EDEXCEL BUSINESS-T2-Business Growth

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why would a small business want to expand?

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22 Terms

1

why would a small business want to expand?

to make more profit, get a bigger customer base, go international

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2

what is organic growth?

the business has grown from within

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3

what are examples of organic growth?

innovation, technology, expanding overseas

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4

what are disadvantages for organic growth?

very high-risk, growth may be slower and limited, long period between investment and return on investment

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5

what is an advantage for organic growth?

retain their own company culture, cheaper than a merger, business can benefit from lower average costs

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6

what is inorganic growth?

when a business has grown by a merger or a takeover

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7

what is a merger?

when 2 business come together to become a new one

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8

what is a takeover?

when one business takes control over another business

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9

what is a disadvantage of mergers?

businesses have different cultures so they may not work as well together, communication problems, unreliable merger partners

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10

what is an advantage of mergers?

better deals because of increased order sizes, increased revenue and market shares, companies can just buy the products they need

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11

what are the 2 things a takeover can be?

friendly or hostile

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12

what is a disadvantage of takeovers?

very expensive, additional legal costs, outside investment, leasing to loss of control for the owners

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13

what is an advantage of takeovers?

buying a competitor eliminates the threat of that competitor, increases market share, less expensive to buy than to open a new site

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14

what is a public limited company?

a company listed on the stock exchange meaning anyone can buy shares into the business

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15

what is a disadvantage of public limited companies?

expensive to produce accounts every year, have to publish annual accounts meaning everyone can see their financial information, expensive process to become a PLC

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16

what is an advantage of public limited companies?

easy to grow and expand, easy to raise capital, banks are willing to lend money to a well-established company

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17

what are the 2 types of finance for growth?

internal and external

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18

what is internal finance?

the business finds the money

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19

what is external finance?

the business borrows the money

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20

what are examples of internal finance?

retained profit, sales of assets

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21

what are examples of external finance?

loans, share capital

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22

what is floating on the stock market?

when a business decides it needs more money to expand

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