2.1-growing The Business

Question 1

What are the two ways business growth can be achieved

Answer 1

-internal growth
-external growth

Question 2

What is internal (organic)growth

Answer 2

When the business expands by itself,by bringing out new products or entering new markets

Question 3

What is external(inorganic)growth

Answer 3

When a business expands joining with another business

Question 4

What are examples of internal growth and how can it be done

Answer 4

INTRODUCING NEW PRODUCTS
-research and development
-innovation

ENTERING NEW MARKETS
-opening shop/factory in different county
-e-commerce

Question 5

What are sone examples of external growth

Answer 5

-mergers
-takeover/acquisitions

Question 6

What is a multinational

Answer 6

A business with operations in more than one country

Question 7

What is the advantages of a multinational

Answer 7

-wider target market
-can spread risk between operations in different countries
-can take advantage of cheap labour

Question 8

What is the disadvantages of a multinational

Answer 8

-cultural and language differences
-exchange rate fluctuations
-damage to reputation if found to be unethical

Question 9

What is a stock market flotation

Answer 9

The process of changing a businesses ownership from private limited company to public limited company

Question 10

What is a Private limited company(Ltd)

Answer 10

Shares can only be sold to friends,family and investors who are invited

Question 11

What is a Public limited company(PLC)

Answer 11

Shares can be sold to the public through stock exchange

Question 12

What is the advantage of being a PLC

Answer 12

-the business has the ability to raise additional finance through share capital
-the shareholders have limited liability-

Question 13

What is the disadvantages of being a PLC

Answer 13

-Risk of hostile takeovers
-more complex accounting

Question 14

What is the two main internal sources of finance

Answer 14

-retained profit
-selling assets

Question 15

What are the two main external sources of finance

Answer 15

-loan capital
-share capital

Question 16

What is the advantage and disadvantage to retained profit

Answer 16

-ADV no need to repay it

-DIS may not be enough for expansion

Question 17

What is the advantage and disadvantage to selling assets

Answer 17

ADV - If they are no longer needed it is worth selling them

DIS- may not be any buyer or it may take a long time to sell

Question 18

What is the advantages and disadvantages of loan capital

Answer 18

ADV- the business can access big amounts of money

DIS- has to be paid back with interest

Question 19

What are the advantages and disadvantages of a share capital

Answer 19

ADV- can raise big amounts

DIS- loss of control and shareholders get dividends

Question 20

How do business aims and objectives evolve

Answer 20

-at first a business is likely to focus on short term survival
-over time it will change to profit and growth

Question 21

How do business aims and objective evolve if competition increases

Answer 21

-if competition increases or economic conditions are poor a business may focus on survival by finding cheaper suppliers or reducing its workforce

Question 22

What is retrenchment

Answer 22

When a business downsizes by reducing the number of employees or closing less profitable branches

Question 23

What are internal reasons business change aims and objectives

Answer 23

-new leaders
-change in business culture
-previous performance in profit
-cash flow or market share

Question 24

What are external reasons businesses change aims and objectives

Answer 24

-competition,market conditions, technology, legislation

Question 25

What are targets for a growing business

Answer 25

Targets that focus on growth eg -expand product range -enter new market -increase sales -open new stores

Question 26

What are targets for a struggling business

Answer 26

Targets that focus on survival eg -decrease product range -exit markets -achieve enough sales to break even -reduce costs

Question 27

What is globalisation

Answer 27

A process by which more and more businesses operate on an international scale and gain a lot of power

Question 28

What ways does globalisation affect a business

Answer 28

-imports -exports -business location

Question 29

What are the benefits of globalisation

Answer 29

-increased markets -access to cheaper labour and raw materials -international specialisation -increased levels of efficiency

Question 30

What are drawbacks of globalisation

Answer 30

-international competitors with cheaper costs -power of multinational brands -while industry closures -effects of events in other countries

Question 31

What are trade barriers and free trade

Answer 31

Trade barriers-measure which restricts free trade Free trade-no barriers to trade between countries

Question 32

How do businesses compete internationally

Answer 32

Using the internet - e-commerce Changing the marketing mix

Question 33

What is business ethics

Answer 33

What is considered morally correct in business situations

Question 34

What do ethical behaviours in business include

Answer 34

-Treating workers fairly -treating suppliers fairly -treating consumers fairly

Question 35

What is the trade off between ethics and profit

Answer 35

Acting ethically can raise costs therefore reducing profit margins However some businesses raise sales by using there ethical policies as a marketing tool

Question 36

What are the possible advantages of ethical behaviour

Answer 36

-add value -sources of product differentiation -gives USP -improved reputation and consumer loyalty -motivated workers

Question 37

What are the possible disadvantages of ethical behaviour

Answer 37

-higher costs therefore decreases profits -consumers not willing to pay for higher priced products -cannot compete on price

Question 38

What is a green audit and why do businesses carry it out

Answer 38

A green audit is a detailed review of a businesses impact on the environment -large businesses usually carry it out to set environmental targets

Question 39

How does reducing a business’s impact on the environment effect the business

Answer 39

Costs may increase decreasing their profits

Question 40

How do business reduce environmental problems

Answer 40

-recycling -renewable energy -replenishing and conserving natural resources

Question 41

What opportunity does businesses becoming more environmentally aware create

Answer 41

Creates opportunities to meet customers needs and make them greener

Question 42

What is a pressure group

Answer 42

A pressure group is a group of people who join together with the aim of influencing the public opinion or governments or business for a particular case

Question 43

What methods do pressure groups use

Answer 43

-boycott -protest -social media campaign -protests -viral marketing -lobbying (trying to imfluenve government)