BUSINESS EDEXCEL GCSE - BUSINESS GROWTH

These points are only in general. Dont be afraid to expand on them as you work through and come up with your own points, as every pro and con is unique to the business

pros fro being a public limited company (plc)

can raise additional finance, limited liability, seen as prestigious and more reliable, can negotiate better prices with suppliers.

cons of being a public limited company (plc)

complex accounting and reporting procedures, risk of hostile takeovers, increased media attention, less privacy for financial performance.

pros of being a multinational business

wider target market, can take cheaper labour and utilities abroad, can spread risk between operations between different countries, reputation as a market leader (access to diverse resources and reduced operating costs.)

Define Multinational corporation

a business with operations in more than one country

define public limited company (plc)

an incorporated business that sells its shares to the public

methods of internal growth for a business

enterting new markets and introducing new products

pros of internal growth for a business

increased revenue, improved market share, better control and stability, maintains its own values and culture.

cons of internal growth for a business

expensive, not always successful, too complex, slow expansion rate

methods of external growth for a business

mergers and takeovers

define merger

when two or more businesses join together to operate as one business

define takeover

when one business buys another business and incorporates it into their own business.

pros of external growth for a business

economies of scale, easier to raise finance, competition reduces, market shares increase allowing for faster expansion and access to new markets.

cons of external growth for a business

potential for culture clash, high costs, poor communication, change of management and resistance from employees disrupts production.

internal sources of finance

retained profit (amount of revenue after costs have been deducted) and selling assets (selling items that it owns to raise finance)

pros of internal sources of finance

immediate sum of money raised, no need to pay interest, can raise money from unused resources which reduces waste

cons of internal sources of finance

selling and buying back assets could reduce liquidity, limited funds available compared to external sources, and reliance on profits may restrict expansion.

external sources of finance

loan capital (money borrowed from a financial institution such as a bank) and share capital (finance raised by sharing a percentage of the business to external investors )

pros of using external sources of finance

The amount borrowed is secured and reduces the risk of being taken by the lender, which allows for more money to be lent (loan capital).

cons of using external sources of finance

paying interest, not always easy to access,