Topic 2.1 - Growing the Business Flashcards

1
Q

What is internal growth?

A

When a business grows by expanding its own activities.

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2
Q

Why is internal growth good?

A

It is relatively inexpensive.

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3
Q

Is internal growth slow or fast?

A

Slow

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4
Q

What are 6 methods of internal growth?

A
  • Targeting new markets
  • Developing new products
  • Expanding your premises
  • Innovation / research and development
  • Selling overseas
  • Increasing product range
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5
Q

How could a firm target new markets?

A

Use e-commerce so that people can buy products even if they don’t live near a store.
Set up branches in other countries.
Change the marketing mix.

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6
Q

What are the advantages of organic growth?

A
  • keep company culture
  • lower risk
  • economies of scale, lowers average cost, increased output
  • more influence comes with more market share
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7
Q

What type of business ownership would apply for a growing business?

A

Public Limited Company

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8
Q

Source of finance for internal growth?

A

Retained profit
Selling assets

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9
Q

Source of finance for external growth?

A

Loan capital
Share capital

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10
Q

Source of finance for external growth?

A

Loan capital
Share capital

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11
Q

Why do business aims and objectives change as businesses evolve?

A

In response to:
- market conditions
- technology
- performance
- legislation
- internal reasons

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12
Q

How do business aims and objectives change as a business evolves?

A
  • focus on survival or growth
  • entering or exiting markets
  • growing or reducing the workforce
  • increasing or decreasing product range
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13
Q

What are the impacts of globalisation on businesses?

A
  • imports: competition from overseas, buying from overseas
  • exports: selling to overseas markets
  • changing business locations
  • multinationals
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14
Q

What are the barriers to international trade?

A
  • tarrifs
  • trade blocs
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15
Q

How do businesses compete internationally?

A
  • The use of the internet and e-commerce
  • Changing the marketing mix to compete internationally
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16
Q

How do ethical considerations influence business activity?

A

Possible trade-offs between ethics and profit.

17
Q

How do environmental considerations influence business activity?

A

Possible trade-offs between the environment, sustainability and profit.

18
Q

What are the three concepts of the design mix?

A

Function, aesthetics and cost.

19
Q

What are the phases of the product life cycle?

A
  1. Introduction / Research and development
  2. Growth
  3. Maturity
  4. Decline
20
Q

What might a business apply after a product has passed the maturity phase?

A

Extension strategies.

21
Q

What are the influences on pricing strategies?

A

Technology
Competition
Market segments
Product life cycle

22
Q

What are some promotion strategies?

A

Advertising
Sponsorship
Product trails
Special offers
Branding

23
Q

What are some uses of technology on promotion?

A

Targeted advertising online
Viral advertising via social media
e-newsletters

24
Q

What are the methods of distribution?

A

Retailers and e-tailors (e-commerce)

25
Q

What is the purpose of business operations?

A
  • to produce goods
  • to provide services
26
Q

What are the production processes?

A

Job, batch and flow

27
Q

What are the impacts of technology on production

A

Balancing cost
Productivity
Quality
Flexibility

28
Q

What is important in a relationship with suppliers?

A

Quality
Delivery (cost, speed, reliability)
Availability
Cost
Trust

29
Q

What are aspects of the sales process?

A

Product knowledge
Speed and efficiency of service
Customer engagement
Response to customer feedback
Post-sales service

30
Q

Gross profit

A

sales revenue - sales cost

31
Q

Net profit

A

gross profit - expenses

32
Q

gross profit margin

A

gross profit / sales revenue x 100

33
Q

net profit margin

A

net profit / sales revenue x 100

34
Q

Average rate of return

A

average yearly profit / initial investment x 100

35
Q

What are the types of organisational structures?

A

Hierarchical
Flat

36
Q

What are the two ways that a business can operate?

A

Centralised and decentralised

37
Q

What is the importance of motivation in the workplace?

A
  • attracting employees
  • retain employees
  • productivity
38
Q

How do businesses motivate employees financially?

A

Financial methods : remuneration, bonus, commission, promotion, fringe benefits.

39
Q

How do businesses motivate employees non-financially?

A

Non-financial methods: job rotation, job enrichment, autonomy.