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Flashcards in 2.1 Deck (27)
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1

What is internal growth also known as ?

Organic growth

2

What is external growth also known as ?

Inorganic growth

3

What are the benefits to internal growth?

- less risk
- can be financed through internal funds
- business grows at sensible rate

4

What are the negatives to internal growth?

- hard to build market share if business is already a leader
- slow growth

5

Give examples of internal growth?

- opening new outlets
- overseas expansion
- new products

6

Give examples of external growth?

- merger
- takeover

7

What are factors that effect a business’ method of growth?

- business size
- nature of product
- financial position

8

What is the benefit to opening new outlets?

- access to wider markets
- increases brand awareness

9

What are the benefits to external growth?

- reduced competition
- more knowledge + skills
- cost saving

10

What are the disadvantages to external growth?

- staff redundancies
- resentment

11

Why do business objectives change?

- technology
- legislation
- business performance

12

What is globalisation?

The process by which the world is becoming increasingly interconnected

13

What are imports?

Good or services bought from overseas

14

What are examples of imports?

- goods we don’t grow/make
- goods that require low skilled labour
- goods that require high skilled labour

15

What are exports?

UK produced goods or services bought by an overseas customer

16

Why might a business change location?

- to reduce tariffs
- to reduce costs
- to gain more skills

17

What are tariffs?

Taxes charged on imports

18

What are the effects of tariffs?

- protects home producers
- encourages local products sales

19

What are trade blocs?

Groups of countries which have agreed to have free trade within external tariff walls

20

What are the benefits to globalisation?

- increased markets
- access to cheaper labour + raw material
- more efficiency

21

What are negatives of globalisation?

- whole industry closures
- power of multinational brands

22

What is a multinational company?

A business with operations on more than 1 country

23

Why would a business want to be a multinational company?

- operate closer to target international markets
- gain access to lower production costs

24

What are quotas?

A limit to the volume of imports allowed into a country in a given time period

25

What are the Effects of barriers to trade ?

- protect jobs
- increase demand for UK goods

26

What are the effects of trade blocs?

- greater trade
- economies of scale
- market efficiency

27

Describe “Economies of scale”

As output increases, cost per unit decreases