THEME 2.1 - Growing the Business

KEY TERMS

Internal Growth (Organic)

Where a business grows internally, from developing new products and services or entering new markets.

New Product Development

Spending time and money on R&D to innovate new products.

Innovation

Creating new products or processes.

Research and Development

Research into new products or processes to develop new ideas

External Growth (Inorganic)

When a business grows externally by acquiring other businesses eg mergers or takeovers.

Mergers

When 2 or more businesses join together to operate as one business .

Takeover

When one business buys another business and incorporates it into their own business. This can be hostile and unwanted.

Multinationals

A business that operates in more than one country. (Also called multinational corporations MNCs).

Public Limited Companies

A company has limited liability and can sell shares on the stock exchange. Generally large and will have plc after their name.

Limited Liability

Where the investors only lose the money they have invested in the business, if it goes bankrupt. Companies have this.

Shareholders

The people who invest in companies and own a share of the business. They will have some control and gain a share of the profits through dividends.

Internal Finance

Finance is from within the business eg retained profit or selling assets.

Retained Profit

Profit which is kept back by the business and will be used to pay for future investment.

Selling Assets

Getting rid of assets the business no longer needs eg company cars, buildings

External Finance

Finance gained from outside the business eg loan or share capital.

Loan Capital

Money gained from borrowing a sum of money which is then repaid over a period of time with interest.

Share Capital

The money raised from selling shares to shareholders.

Globalisation

When businesses operate on an international scale, gaining worldwide influence and power.

Imports

Goods and services that come in from another country.

Exports

Goods that are sold from one country to another country. They go out!

Tariffs

A tax placed on imported goods coming into the country

Trading Bloc

A group of countries who agree to work together and allow free trade between themselves so no tariffs eg the EU.

Ethics

The morale set of rules that guide a business (or person).

Stakeholder

Anyone who has an interest in the activities of a business eg workers, suppliers

Trade-offs

Finding a balance/compromise between 2 different objectives eg making a profit and being ethical.

Sustainability

Acting to ensure that natural resources are used responsibly to protect the environment.

Pressure Groups

A group of people who join together to get businesses or the government to change their policy .

Boycotts (6-9 Term)

When customers refuse to buy from or interact with a particular business.

Lobbying (6-9 Term)

When pressure groups try and influence the government or other organisations