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Introductory European and International Business for University > Week 2 - Business Growth > Flashcards

Week 2 - Business Growth Flashcards

1
Q

What are some sources of finance for businesses?

A
  • Venture capital
  • Bank loans
  • Personal savings
  • Mortgages
  • retained profit
  • Share capital
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2
Q

What are some reasons for business growth?

A
  • Market dominance
  • Brand recognition
  • Efficiency via economies of scale
  • Exploit sources of finance
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3
Q

What does Ansoff’s Matrix show about the risk of products?

A
  • There is an increasing risk from the movement of existing products to new products
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4
Q

What does Ansoff’s Matrix show about the risk of markets?

A
  • There is an increasing risk from the movement of existing markets to new markets
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5
Q

Where is market penetration on Ansoff’s Matrix?

A
  • Existing markets + Existing products
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6
Q

Where is market development on Ansoff’s Matrix

A
  • New markets + Existing products
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7
Q

Where is product development on Ansoff’s Matrix

A
  • Existing market + New product
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8
Q

Where is diversification on Ansoff’s Matrix

A
  • New market + New product
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9
Q

What are the characteristics of market penetration?

A
  • Existing markets + Existing products
  • Common objective includes increasing revenue and ‘milking’
  • Products positioned here have high market share
  • Also known as cash cows
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10
Q

What are the characteristics of market development?

A
  • New market + Existing product
  • Product remains the same but is target to a new audience
  • Includes exporting to new countries or new geographic areas
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11
Q

What are the characteristics of product development?

A
  • New product + Existing market
  • Businesses look to be creative and innovative
  • Produce new products to existing target audience
  • Involves investment into R&D
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12
Q

What are the characteristics of diversification?

A
  • New product + New market
  • Related and unrelated diversification
  • Related: Where businesses are in a market they’re familiar with
  • Unrelated: Where businesses enter a market with no previous experience
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13
Q

What are the 5 stages of the product life cycle?

A
  • Development
  • introduction
  • Growth
  • Maturity
  • Decline
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14
Q

What are the two components of the Boston Matrix Grid?

A
  • Relative market share
  • Market growth
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15
Q

What does the Boston matrix imply about products with high market growth and high relative market share?

A
  • Position of leadership in market
  • Product is strong and market is growing
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16
Q

What does the Boston matrix imply about products with low relative market share and high market growth?

A
  • Cashflow is usually negative
  • known as problem child products
17
Q

What does the Boston matrix imply about products with low market growth and high relative market share?

A
  • Successful product but at mature stage of life cycle
  • Looking to ‘milk’ market for cash
18
Q

What does the Boston matrix imply about products with low market growth and low relative market share?

A
  • Products that have now failed
  • Products in decline phase of life cycle
19
Q

What is Retrenchment?

A
  • When a business decides to significantly cut or scale-back it operations
  • Often response to real world events like COVID or recession
20
Q

What are some causes of Retrenchment?

A
  • New leadership
  • Excessively high costs
  • Low profitability
  • Economic downturn
  • Strategic direction
21
Q

What is a merger?

A
  • The mutual decision of two companies to combine and become one entity
22
Q

What is an acquisition?

A
  • When one company purchases another with the permission of the other
23
Q

What is a takeover?

A
  • When one company purchases another without the permission of the other
24
Q

What is a joint venture?

A
  • When two separate entities form a business and share its profits, loss and control
25
Q

What is forward vertical integration?

A
  • When a firm merges with another in the same industry at the next stage of production
26
Q

What is horizontal integration?

A
  • When a firm merges with another in the same industry and at the same stage of production
27
Q

What is backward vertical integration?

A
  • When a firm merges with another in the same industry at the previous stage of production
28
Q

What are the pros of horizontal integration?

A
  • Larger market share
  • Large customer base
29
Q

What are the cons of horizontal integration?

A
  • Threatens competition
  • Reduces flexibility
30
Q

What are the pros of vertical integration?

A
  • More control of supply chain by becoming a conglomerate
  • Reduction of input costs
31
Q

What are the cons of vertical integration?

A
  • Increases managerial complexity
  • Hard to achieve consistencies

Introductory European and International Business for University (6 decks)

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