2.1 Growing the business

Question 1

2 types of business growth

Answer 1

Organic(Internal)
Inorganic(External)

Question 2

Methods of internal growth

Answer 2

New products(through innovation, R&D)
Entering new markets

Question 3

Advantages of internal growth

Answer 3

Low risk
No interference from new cultures
Economies of scale

Question 4

Disadvantages of external growth

Answer 4

Long return on investment
Grwoth may be limited

Question 5

2 methods of external grwoth

Answer 5

Mergers
Takeovers

Question 6

4 types of Mergers

Answer 6

Horizontal
Forward vertical
Backward vertical
Conglomerate

Question 7

Horizontal mergers

Answer 7

Two competitors merge together

Question 8

Forward vertical mergers

Answer 8

When a business merges with another that operates later in the supply chain

Question 9

Backward vertical mergers

Answer 9

When a business merges with another that operates earlier in the supply chain

Question 10

Conglomerate mergers

Answer 10

When a business merges with another that is in an unrelated market

Question 11

Advantages of external growth

Answer 11

Competition reduced
Market share increases very quickly

Question 12

Disadvantages of external growth

Answer 12

Expensive
Managers may lack experience to handle both

Question 13

PLC stands for

Answer 13

Public Limited Company

Question 14

Advantages of being PLC

Answer 14

Ability to raise share capital
Shareholders have limited liability
Increased negotiation opportunities with suppliers

Question 15

Disadvntages of being PLC

Answer 15

Expensive, minimum of £50,000
Complex finances
Greater risk of hostile takeover

Question 16

Internal sources of finance for large businesses

Answer 16

Retained profits
Selling assets
Owners savings

Question 17

External sources of finance for large businesses

Answer 17

Loan capital
Share capital
Stock market flotation

Question 18

Business aims and objectives change in response to

Answer 18

Market conditions
Technology
Performance
Legislation
Internal reasons

Question 19

Exampels of aims and objectvies changing as the business evolves

Answer 19

Focusing on survival or growth
Entering or exiting markets
Growing or reducing the workforce
Increasing or decreasing product range

Question 20

Globalisation business

Answer 20

Companies operating internationally or on a global scale

Question 21

Imports

Answer 21

Purchasing goods from overseas and bringing them into the country

Question 22

Exports

Answer 22

Selling products to other countries around the world and sending the products there

Question 23

SPICED stands for

Answer 23

Strong
Pound makes
Imports
Cheaper
Exports
Dearer

Question 24

WPIDEC stands for

Answer 24

Weak
Pound makes
Imports
Dearer
Exports
Cheaper`

Question 25

Two acronyms for imports and exports prices

Answer 25

SPICED WPIDEC

Question 26

Globalisation leads to

Answer 26

Imports exports Changes in business location Multinational Companies

Question 27

Advnatges of more locations

Answer 27

Access to more customers More slaes and profit potentially Grwo product range Increased brand awareness

Question 28

Disadvantages of more location

Answer 28

Increased responsibility More risk Potential for failure

Question 29

MNC's stand for

Answer 29

Multinational Companies

Question 30

MNC's are

Answer 30

companies that operate in a number of countries around the world

Question 31

2 Barriers to international trade

Answer 31

Tariffs Trading Blocs

Question 32

Tariffs

Answer 32

A tax on imported products

Question 33

Trading Blocs

Answer 33

A group of countries that work together to make exports and imports between them cheaper

Question 34

2 ways businesses compete internationally

Answer 34

The use of the internet and e-commerce Changing the marketing mix

Question 35

How do ethical considerations influence business

Answer 35

Treating workers ethically Treating suppliers ethically Treating customers ethically Btter reputation Trade-offs between ethics and profits

Question 36

Environmental considerations for business

Answer 36

Climate change Pollution Sustainability Waste reduction

Question 37

Advantages of being environmentally freindly

Answer 37

Subsidies and grants Lower fuel costs Increased sales

Question 38

Disadvantages of beign environmentally friendly

Answer 38

Increased costs Time consuming Inaccurate claims Trade-offs between profits, environment and sustainability

Question 39

Pressure groups may impact the

Answer 39

marketing mix