Growth

Question 1

why do business want to grow?

Answer 1

• AVOID BEING A TAKEOVER TARGET
• RECUCE THE RISK OF FAILURE
• BECOME THE MARKET LEADER AND DOMINATE THE MARKET
• INCREASE SALES AND PROFITS
• GAIN A BETTER REPUTATION IN THE MARKET PLACE
• REMOVE COMPETITOR
• ABLE TO BENEFIT FROM THE ECONOMIES OF SCALE

Question 2

what is internal method of growth?

Answer 2

growth from within the business without getting involved in another company

Question 3

what are the internal methods of growth?

Answer 3

• LAUNCHING NEW PRODUCTS
• EXPANDING INTO NEW GEOGRAPHICAL MARKETS
• SELLING TO OUTLETS - allowing other stores to sell your product
• HIRING NEW STAFF - new ideas

Question 4

what is external methods of growth?

Answer 4

growth from outside the business either by merger or takeover.

Question 5

what are the external methods of growth?

Answer 5

1. TAKEOVER OF COMPETITOR
2. MERGER WITH COMPETITOR
3. ACQUIRING A SUPPLIER OR MAJOR CUSTOMER IN THE SUPPLY CHAIN
4. JOINT PROJECT OVERSEA

Question 6

what are less common internal methods of growth are there?

Answer 6

DIVERSIFYING - launching new products into new markets.
OPEN NEW BRANCHES - more locations operating.
INTRODUCING E COMMERCE - allows the business to be shopped 24/7 by a global market.

Question 7

in what 5 days can external growth occur?

Answer 7

1. HORIZONTAL INTEGRATION
2. FORWARD VERTICAL INTEGRATION
3. BACKWARDS VERTICAL INTEGRATION
4. LATERAL INTEGRATION
5. CONGLOMERATE INTEGRATION

Question 8

what is the order of the supply chain?

Answer 8

primary - secondary - tertiary - quaternary

raw materials - manufacturing - distribution - retail

Question 9

what is horizontal integration?

Answer 9

this is a method of growth occurs when 2 business from the same sector of industry become 1 business by takeover or merger.

Question 10

what is the advantages of horizontal integration?

Answer 10

1. THE NEW BUSINESS CAN DOMINATE THE MARKET AS COMPETITION IS REDUCED.
2. THE NEW BUSINESS CAN BENEFIT FROM ECONOMIES OF SCALE AS IT IS LARGER.
3. DUE RO REDUCED COMPETITION, THE NEW BUSINESS CAN RAISE PRICES = more profit

Question 11

what are the disadvantages of horizontal integration?

Answer 11

1. QUALITY MAY SUFFER DUE TO LACK OF COMPETITION AS BUSINESS FEEL THUE CAN NOW ‘CUT CORNERS’
2. CUSTOMERS MAY HAVE TO OAY HIGHER PRICES FOR THE SAME GOODS.
3. THIS IS MAY BREACH EU COMPETITION RULES

Question 12

what is forward vertical integration?

Answer 12

vertical integration involves a takeover or merger of business from different sectors of industry but are usually related to one another.
forward vertical integration is when a business takes over or mergers with the business in the next sector of industry.

Question 13

what are the advantages of forward vertical integration?

Answer 13

1. BUSINESS CAN CONTROL HOW THE FINISHED PRODUCT IS SOLD. i.e. prices
2. CAN INCREASE PROFITS BY CUTTING OUT THE ‘MIDDLEMAN’ AS WITHOUT THE INTEGRATION THE MANUFACTURER WILL USUALLY INCREASE THE RPICE BEFORE SELLING TO THE SHOP

Question 14

what are the disadvantages are of forward vertical integration?

Answer 14

1. COMPANY MAY NOT MANAGE THE NEW BUSINESS ACTIVITIES EFFECTIVELY.
2. WITH YHE FOCUS BEING ON THE NEW ACTIVITIES THIS CAN HAVE A NEGATIVE IMPACT ON CORE ACTIVITIES.

Question 15

what is backward vertical integration?

Answer 15

this is when a business takes over or mergers with a business in an earlier sector of industry. in other words, they take over their supplier.

Question 16

what are the backward vertical integration advantages?

Answer 16

1. GUARANTEED STOCK WILL BE AVAILABLE ON TIME.
2. NO NEED TO PAY SUPPLIERS MARKED UP PRICES.
3. QUALITY OF SUPPLIES CAN BE CLOSELY MONITORED.

Question 17

what are the backward vertical integration disadvantages?

Answer 17

1. IF THE NEW ACTIVITIES ARE NOT MANAGED EFFECTIVELY THIS CAN PEAD TO HIGHER COSTS.
2. MAY BE DUPLICATION OF STAFF WHICH CAN LEAD TO REDUNDANCIES.

Question 18

what is lateral integration?

Answer 18

this is when a business takes over and mergers with a business that is in the same sector of industry but does not provide the exact same product. the 2 businesses are not in direct competition with one another.

Question 19

what are the advantages of lateral integration?

Answer 19

1. THE BUSINESS CAN TARGET NEW MARKETS AND INCREASE THEIR SALES.
2. NEW PRODUCTS CAN COMPLEMENT EXISTING ONES.

Question 20

what are the disadvantages of lateral integration?

Answer 20

1. THE LACK OF KNOWLEDGE OF A NEW MARKET AND NEW PRODUCTS MAY AFFECT PERFORMANCE.

Question 21

what is conglomerate integration?

Answer 21

this is when business in completely different markets join. their products are unrelated.

Question 22

what are the advantages of conglomerate integration?

Answer 22

1. SPREAD THE RISK - if one product fails then they still have others to generate profit.
2. IF PRODUCTS ARE SEASONAL, OTHER PRODUCTS CAN BALANCE THIS OUT SO THERE ARE CONSISTENT SALES.

Question 23

what are the disadvantages of conglomerate integration?

Answer 23

1. LACK OF KNOWLEDGE ON NEW MARKET AND PRODUCTS MAY NEGATIVELY EFFECT THE BUSINESS.
2. THE BUSINESS MAY BECOME TOO LARGE TO MANAGE EFFCIENTLY.

Question 24

fill in the blanks

internal methods of growth have … risk whereas external methods of growth have … risk?

Answer 24

internal methods of growth have lower (+) ricks whereas external methods of growth have higher (-) risks.

Question 25

# fill in the blanks internal methods of growth cause ... growth whereas external methods of growth cause ... growth?

Answer 25

internal methods of growth have slower (-) growth whereas external methods of growth have higher (+) growth.

Question 26

# fill in the blanks... internal methods of growth are usually a ... option whereas external methods of growth are usually a ... option?

Answer 26

internal methods of growth are usually a more expensive option whereas external methods of growth are usually a more expensive option.

Question 27

# fill in the blanks... internal methods of growth builds on ... whereas methods of growth can ...?

Answer 27

internal methods of growth builds on existing activities (+) whereas external methods of growth can transform a business - adopting new methods and systems.

Question 28

what are the other two positive effects of internal growth?

Answer 28

- GOOD IN HIGH MARKET GROWTH (+) | - REWARDS INNOVATION AND BRAND BUILDING (+)

Question 29

what are the other two positive effects of external growth?

Answer 29

- POPULAR IN MATURE OF DECLINING MARKETS | - CAN ACQUIRE MISSING TECHNOLOGY ADN BRANDS (+)

Question 30

what is a takeover?

Answer 30

a takeover is a way of achieving growth and is also known as acquisition involve larger business buying a small business. often comes as a result of the smaller business struggling financially.

Question 31

what is the outcome of achieving growth?

Answer 31

the smaller business will take on the name of the larger business or sometimes the bigger business just wants to add another product to their portfolio.

Question 32

what are the advantages of a takeover?

Answer 32

1. BUYING BUSINESS GAINS MARKET SHARES AND CUSTOMERS OF THE SMALLER BUSINESS. 2. RISK OF FAILURE IS SOREAD AS THERE IS A LARGER PORTFOLIO. . 3. COMPETITION IS DECREASED

Question 33

what are the disadvantages of takeovers?

Answer 33

1. CAN LEAD TO DUPLICATION ON JOBS WHICH CAN REULT IN REDUNDANCIES. 2. AS COMPETITION IS REDUCED THIS MEANS HIGHER PRICES CAN BE CHARGED 3. CAN LOSE LOYAL CUSTOMERS IF THEY ARE NOT KEEN ON THE BUYING IN BUSINESS.

Question 34

what are mergers?

Answer 34

a method of growth which involves 2 businesses agreeing to join forces and become 1 organisation. this is often friendlier than a takeover and can result in a new name and logo for the new merger company.

Question 35

what are advantages of mergers?

Answer 35

1. MARKET SHARE AND RESORUCES ARE SHARED. 2. ECONOMIES OF SCLAE CAN NOW BE ACHIEVED AS A BIGGER BUSINESS. 3. EACH BUSINES CAN BRING ITS OWN EXPERTISE.

Question 36

what are disadvantages of mergers?

Answer 36

1. CUSTOMER MAY NOT LIKE THE UNFAMILAR LOGO 2. MARKETING CAMPAIGN USED TO INFOMR CUSTOMERS ABOUT MERGER CAN BE EXPENSIVE 3. HIGHER PRICES CAN BE CHARGED AS COMPETITION IS LESS.

Question 37

takeovers and mergers can both be used with what?

Answer 37

any of the 5 methods of growth e.g. lateral, forward

Question 38

what other way can businesses grow?

Answer 38

- TAKEOVER - MERGER - FRANCHISING - BECOMING A MULTINATIONAL COMPANY - INTERNAL GROWTH

Question 39

what are the ways business can fund growth?

Answer 39

- RETAINED PROFIT - DIVESTMENT - DEINTEGRATION - ASSET STRIPPING - DEMERGER - BUT OUT - BUY IN - OUTSOURCING

Question 40

retained profits helps a business grow as?

Answer 40

it is when some of the profits made by the business are not given to shareholders but instead, they are 'saved' by the business in order to fund the project just as growth.

Question 41

divestment helps a business grow as?

Answer 41

when a business sells part if the business. this allows them to gain s sum of money while focusing on more profitable brands.

Question 42

deintegration helps a business grow as?

Answer 42

when a business sells part of the supply chain it owns.

Question 43

asset striping helps a business grow as?

Answer 43

when a business buys over another business with the sole purpose of selling off assets that are more valuable than the business itself.

Question 44

demerger helps a business grow as?

Answer 44

when 1 business splits itself into separate components. all components are still owned by the same organisation but they're managed independently.

Question 45

buy out helps a business grow as?

Answer 45

when the management of the business buys the company they work for. the management team will feel that they have new ideas and industry knowledge to improve the business.

Question 46

buy in helps a business grow as?

Answer 46

when the management of another company (usually a competitor) takes over the business. the management team will fell that they have ideas and knowledge to improve the business.

Question 47

outsourcing helps a business grow as?

Answer 47

when an organisation employs an outside business to carry put certain activities e.g. marketing. this outside business will usually be a specialist. can allow on core activities.