PAPER 2

Cards (100)

  • what are methods of business growth?
    internal growth and external growth
  • what are methods of internal growth in a business?
    -developing new products
    -targeting new markets
  • what are methods of external growth?
    merger, takeover
  • what are mergers?

    the combining of companies
  • what are takeovers?
    when an existing firm expands by buying more than half the shares in another firm
  • which is riskier and faster? internal growth or external growth?
    External growth is faster but riskier, internal growth is slower but less riskier
  • what are the four ways a company can merge or takeover another firm?
    -join with a supplier
    -join with a competitor
    -join with a customer
    -join with an unrelated firm
  • what might owners decide to do to the business if it grows?
    may decide to make it a public limited company
  • why might owners change their business to a PLC?
    as "public" means that shares in the company are traded on a stock market and can be bought and sold by anyone, bringing extra finance into business, especially if shares are high in demand so will increase in value
  • Advantages of a public limited company
    -more capital can be raised by a PLC than any other kind of business which helps business to expand and diversify
    -PLCs are incorporated and have limited liability so owners only lose the amount of money they invested
  • disadvantages of Public Limited Companies
    -each shareholder has little to say on how business is run
    -someone can buy enough shares to take over the company
    -accounts have to be made public
    -PLCs have many shareholders who all want a profit
  • what are internal sources of finance?
    retained profit and fixed assets
  • what are retained profits
    profits that owners have decided to leave to invest back into the business after they've paid themselves a percentage
  • what are fixed assets
    firms can raise cash by selling fixed assets which are no longer in use (e.g. machinery)
  • how can a company's aims and objectives change?
    -focus on survival or growth
    -grow or reduce of its workforce
    -enter or exit new markets
    -increase/decrease size of its product range
  • what are some external reasons causing businesses to change their aims and objectives?
    -new legislations means company's may need to adjust their aims+objectives
    -change in market conditions, if the market grows company might change aims+objectives to focus on growing sales
    -change in technology, may change aims+objectives to be up to date with technology
  • what are some internal reasons causing businesses to change their aims and objectives?
    -performance, if a company performs better or worse than expected, aims+objectives can be changed
    -internal changes, such as management changes may cause a business's aim+objective to change
  • what is globalisation?
    Globalisation is the process by which the world is becoming more connected which means it's easier for b
  • why is globalisation good?
    which means it's easier for businesses to import products and export products
  • what is importing?
    buying from abroad
  • what is exporting?

    selling products to other countries
  • what can globalisation affect in a business?
    -imports, means there's a larger market so more competitive
    -exports, easier to sell goods abroad so more profit due to increased sales
    -business location, makes it easier for businesses to locate parts of their business abroad
    -multinationals, businesses who operate in more than one country enter a new country, meaning they may need to change the way they operate
  • what are some barriers to international trade?
    tariffs
    trade blocs
  • what are tariffs?

    faces on goods that are being imported or exported
  • impacts of tariffs?
    *helps firms stay competitive
    -increased costs
  • what are trade blocs?
    -groups of countries that have few or no trade barriers between them(so can compete without paying tariffs)
  • impacts of trade blocs?
    -countries outside the trade blocs will find it hard to compete with those inside as they're priced will be affected by paying tariffs
  • how can businesses compete internationally?

    -Use of the internet and e-commerce
    -Changing the marketing mix
  • impacts of accessing a global market?
    -more competition
    *however a larger customer base so increased sales and profit
  • use of e commerce and internet globally?
    businesses can compete without having to set up stores and infrastructure in foreign countries
  • use of changing the marketing mix globally?
    can change theyre prices or products to tailor to customer wants and needs it to the countries culture, to make them more competitive
  • what is the impact of ethical considerations on business
    -possible decisions between ethics and profit
    -pressure to use ethically sourced materials, adding costs to business
    *ethical policies can help them advertise, attracting customers
  • what is the impact of environmental considerations on business
    -aiming to be more sustainable, such as:
    -using less packaging and recycle more so less waste goes to landfill
    -use more efficient machinery, polluting less to the air
    -use more renewable energy sources
  • pros of being environmentally friendly
    -as people become more aware of environmental issues, customers are starting to prefer eco friendly products
    -taking environmental issues gives firms a competitive advantage, attracting new customers and sales
  • cons of being environmentally friendly
    -expensive for the business as they may need to buy more equipment or materials, producing a negative effect on profit
  • why might a business change its policies due to pressure groups?
    -if pressure groups hold campaigns against firms or industries, it could affect business reputation, reducing sales and customers
    -in order to improve their reputation, businesses may change their marketing mix (e.g. due to palestine, people boycott disney, causing disney to lower the prices in order to gain customers)
  • what is the design mix?
    -Function(design must be fit for its purpose)
    -Aesthetics(a good product looks attractive)
    -Cost(a good design leads to low manufacturing costs)
  • what is the product life cycle?
    research and development, introduction, growth, maturity, decline
  • how do the different parts of marketing mix affect each other?
    the method of distribution of a product is affected by pricing and promotion
    the quality and price of product may affect how it's promoted
  • what is differentiation?

    making your products or services distinctive in the market by changing elements if the marketing mix, allows business to attract customers