Chapter 3-

Revenue

The total value of sales made during the trading period = selling price x quantity sold

Capital Employed

The total value of all long-term finance invested in the business

Market Capitalization

The total value of a company’s issued shares

Market Share

Sales of the business asa proportion of total market sales

Organic Growth

Expansion of a business by means of opening new branches, shops of factories (also known as internal growth)

External Growth

Business expansion achieved by integrating with another business by either merger or takeover

Merger

An agreement by owners and managers of two businesses to bring them together in a new combines business. This is often referred to as a friendly merger

Takeover

When a company buys more than 50% of the shares of another company and becomes its controlling owner. It can be called an acquisition.

Horizontal Integration

Integration with a business in the same industry and at the same stage of production

Vertical Integration

Integration with a business in the same industry

Forward Vertical Integration

Vertical integration with a customer business

Backward Vertical Integration

Vertical integration with a supplier business

Comglomerate Integration

Integration with a business in a different industry

Synergy

Literally means that “the whole is greater than the sum o parts” - it is often assumes that the new business will b more successful than the original separate businesses

Strategic Alliance

Agreement between two organizations to commit resources to achieving a specific objective while remaining independent