Topic 1.7 Expanding A Business. Flashcards
Define “internal growth (organic growth)”
When a business gets bigger by selling more of its products.
Define “external growth (integration)”
When a business gets bigger by joining or buying other businesses.
Define “market capitalisation”
Measures the value of all of a companies shares. Market capitalisation = market price od a share X the number of shares.
Define a “franchise”
A franchise is when a franchisor sells the rights to its product to a franchisee; this is usually in return for a fee and percentage of turnover.
Define a “franchisee”
A franchisee buys a franchise usually in return for a fee and percentage of turnover.
Define a “franchisor”
A franchisor sells a franchise usually in return for a fee and percentage of turnover.
Define “E-commerce (electronic commerce)”
The act of buying or selling a product using an electronic system such as the internet.
Define “outsourcing”
When a business uses another business to produce for it.
Define a “merger”
When two or more businesses join together to form a new business.
Define a “takeover”
A takeover occurs when one business buys control of another one.
Define an “economy of scale”
When a business’s unit cost of production falls as its output rises and the business expands.
Define a “diseconomy of scale”
When the cost per unit increases as the business expands.
