UB4 : Methods of Growth

Question 1

See flash cards for Methods of Growth

Question 2

Merger

Answer 2

When two companies decide to join together

Question 3

Takeover

Answer 3

When one business (usually a larger business) buys another (usually smaller) business.​
Often occurs because smaller business is struggling financially​.

Question 4

Acquisition

Answer 4

An acquisition is when one company buys the
assets or operations of another company.

Question 5

Franchising

Answer 5

Where a business leases its idea to franchisees. This allows new branches to open across the country and internationally. A franchise is a joint venture between:
- a franchisee, who buys the right from a franchisor to
copy a business format
- a franchisor, who sells the right to use a business
idea in a particular location

Question 6

Becoming a Multinational

Answer 6

A business will expand its operations to operate in more than one country. This will allow the company to access new markets which can lead to an increase in sales and market share.

Question 7

Product Development

Answer 7

Developing new products allows a company to target new markets and expand their product range.

Question 8

Advertising

Answer 8

Can be used to increase awareness of a company’s products allowing them to grow organically or used to inform customers of new products.

Question 9

Increased Staffing

Answer 9

The productivity of a business will grow and there may be increased levels of customer satisfaction.

Question 10

Retained Profit

Answer 10

Any profits made by the business that aren’t given to shareholders, they are kept in the business to fund growth/expansion such as developing new products.​

Question 11

Divestment

Answer 11

When a company sells its business assets or subsidiary companies to raise funds.

Question 12

Deintegration

Answer 12

When a business sells off part of the supply chain that it owns. eg a company may decide to sell the delivery company they had previously bought to aid with product delivery. This will allow them to focus on the core activities of the business.

Question 13

Asset Stripping

Answer 13

Asset stripping is taking over another company with the intent to sell off its assets for a profit.

Question 14

Demerger

Answer 14

Occurs when a single business splits into two or more separate components and managed independently.

Question 15

Buy-in

Answer 15

This is when managers who are not employed by the company purchase the business as they believe they can run it more profitably.

Question 16

Buy-out

Answer 16

This is when managers or employees who are currently employed by the business purchase the business from the owners.

Question 17

Outsourcing

Answer 17

Outsourcing is when a company hires another business to do some work for them.