Business 2.1

• Internal growth


  Occurs when a business expands its existing operations causing the firm to grow slowly
• methods of internal growth

  Targeting new markets

  developing new products
• External growth


  Business expansion achieved by means of merging with or taking over another business, from either the same or a different industry
• ways a firm can merge or take over other firms


  join with suppliers

  join with a customer

  join with a competitor

  join with an unrelated firm
• downsides to mergers and takeovers

  less than half are successful

  management styles differ

  can create bad feelings

  lead to cost cutting
• economies of scale


  factors that cause a producer's average cost per unit to fall as output rises
• who benefit's from economies of scale

  larger firms as they buy in bulk
• Diseconomies of Scale


  the property whereby long-run average total cost rises as the quantity of output increases
• internal sources of finance


  retained profit

  fixed assets
• external sources of finance

  loan capital

  share capital
• Public limited companies


  businesses owned by shareholders but they can sell shares to the public on the Stock Exchange
• advantages of public limited companies

  more capital can be raised

  helps to expand and diversify

  limited liability
• disadvantages of public limited companies


  conflict on how the business should be run

  business could be taken over

  accounts made public

  share the profits
• why a companies aims and objectives change over time

  survive or grow

  size of its workforce

  enter or exit new markets

  change the size of its product range
• aims and objective change for external reasons

  new legislation

  change in market conditions

  changes in technology
• aims and objectives change for internal reasons

  performance (perform better you increase targets)

  internal changes (management)
• Globalisation definition


  the process by which businesses or other organizations develop international influence or start operating on an international scale.
• globalization impacts on businesses

  imports- larger market to buy from

  exports- larger market to sell to

  business location- easier to locate abroad

  multinationals- operate in multiple countries
• tariffs


  taxes on goods being imported and exported helping domestic firms stay competitive
• trade blocs


  group of countries with few or no trade barriers between them
• How firms compete internationally

  use ecommerce

  change there marketing mix
• ethics


  moral principle of right and wrong
• ethical issues


  treating people fairly

  using non-toxic substances

  no animal testing
• solving ethical issues


  write codes of conduct for overseas factories

  buy from fairtrade
• downsides to acting ethically

  policies can be costly

  difficult to find ethically sourced materials

  which leads to less profit
• benefits to working ethically

  change marketing to show that they work ethically

  positive affect on stakeholders
• action to be more sustainable

  less packaging and recycle more

  dispose of hazardous waste carefully

  use efficient machines (less pollution)

  use renewable energy resources
• pros and cons of being environment friendly

  give firms a competitive advantage

  expensive
• pressure groups to be environmentally friendly

  run campaigns that puts firms in a negative light so firms might change there marketing mix to improve their image