Topic 2.1 - Growing the Business Flashcards
What is internal growth?
When a business grows by expanding its own activities.
Why is internal growth good?
It is relatively inexpensive.
Is internal growth slow or fast?
Slow
What are 6 methods of internal growth?
- Targeting new markets
- Developing new products
- Expanding your premises
- Innovation / research and development
- Selling overseas
- Increasing product range
How could a firm target new markets?
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.
What are the advantages of organic growth?
- keep company culture
- lower risk
- economies of scale, lowers average cost, increased output
- more influence comes with more market share
What type of business ownership would apply for a growing business?
Public Limited Company
Source of finance for internal growth?
Retained profit
Selling assets
Source of finance for external growth?
Loan capital
Share capital
Source of finance for external growth?
Loan capital
Share capital
Why do business aims and objectives change as businesses evolve?
In response to:
- market conditions
- technology
- performance
- legislation
- internal reasons
How do business aims and objectives change as a business evolves?
- focus on survival or growth
- entering or exiting markets
- growing or reducing the workforce
- increasing or decreasing product range
What are the impacts of globalisation on businesses?
- imports: competition from overseas, buying from overseas
- exports: selling to overseas markets
- changing business locations
- multinationals
What are the barriers to international trade?
- tarrifs
- trade blocs
How do businesses compete internationally?
- The use of the internet and e-commerce
- Changing the marketing mix to compete internationally
How do ethical considerations influence business activity?
Possible trade-offs between ethics and profit.
How do environmental considerations influence business activity?
Possible trade-offs between the environment, sustainability and profit.
What are the three concepts of the design mix?
Function, aesthetics and cost.
What are the phases of the product life cycle?
- Introduction / Research and development
- Growth
- Maturity
- Decline
What might a business apply after a product has passed the maturity phase?
Extension strategies.
What are the influences on pricing strategies?
Technology
Competition
Market segments
Product life cycle
What are some promotion strategies?
Advertising
Sponsorship
Product trails
Special offers
Branding
What are some uses of technology on promotion?
Targeted advertising online
Viral advertising via social media
e-newsletters
What are the methods of distribution?
Retailers and e-tailors (e-commerce)
What is the purpose of business operations?
- to produce goods
- to provide services
What are the production processes?
Job, batch and flow
What are the impacts of technology on production
Balancing cost
Productivity
Quality
Flexibility
What is important in a relationship with suppliers?
Quality
Delivery (cost, speed, reliability)
Availability
Cost
Trust
What are aspects of the sales process?
Product knowledge
Speed and efficiency of service
Customer engagement
Response to customer feedback
Post-sales service
Gross profit
sales revenue - sales cost
Net profit
gross profit - expenses
gross profit margin
gross profit / sales revenue x 100
net profit margin
net profit / sales revenue x 100
Average rate of return
average yearly profit / initial investment x 100
What are the types of organisational structures?
Hierarchical
Flat
What are the two ways that a business can operate?
Centralised and decentralised
What is the importance of motivation in the workplace?
- attracting employees
- retain employees
- productivity
How do businesses motivate employees financially?
Financial methods : remuneration, bonus, commission, promotion, fringe benefits.
How do businesses motivate employees non-financially?
Non-financial methods: job rotation, job enrichment, autonomy.
