Business Theme 2

Created by

Maysa

Cards (148)

What is internal (organic) growth + its methods
when a business expands by growing its own activities
-new products (innovation, research and development)
-new markets (through changing the marketing mix or taking advantage of technology and/or expanding overseas)
advantages and disadvantages of organic growth
+ less risky as the business grows by doing what it is already good at so retains its culture, economies of scale, higher market share and sales
- growth is slower
what does external (inorganic) growth usually involve?
merger
takeover
advantages and disadvantages of external growth
+ economies of scale. increased revenue and market share
- clash of cultures, diseconomies of scale (communication problems), lack of trust
type of business ownership for growing businesses + advs & disadvs
public limited company
+ lots of finance raised, expand and diversify, limited liability
- disagreements between shareholders, someone could take over the company, accounts must be made public
internal sources of finance for established businesses
retained profit
selling assets
external sources of finance for established businesses
loan capital
share capital, including stock market flotation
why do business aims and objectives change as a business evolves?
in response to:
market conditions
technology
performance
legislation
internal reasons
how do business aims and objectives change as a business evolves?
-focus on survival or growth
-entering or exiting markets
-growing or reducing the workforce
-increasing or decreasing the product range
impact of globalization on business
-imports: competition from overseas, buying from overseas
-exports: selling to overseas markets
-changing business locations
-multinationals: businesses that operate in more than one country
barriers to international trade
tariffs
trade blocs
how do businesses compete internationally?
-using e-commerce and the internet
-changing the marketing mix to fit that country's culture
examples of ethical issues for businesses 
exploiting workers, Fair Trade, comfortable working environment, animal testing ...
advs and disadvs of acting ethically
+ customer satisfaction, staff is more motivated
- costly (higher labour costs and ethically sourced materials), may lead to higher prices and so lower sales. Trade-off between ethics and profit
examples of environmental issues for businesses
packaging, recycling, renewable energy resources, sustainability...
advs and disadvs of being environmentally friendly
+ competitive advantage, attract customers
- expensive, trade-off between being sustainable and making a profit
potential impact of pressure group activity on the marketing mix
e.g change products by using ethically sources raw materials or promotional campaigns to repair negative publicity pressure group has caused
design mix 
function, aesthetics, cost
product life cycle
extension strategies 
Methods used to prolong the life of a product:
-adding more or different features
-using new packaging
-targeting new markets
-changing advertisements
-lowering price
importance of differentiating a product/service
competitive advantage
pricing strategies 
- price penetration: low to high
-loss leader pricing: price is set below cost so no profit is made but customer will buy other products as well
-price skimming: high to low
-competitive pricing: charge similar prices to competitors
-cost-plus pricing: add a certain amount to costs depending on how much profit they want to make
influences on pricing startegies
technology
competition
market segments
product life cycle
promotion strategies 
advertising
sponsorship
product trials
special offers
branding
use of technology in promotion
targeted advertising online
viral advertising via social media
e-newletters
methods of distribution 
retailers
e-tailers
purpose of business operations
produce goods
provide services
Job Production 
Producing a one-off item specially designed for the customer
+ unique, high quality products, customer satisfaction, added value
- requires skilled labour, low productivity as it is slow
Batch Production 
certain quantities of identical products are made
+ flexible, machinery lowers costs, economies of scale
- time needed to change between batches lowers productivity
Flow Production 
producing items in a continually moving process
+ fast, economies of scale
- capital-intensive, needs lots of space for product storage
advantages of using technology
-quick and accurate e.g CAD Design
-increases productivity
-more consistent quality
-continuous 24/7
-cheaper is the long term
disadvantages of using technology
-expensive: regular maintenance and staff training
-staff may be worried they will lose jobs, demotivates them
-inflexible as machines are suited to one task
Bar Gate Stock Graph
Just In Time stock control
A system where stock is delivered only when it is needed
+ no warehouse for stock means lower rent, stock less likely to go out of date
- requires lots of coordination between firm and suppliers, could run out if there is a mistake in delivery/order, losing out on economies of scale
Procurement 
finding and buying things that a business needs from suppliers outside the business
Logistics 
getting goods and services from one part of the supply chain to another
To choose a supplier, a business must consider
quality
trust
availability
cost
delivery (cost, speed, reliability)
impact of logistics and supply decisions
reduce overall costs if business gets supplies at best possible price and doesn't waste time being inefficient
ensures products amp high-quality, a reasonable price and delivered onetime, which improves customer satisfaction and brand reputation
importance of quality 
controls costs by wasting less
competitive advantage
add value
quality control 
The checking for quality at the end of the production process