2.1 growing the business

• What are the two categories of methods of business growth?

  • Internal growth (organic growth)
  • External growth (inorganic growth)
• What is internal growth in a business context?

  Growth through a business's own operations
• What is another term for external growth?

  Inorganic growth
• What is a merger?

  Combining two businesses into one
• How does a takeover differ from a merger?

  A takeover involves one business buying another
• What are the benefits of internal growth?

  More control over decisions and processes
• What is a drawback of external growth?

  It can be more expensive
• Why did Facebook pay a billion dollars for Instagram?

  For its potential future value
• What are the internal sources of finance for a business?

  • Owner's funds
  • Retained profit
  • Sale of assets
• What is retained profit?

  Profit made from previous years
• What is a potential downside of selling assets for finance?

  You lose the asset sold
• What are the external sources of finance for a business?

  • Share capital
  • Loan capital (bank loans and overdrafts)
• What is share capital?

  Selling ownership shares to investors
• What is the difference between a private limited company and a public limited company?

  Private sells shares privately; public on stock market
• What is an IPO?

  Initial public offering of shares
• What is a bank loan?

  Borrowing a sum of money to repay later
• How does an overdraft work?

  Allows negative bank balance temporarily
• What is a key characteristic of an overdraft?

  It is a short-term source of finance
• What are the reasons for changing business aims and objectives?

  • Market conditions
  • Technology changes
  • Business performance
  • Legislation
  • Internal changes (leadership)
• What is the difference between an aim and an objective?

  An aim is a long-term goal; an objective is a target
• Why might a business change its objectives in a competitive market?

  To maintain or improve market position
• How can technology impact business aims and objectives?

  It can necessitate more ambitious or cautious goals
• How does a business's performance influence its aims and objectives?

  Poor performance may lead to more conservative goals
• What might prompt a business to exit a market?

  Poor market viability or competition
• What is a potential internal reason for changing business objectives?

  A new leader or owner with different vision
• What is a common initial focus for a new business?

  Survival in the first 12-24 months
• What does growing a workforce entail?

  Hiring new staff for business expansion
• What does reducing a workforce typically involve?

  Cutting costs by making staff redundant
• What should a business consider if a market isn't performing well?

  It might be sensible to exit the market
• What does growing a workforce involve?

  Hiring new staff
• What does reducing a workforce typically mean?

  Cutting costs by removing staff
• What is the focus of section 2.1.3?

  Globalization and its impact on business
• What is the difference between imports and exports?

  Imports are goods brought in; exports are sold abroad
• What is a multinational company?

  A company operating in different locations
• How does globalization affect businesses?

  It allows businesses to buy and sell internationally
• Why do businesses move manufacturing to countries like Asia?

  To take advantage of lower labor costs
• What is e-commerce's role in global competition?

  It enables selling products worldwide from one location
• What must businesses adapt when entering new markets?

  Their marketing mix to local preferences
• What are tariffs?

  Taxes on imports
• What are quotas?

  Limits on imports