Business exam

BUSINESS GROWTH

• Definition: Business growth is a fundamental objective for many organisations signifies progress,expansions, and increased success within the marketplace

• Key Aspects:

  • Increasing revenue.

  • Expanding operations.

  • Enhancing market share.

FACTORS IMPACTING BUSINESS GROWTH

• Barriers to Growth:

  • Market conditions.

  • Industry competition.

  • Technological advances.

• Success Factors:

  • Customer loyalty.

  • Demand from customers.

  • Consistency in products and services.

FOUR WAYS TO GROW A BUSINESS

1. Increase the ideal number of customers.

2. Encourage more frequent purchases from existing customers.

3. Increase the average sale value.

4. Improve systems and processes.

REASONS WHY BUSINESSES GROW

• Higher profit opportunities.

• Increased control of the market.

TYPES OF BUSINESS GROWTH

• Internal Growth (Organic Growth):

  • Growth from within through rising profits and customer numbers.

• External Growth:

  • Growth through mergers or acquisitions with other businesses.

PROBLEMS OF BUSINESS GROWTH

• Challenges for large businesses:

  • Difficulty in management and control.

  • High costs associated with expansion.

• Reasons for businesses remaining small:

  • Market niche focus.

  • Risk aversion.

REASONS FOR BUSINESS FAILURE

• Poor management.

• Failure to plan for change.

• Over-expansion.

• Start-up risks.

• Poor financial management.

INTERNAL GROWTH

• Definition: Growth achieved from existing business activities.

• Methods:

  • Entering new markets.

  • Developing new products.

  • Utilizing new technologies.

• Benefits:

  • Generally lower risk and costs than external growth.

  • Increased market share leads to higher profits.

EXTERNAL GROWTH

• Definition: Growth achieved through mergers or acquisitions.

• Mergers vs. Takeovers:

  • Merger: Voluntary agreement to join forces.

  • Takeover: Buying another business, requiring sufficient shares.

• Benefits of Mergers:

  • Quickly expanding into new markets or customer segments.

  • Access to new technology, talent, and expertise.

TYPES OF EXTERNAL GROWTH

• Horizontal Integration:

  • Merger of companies in the same industry.

  • Reduces competition, increases market share.

• Vertical Integration:

  • Owning multiple stages of the supply chain (example: Netflix).

• Conglomerate Integration:

  • Expansion into unrelated business areas.

MOTIVATION THEORIES AND STAFF APPRAISALS

• Performance Appraisals:

  • Conducted annually to improve individual and organizational performance.

  • Key for identifying training needs and enhancing employee motivation.

• Measuring Business Size:

  • Number of employees.

  • Value of output and capital.

ADVANTAGES AND DISADVANTAGES OF STAFF APPRAISALS

• Advantages:

  • Boosts employee performance and motivation.

  • Helps in determining training requirements.

• Disadvantages:

  • Can decrease trust within teams.

  • May be stressful and time-consuming.

  • Sensitive to organizational culture.

MOTIVATION THEORIES

TAYLOR'S THEORY

• Workers may not enjoy work naturally, requiring close supervision.

• Efficiency gained by breaking production into small tasks.

• Importance of appropriate training and tools.

MASLOW'S HIERARCHY OF NEEDS

• Outlines the path to self-actualization once core needs are met:

  • Physiological Needs: Basic survival requirements (food, safety).

  • Safety Needs: Security and stability in life.

  • Social Needs: Love and belongingness.

  • Esteem Needs: Respect and status from peers.

  • Self-Actualization: Pursuing individual potential and authenticity.

HERZBERG'S THEORY

• Motivators: Factors related to the job itself (interest level, responsibility).

• Hygiene Factors: External factors surrounding the job (work conditions, salary).

INTRINSIC AND EXTRINSIC MOTIVATION

• Intrinsic Motivation: Driven by internal desires to achieve goals.

• Extrinsic Motivation: Influenced by external rewards and recognition.

ORGANISATIONAL STRUCTURE

• Definition: Allocation of responsibility and authority within a business.

• Types:

  • Tall Structure: Many levels of hierarchy.

  • Flat Structure: Few or no levels of management.

ADVANTAGES AND DISADVANTAGES

Tall Structure

• Advantages:

  • Clear hierarchy.

• Disadvantages:

  • Slow decision-making.

  • Bureaucracy.

Flat Structure

• Advantages:

  • Encourages collaboration.

  • Empowers employees.

• Disadvantages:

  • Potential for overworked staff.

  • Limited career growth opportunities.

SPAN OF CONTROL

• Refers to the number of employees a manager supervises, characterized as wide or narrow.

• Factors affecting span of control include:

  • Task difficulty.

  • Employee experience and skills.

CHAIN OF COMMAND

• Route through which authority flows in an organization.

DELAYERING

• Involves removing one or more levels of hierarchy to streamline operations.

CENTRALISATION AND DECENTRALISATION

• Centralisation: Decision-making authority concentrated at the top.

• Decentralisation: Authority distributed to lower levels of management.

DELEGATION

• Involves passing authority and responsibility to employees.

Aims and objectives

• aims: the long term vision or goal of a business.

• objectives- targets to help achieve an aim.
  
  |why organisations need aims and objectives

• provide a clear sense of direction and purpose

• helps employees to make informed decisions

• motivates employees

• create accountability

• customer satisfaction

• serve as a way to communicate
  
  |reasons for changes in business aims and objectives

• market condition

• legislation

• technology

• performance

• internal reasons