IGCSE Business - Enterprise & Business Growth Flashcards

Characteristics of Successful Entrepreneurs

  • Organize resources: Put together the things you need to run the business.

  • Make business decisions: Use research, creativity, and skills to decide what to do.

  • Take risks: Face possible money, personal, or work-related losses.

  • Create & set-up a Business: Start a new business and take chances.

  • Skills required: Good at talking, creative, tough, able to persuade, and able to make decisions.

Business Plans

  • A document that shows what you expect in sales, costs, and money flow.

  • Help Entrepreneurs:

    • Lowers risk and helps get money.

Government Support

  • Reasons:

    • To make more stuff for the economy to grow.

    • To lower the number of people without jobs.

    • To give customers more choices.

    • To help businesses that want to do good for society.

  • How:

    • Training and help sessions.

    • Advice about money, how things work, and getting the word out.

    • Enterprise zones: Special areas with tax breaks and help from the government.

    • Finance: Loans with low interest and free money.

Limitations of Measuring Business Size

  • Size of the workforce: Depends on how things are made (using machines vs. using people).

  • Value of sales: Prices change in different places.

  • Value of output: Big output can be made by businesses with few people or machines.

  • Profits: NOT a way to measure business size.

Types of Business Growth

  • Reasons for Growth:

    • Wanting to be big, get more of the market, make more money, get more power, lower costs.

    • Chances to sell different products.

    • Easier to get money.

Organic (Internal) Growth

  • Achieved by:

    • Getting more of the market.

    • Selling different products.

    • Opening new stores.

    • Selling in other countries.

    • Putting money into new technology.

  • Advantages:

    • Easy to control, less risky, uses what you already know.

  • Disadvantages:

    • Slow, doesn't lower costs much, hard to get money.

Inorganic (External) Growth

  • Happens when businesses merge or take over others.

  • Merger: Two or more businesses join to make one new business.

  • Takeover: One business buys another.

Types of Inorganic Growth

Vertical Integration:

  • Merging or taking over businesses in the supply chain.

    • Forward: Joining with a business that's further along in getting the product to the customer.

    • Backward: Joining with a business that's earlier in the process of making the product.

  • Advantages:

    • Lowers costs to make things, more competitive, more control over the supply chain, better quality of materials, makes the brand more known.

  • Disadvantages:

    • Can get too big, problems with different company cultures, not knowing much about the new business.

Horizontal Integration:

  • Merging or taking over a business that does the same thing you do.

  • Advantages:

    • Quickly gets more of the market, lowers cost per item (making things cheaper when you make more), less competition, already knows about the industry.

  • Disadvantages:

    • Can get too big, problems with different company cultures.

Overcoming Business Growth Issues

  • Poor communication: Use technology to talk, give more power to different parts of the company.

  • High costs and cash flow problems: Grow slowly, manage money carefully, use profits to pay for things.

  • Difficulties of mergers and acquisitions: Plan carefully, make sure everyone talks to each other.

Reasons for Businesses to Remain Small

  • Offer personal service, focus on a specific market, respond quickly to what customers want.

  • Advantages:

    • Make custom goods/services, know customers well.

  • Disadvantages:

    • Hard to lower costs by making more, hard to get money, hard to find workers.

Why Businesses Fail

  • Financial Factors:

    • Not enough money coming