2)

A

low

little customer base

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6
Q

what are costs do you need to consider during the establishment phase.(4)

A

acquire premises
equipment
stock and raw material
high costs

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7
Q

what are profits like in the establishment phase(2)

A

low

perhaps negative

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8
Q

what goals should be considered during the establishment phase

A

to survive

breakeven

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9
Q

what happens during the growth phase

A

it’s when the business increases in sales

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10
Q

key considerations/decisions that a business should keep in mind during the growth period (5)

A
developing budgets
liquidity
marketing
structure
staffing
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11
Q

what are sales like during the growth period(1)

A

rapidly increasing

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12
Q

what are cost like during the growth period(1)

A

decreasing - bulk purchasing

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13
Q

what are profits like during the growth period(1)

A

increasing

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14
Q

what goals should a business consider during the growth period(1)

A

longer term planning

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15
Q

how can growth occur(3)

A

expanding
merging
acquisition

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16
Q

how do mergers occur

A

when the owners of two separate businesses decide to combine their resources to form a new organisation

17
Q

how do acquisitions occur

A

acquisitions happen when one business takes control of another(takeover) by purchasing the majority share

18
Q

name types of integration(5)

A

vertical integration:
backward vertical integration
forward vertical integration

Horizontal integration
Diversification

19
Q

what is vertical integration

A

it is when a business expands at different but related levels in the production process. There are two types of vertical integration forward and backward.

20
Q

what is backward vertical integration

A

it is when the business goes backwards in the chain of production. E.g a business buying there supplier.

21
Q

what is forward vertical integration

A

it is when a business integrates with a firm it sells to

22
Q

what is horizontal integration

A

it is when a business acquires or merges with another firm that makes/sells similar goods

23
Q

what is diversification

A

it is when a business acquires or merges with an unrelated industry

24
Q

what happens during the maturity phase

A

the business’s growth and market share begin to slow

25
Q

issues faced in maturity phase

A

other firms try to emulate/copy.

26
Q

what is post maturity

A

it is a decision the business takes that decides what they want to do after maturity, from this they can pick from 4 options

27
Q

what are the 4 options in post maturity

A

renewal
decline
steady state
cessation

28
Q

what happens in renewal

A

the business re-invents itself and will experiences a 2nd growth phase

29
Q

how does a business go through renewal

A

through offering new products or makeover there existing business image

30
Q

what happens in steady state

A

the business maintains it’s market share, and try to avoid decline but do not seek renewal or re-invent the bussiness

31
Q

what do you need to be weary about if you go into steady state

A

the business must maintain it’s market share and must be wary of competition.

32
Q

what happens during decline

A

the business has been unsuccessful in addressing the various challenges.

33
Q

how can a business go through decline

A

through the loss of it’s competitive edge

34
Q

what is ceassation

A

the closure of a business

35
Q

why would someone go through ceasation

A

they would go through it because of many factors, they could be forced due to many factors, or the owner may go through voluntary cessation

36
Q

reasons for forced cessation(2)

A

financial difficulties

bankruptcy

37
Q

reasons for voluntary cessation(3)

A

loss of enthusiasm
retire
another party would like to buy the business

38
Q

how can a business lose there competitive edge (3)

A

failure to meet customer needs
lack of demand
failure to plan

39
Q

list 3 businesses that failed to adapt

A

Nokia
dick smith
quicksilver