Topic 2.1 Flashcards
Methods of organic growth
Targeting new markets
Developing new products
Methods of inorganic growth
Joining with a supplier
Joining with a competitor
Joining with a customer
Joining with an unrelated firm
Pros and cons of takeovers and mergers
Pros:
Can cut costs
Can increase market share
Cons:
Less than half are successful
Can create a bad feeling
Lack of synergy
What are economies of scale
Where larger businesses benefit from cheaper average unit costs
What are diseconomies of scale
Increases in average unit costs
Internal sources of finance
Retained profit
Fixed assets
External sources of finance
Loan Capital
Share Capital
Share Capital
Pros and cons of market flotation and being a PLC
Pros:
More capital can be raised
Limited liability
Cons:
Hard to get shareholders to agree on how a business is run
Risk of takeover
Accounts published
Examples of how a business’ aims and objectives can change
Survive
Grow
Workforce
Enter/ exit new markets
Product range
Why might a business’ aims and objectives change
New legislation
Changes in market conditions
Changes in tech
Performance
Internal changes (e.g scandals)
What is globalisation
The process by which businesses and countries around the world become more connected
Examples of effects of globalisation
More imports
More exports
Business locations changing
Multinational companies
Examples of barriers to international trade
Tariffs
Trade blocs
How do firms change to compete internationally
Using e-commerce
Changing marketing mix
Pros and cons of acting ethically
Pros:
Gain in customers
Better reputation
Can have positive effects on other stakeholders
Cons:
Can be costly
May be more difficult to find suppliers
Higher prices
