2.1 key terms

• Innovation


  Bringing a new idea to market, such as Warburton's clever idea of an extra-large crumpet
• Inorganic (external) growth


  Growing by buying up other businesses or by merging with a business of roughly equal size
• Merger


  When two businesses of roughly equal size agree to come together to form one big business
• Organic (internal) growth


  Growth from within the business, such as creating and launching successful new products
• Research and development (R&D)


  The scientific research and technical development needed to come up with successful new products
• Takeover


  Obtaining control of another business by buying more that 50% of its share capital
• Flotation


  Listing company shares on the stock market, allowing anyone to buy the shares. This means the price can float freely (up and down)
• Public limited company (plc)


  A company with at least £50,000 of share capital that can advertise its shares to outsiders and is, therefore, allowed to float its shares on the stock market
• Entering markets


  When a company decides to open up in a market it hasn't been in before, for examples Walkers launching cereal bars
• Exiting markets


  Choosing to leave a market probably because it was loss-making and looked set to continue
• Competing internationally


  Finding a way to succeed against rivals from overseas
• Free Trade


  Trade between countries with no barriers, for example no tariffs
• Globalisation


  The increasing tendency for countries to trade with each other and to buy global goods such as Coca-Cola, or services, such as Costa Coffee
• Imports


  Goods or services bought from overseas
• Tariffs


  Taxes charged only on imports
• Trade blocs


  A group of countries that have agreed to have free trade within external tariff walls
• Ethical considerations


  Thinking about ethics, which may lead to morally valid decisions or may lead to the manipulation of customer attitudes (that is, pretending to be ethical)
• Ethics


  Weighing up decisions or actions on the basis of morality, not personal gain
• Fair trade


  A social movement whose goal is to help producers in developing countries achieve better trading conditions and to promote sustainability. It ensures that the price paid to the workers who produced it. Fair trade certification can be found on many products, including KitKats
• Trade-offs


  How having more of one thing may force you to have less of another, for example higher ethical standards may mean less profit
• Environment


  The condition of the natural world that surrounds us, which is damaged when there's pollution
• Environmental considerations


  Factors relating to green issues, such as sustainability and pollution
• Sustainability


  Whether or not a resource will inevitably run out in the future; a sustainable resource will not
• Multinational


  A business with operations in more than one country(also known as a multinational corporation or MNC)
• Assets


  Items owned by a business, such as premises, equipment or stock
• Dividends


  A percentage of a business's profits that is paid to shareholders as a reward for their investment in the business