Studied by 11 people
What’s internal finance?
internal - the business finds the money itself
—> this could be through selling personal assets, retained profit or personal savings
What’s external finance?
business may ask for a loan to expand business (Overdraft)
ways to raise money could also be through
dividends
share capital
trade credit
What’s ‘organic/internal growth’?
Expanding the business by its own operations
This could be by:
→ Opening new stores - allows to be closer to customers in another location
→ New product development - expand customer base
disadvantages
→ Long period between investment & return of investment
→ growth is limited & dependent on reliability of sales forecast
What’s inorganic/external growth?
a business trying to grow itself quickly
→ it’ll decide to merge or takeover another business
merge - two businesses join to form one
takeover - takeover by buying 50% + of shares
advantages
→ reduces competition and speeds growth
disadvantages
—> clashes of work cultures
What’s retained profit?
profits earned from the business
advantages
→ no need to pay back interest
disadvantage
→ you’re using your own profits lol
What’s globalization? (in business)
people, businesses & governments around the world becoming more interconnected
→ this means reduced costs but more competition
What is ethics in business?
Understanding of morals of right & wrong
→ eg. Paying workers fair wage, not polluting the environment
what are the benefits to behaving ethically in business?
→ easier to recruit staff due to good reputation
→ increased employee motivation
→ higher revenue - customers making purchases due to their morals
What are the drawbacks to behaving ethically?
→ higher costs
→ Possibility of building up false expectations amongst consumers
→ Bad publicity if business is found to be behaving unethically
What are fairtrade products?
Ethically sourced materials for a fair price
What are pressure groups?
organizations set up to try influence what consumers think about the business & its impact on the environment
Eg. protesting
Note
Flashcard