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Business 📈 > Topic 2.1 Growing A Business 📍 > Flashcards

Topic 2.1 Growing A Business 📍 Flashcards

1
Q

Methods of business growth?

A

Organic growth - internal growth

Inorganic growth - external growth

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2
Q

How do businesses use organic growth? (4)

A
  1. Development of new products
  2. Entering a new market
  3. Changing marketing mix
  4. Using tech
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3
Q

What are the advantages of organic growth?

A
  1. Increase in customers increase in sales revenue + profit
  2. More production -> benefit from economies of sale
  3. More control over business reflecting on your business culture
  4. Gain more influence -> can set prices for market share
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4
Q

Disadvantages for organic growth

A
  1. Takes a long time
  2. Expensive - risky
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5
Q

What are the positives of inorganic growth?

A
  1. Greater quality of products
  2. Customer needs being met
  3. Higher market share gained
  4. More income so dents are paid off more
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6
Q

What are the two types of inorganic methods

A

Takeover - get bought by another business

Horizontal Merger- merge with another business in same market

Vertical- join via supply chains

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7
Q

What are the negatives of of inorganic Growth?

A
  1. Jobs made redundant
  2. Less choice for customers
  3. Clash of cultures - risk merger to fail
  4. Lack of communication
  5. Diseconomy of scale
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8
Q

How does inorganic growth take place in a PLC ?

A

Public can buy shares of your business and use the stock exchange to raise funds

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9
Q

What are the advantages of using inorganic growth as a plc ?

A
  1. Limited liability
  2. Good public profile - banks willing to lend loans
  3. Easy to raise capital
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10
Q

Disadvantages of using inorganic growth as a PLC?

A
  1. Ownerships shared between shareholders - more likely to be a hostile takeover
  2. Expensive / complicated prepare annual accounts
  3. Everything is visible for your competitors to see
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11
Q

What are the internal sources of finance?

A

Retained profit
Sales of assets

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12
Q

Positives and negatives of using sales of assets?

A

Positives - releases trapped money
No interest

Negatives- sell it for less than you bought it still a loss
No longer on balance sheet - drives away investors
Money not available immediately

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13
Q

Positives and negatives of retained profit

A

Positive - no interest
Freedom of chioce
Tax break

Negatives- one time opportun- can only be spent once

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14
Q

Positives and negatives of a bank loan

A

Positives - low rate of interest as a well known business

Negative - interest still needs to be paid

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15
Q

Positives and negatives of using share capital ?

A

Positives - no interest
Easy
Negative - dilutes ownership
Entitled to dividends so may lose most money

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16
Q

What are positives of becoming a PLC ?

A

Ability to raise finance through share capital

Limited liability

Good public awareness

Seen as reliable

17
Q

What are negative did becoming a PLC?

A

More complex procedures

Risk of hostile take over

Increase public attention

Dilute ownerships

Less privacy

18
Q

What are the internal sources of finance ?

A

Sales of assets

Positives - no interest

Negatives

May make less as asset has devalued

No immediate

Less assets - less opportunity for partnerships

Retained profit - saving profit

Positives - no interest

Negative - takes a while to accumulate- may miss out on opportunities

19
Q

What are the external sources of finance ?

A

loan capital 🏦- money form bank

Good - secure

Negatives - interest

Shared capital- no interest

Negative - risk take over

20
Q

What are the four main external influences that make us a business to change their objectives?

A

Legislation
market conditions
technology
competitors

21
Q

How may the external influence of competitors cause a business to change their objectives?

A

If a new competitor enters the market it will lead to high levels of competition that needs to be completed with

this will lead to the business change the objectives to be more competitive

22
Q

How can the external influence of legislation affect our businesses objectives?

A

Legislations may change the creations of services and products and restrict the businesses operations or create new opportunities to incorporate them into objective

23
Q

How may the external implement of market conditions affect the businesses objectives?

A

The economic climate may affect how consumers spend if demand is high and low this will affect the ambition of the businesses objectives

24
Q

How may the external influence of technology affect the businesses objectives?

A

Technology may create a new opportunity or innovation

25
Q

What are the three internal reasons why businesses objectives change?

A

Performance, leadership and culture

26
Q

What are the reasons that performance leadership and culture may change a business objective?

A

A new objective effect on the previous performance of the business and the change of work in culture and or business leaders may may also affect the objectives

27
Q

What are the targets for growing business? 5)

A

Increase profit
increase market share
Enter an new market
open your store
increasing workforce

28
Q

What are the targets for a struggling business 4)

A

Achieve break even sales
exit markets
decrease product range
reduce costs

29
Q

What is retrenchment?

A

The business downsize is the scale of operations

30
Q

What are the two things you’re going to look at if you’re in a shrinking market?

A

Retrenchment and efficiency

31
Q

What are the two things you’re gonna look at if you’re in an expanding market?

A

Creating the most profit and growth 

32
Q

What is globalisation?

A

When a business operates internationally

33
Q

What are the shot term impacts on the environment by businesses?

A

Noise and water is pollution and traffic congestion

34
Q

What are the long-term impacts on the environment by businesses?

A

Climate change

Depletion of land resources and food

35
Q

How can businesses reduce impact of environmental issues? (3)

A

Reduce food miles
use biodegradable packaging
use renewable energy

36
Q

What business opportunities can occur from being more environmentally friendly?

A

Businesses can differentiate their products to make them more to customer needs and make them all greener

37
Q

What are the three components of the design mix?

A

Aesthetics – style if it looks good if you could come in multiple colours

Cost – if it varies with the quality of the product and function

Function – how it tastes how it works

38
Q

How can we be ethical with the place?

A

Source locally

39
Q

What are the 6 things that can influence the pricing strategies?

A

Tech- make it cheaper to produce- more competitive

Branding -products with a strong brand and demand with a higher price due to value desirability

Cost – if the profit margin is low it’s gonna affect the kind of person strategy that they go for

Product life cycle

Market segment – it depends what kind if your expensive or not 

CompetitorsHave to consider their position on the pricing-

Business 📈 (17 decks)

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