Topic 1: business growth and decline

Question 1

what is the business life cycle

Answer 1

it shows the phases that every business will go through during it’s life

Question 2

name the phases in the business life cycle(4)

Answer 2

establishment
growth
maturity
postmaturity

Question 3

what happens in the establishment phase

Answer 3

when the business enters the market

Question 4

what are some key considerations during the establishment phase(4)

Answer 4

location
products
staff
legal structure

Question 5

what are sales like during the establishment phase(2)

Answer 5

low

little customer base

Question 6

what are costs do you need to consider during the establishment phase.(4)

Answer 6

acquire premises
equipment
stock and raw material
high costs

Question 7

what are profits like in the establishment phase(2)

Answer 7

low

perhaps negative

Question 8

what goals should be considered during the establishment phase

Answer 8

to survive

breakeven

Question 9

what happens during the growth phase

Answer 9

it’s when the business increases in sales

Question 10

key considerations/decisions that a business should keep in mind during the growth period (5)

Answer 10

developing budgets
liquidity
marketing
structure
staffing

Question 11

what are sales like during the growth period(1)

Answer 11

rapidly increasing

Question 12

what are cost like during the growth period(1)

Answer 12

decreasing - bulk purchasing

Question 13

what are profits like during the growth period(1)

Answer 13

increasing

Question 14

what goals should a business consider during the growth period(1)

Answer 14

longer term planning

Question 15

how can growth occur(3)

Answer 15

expanding
merging
acquisition

Question 16

how do mergers occur

Answer 16

when the owners of two separate businesses decide to combine their resources to form a new organisation

Question 17

how do acquisitions occur

Answer 17

acquisitions happen when one business takes control of another(takeover) by purchasing the majority share

Question 18

name types of integration(5)

Answer 18

vertical integration:
backward vertical integration
forward vertical integration

Horizontal integration
Diversification

Question 19

what is vertical integration

Answer 19

it is when a business expands at different but related levels in the production process. There are two types of vertical integration forward and backward.

Question 20

what is backward vertical integration

Answer 20

it is when the business goes backwards in the chain of production. E.g a business buying there supplier.

Question 21

what is forward vertical integration

Answer 21

it is when a business integrates with a firm it sells to

Question 22

what is horizontal integration

Answer 22

it is when a business acquires or merges with another firm that makes/sells similar goods

Question 23

what is diversification

Answer 23

it is when a business acquires or merges with an unrelated industry

Question 24

what happens during the maturity phase

Answer 24

the business’s growth and market share begin to slow

Question 25

issues faced in maturity phase

Answer 25

other firms try to emulate/copy.

Question 26

what is post maturity

Answer 26

it is a decision the business takes that decides what they want to do after maturity, from this they can pick from 4 options

Question 27

what are the 4 options in post maturity

Answer 27

renewal decline steady state cessation

Question 28

what happens in renewal

Answer 28

the business re-invents itself and will experiences a 2nd growth phase

Question 29

how does a business go through renewal

Answer 29

through offering new products or makeover there existing business image

Question 30

what happens in steady state

Answer 30

the business maintains it's market share, and try to avoid decline but do not seek renewal or re-invent the bussiness

Question 31

what do you need to be weary about if you go into steady state

Answer 31

the business must maintain it's market share and must be wary of competition.

Question 32

what happens during decline

Answer 32

the business has been unsuccessful in addressing the various challenges.

Question 33

how can a business go through decline

Answer 33

through the loss of it's competitive edge

Question 34

what is ceassation

Answer 34

the closure of a business

Question 35

why would someone go through ceasation

Answer 35

they would go through it because of many factors, they could be forced due to many factors, or the owner may go through voluntary cessation

Question 36

reasons for forced cessation(2)

Answer 36

financial difficulties | bankruptcy

Question 37

reasons for voluntary cessation(3)

Answer 37

loss of enthusiasm retire another party would like to buy the business

Question 38

how can a business lose there competitive edge (3)

Answer 38

failure to meet customer needs lack of demand failure to plan

Question 39

list 3 businesses that failed to adapt

Answer 39

Nokia dick smith quicksilver