Topic 2.1 - Growing the Business Questions (copy)

4 reasons why its good to trade internationally?

• more potential customers internationally

• more competition from foreign companies

• access to a wider variety of materials, components and finished goods

• access to cheaper and skilled labour

3 advantages of free trade?

• gives access to more customers and markets

• easier access to materials and components internationally or to relocate production

• firms may gain more investment from oversees to expand

3 disadvantages of tree trade?

• firms may have to cut prices to compete and advertise more with free trade

• greater risk of takeover by foreign firms

• international competition may damage UK firms

what are the 2 things that trade blocs lead to?

trade blocs lead to

• reduced or zero taxes on import

• less rules and regulations restricting trade - e.g quotas or legal restrictions

which are import taxes a problem?

import taxes act as a barrier to trade

what are the 2 things that tariffs can do?

• make foreign goods more expensive so it helps UK firms compete , projecting jobs and businesses

• raises the cost of imported materials, components and finished goods so higher costs for business and higher prices for consumers

Sales can increase through 3 ways which are?

• selling to more customers in existing markets

• finding new markets

• launching new products through innovation, research and development

what can profits and loans be used to ? *

profits and loans can be used to expand (e.g the building of new stores)

3 advantages of internal/organic growth?

• less expansive than

• less risky because it can be better planned for

• easier to control

3 disadvantages of internal/ organic growth?

• can be very slow

• growth may be limited (e.g by a lack of funds)

• opportunities may be missed

5 factors affecting business aims and objectives as business evolve?

• market conditions - economic climate may change the level of demand and spending in the market

• technology - new technology means innovation and invention of new products

• performance - businesses will often look at where they can make improvements to their sales revenue or profit, the impact of their marketing, or their productivity.

• legislation - If a new law is introduced or changed , it could restrict the business’s operation so a business may have to change its aims and objectives to accommodate this change

• internal reasons - for e.g change in leadership or entering a new market

4 ways how business’s aims and objectives change as businesses evolve?

• focus on survival and growth

• entering or exiting markets

• growing or reducing the workforce

• increasing or decreasing the product range

globalisation affects businesses in 3 ways which are?

• imports

• exports

• location

4 benefits of globalisation for businesses?

• new market opportunities - which gives them the potential to grow

• able to import raw materials at a lower price

• changing locations mean you can get lower labour costs - e.g taxes

  Increased brand awareness - Potential for more sales and profit

3 disadvantages of globalisation for businesses?

• increases competition from foreign businesses - that are able to sell directly to UK customers

• increased responsibility

• potential for failure - international markets are different so businesses may face problems if they lack the necessary skills and knowledge

how and why do businesses change their marketing mix to compete internationally?

product - change tech components (e.g sockets), change taste to meet cultural preferences

price - change price to consider tariffs , change price to comply with different tax laws and currency conversions

place - change location of products to fit with the local preferences (e.g - e-commerce may not be popular)

promotion - revise advertising campaigns to understand that the meanings of colours, gestures and phrases are different in different countries

5 Advantages of E-commerce for a growing business?

• open 24/7

• cheap to operate compared to physical stores

• gives access to a huge range of potential customers

• easy to sell to overseas customers

• provides access to cost-effective promotional methods - for e.g social media and email advertisements

impact of pressure groups on the marketing mix?

product - use sustainable resources

price - increase the price paid to small suppliers

place - source local products

promotion - provide accurate information on packaging

6 examples of ethical behaviour by businesses (not in specification**)

• treating workers and suppliers fairly

• being honest with customers

• ethical sourcing of materials

• caring for the environment and operating sustainably

• meeting government requirements

• investing in the community

2 disadvantages of a business being ethical?

• make them less competitive, leading to lower sales and reduced profit margins

• increasing wages and using ethical suppliers is likely to raise costs and lower profits

3 advantages of a business being ethical?

• the business will look more appealing to customers - meaning more sales

• motivate staff - leading to higher productivity

• potential investors who want to be associated with businesses that are ethical

1 advantage and 1 disadvantage about pressure groups?

• good thing is that they focus on issues - e.g world poverty, animal and workers’ rights and environment

• bad thing is that they can cause bad publicity for unethical businesses - which can ruin the business’ reputation

3 advantages of being an environmentally friendly business? **

• Get subsidies and grants – The government offers money to businesses willing to invest in environmentally friendly production methods - This can help to reduce costs.

• Lower costs – Changes to business activities that lower the impact on the environment can often also lower the business’ costs

• Increased sales – Concerned customers who are very aware of environmental issues are more likely to buy from environmentally-friendly businesses

2 disadvantages of being an environmentally friendly business?

• Increased costs – as it can require research and investment in new production methods.

• Time consuming – Becoming environmentally friendly can take up a lot of time, particularly in large businesses

ways a business could limit its impact on the environment?

• a business may use renewable energy

• recycle materials such as paper and ink cartridges

• reduce the amount of waste that they produce, which reduces costs and means that there is less waste to dispose of. Many businesses also look for ways in which waste materials can be reused.

list 2 short term impacts a business might have on the environment*

• traffic congestion through transport and deliveries

• air, noise and water pollution through manufacturing and industry

list 2 long term impacts a business might have on the environment*

• climate change

• depletion of land , food and natural resources

4 advantages of being a PLC

• you have limited liability

• you have unlimited potential shareholders - meaning you have unlimited amount of funds

• have a greater public awareness of business

• ability to raise finance through share capital

4 disadvantages of being a PLC

• very expensive

• have to give dividends to the shareholders

• risk of potential takeover

• less privacy around financial performance

2 examples of internal sources of finance? - with advantages and disadvantages

• sale of assets - good thing is that its convenient and quick to do , bad thing is that you might need those assets for the future

• retained profit - good thing is that there its the safest because there is no risk or debt and its quick to access money , bad thing is that you need profit for retained profit

2 examples of external sources of finance - advantages and disadvantages

• loan capital - can be secured against the business’s assets, bad thing is that interest will be charged

• share capital - can raise considerable capital by selling shares since no interest is applied , bad thing is that profits made by the business are paid as dividends to the shareholders