Paper 2

• Types of business growth

  • Internal growth - bringing out new products, entering new markets
  • External growth - takeover, merger
• Benefits of being a PLC

  • Raise large sums of finance through selling shares on the stock market
  • Considered more prestigious and reliable
  • Greater public awareness of the business
• Drawbacks of being a PLC

  • Risk of potential takeovers
  • Increased public media attention
  • Less privacy around financial performance
• Sources of finance for growing and established businesses

  • Internal - sale of assets, retained profit
  • External - loan capital, share capital
• Reasons for changes to business aims and objectives

  • Competition - increasing competition may mean the business has to change its focus to become more competitive and survive
  • Legislation - a change in the law may force business
• Plc


  Public limited company
• Benefits of being a plc

  • Able to raise large sums of finance through selling shares on the stock market
  • Considered more prestigious and reliable
  • Greater public awareness of the business
• Drawbacks of being a plc

  • Risk of potential takeovers
  • Increased public media attention
  • Less privacy around financial performance
• Sources of finance for growing and established businesses

  • Internal: Sale of assets
  • Retained profit
  • External: Loan capital
  • Share capital
• Factors that can lead to changes in a business's aims and objectives

  • Competition
  • Legislation
  • Economic climate
  • New technology
  • Ambitions of CEO/managing director
• Targets for a growing business

  • Expand product range
  • Enter new market
  • Increase sales
  • Increase profits
  • Gain larger market share
• Targets for a struggling business

  • Breakeven
  • Reduce costs
  • Improve efficiency
  • Maintain market share
  • Downsize operations
• Globalisation


  The process of world markets becoming increasingly interconnected
• Impacts of globalisation on businesses

  • Imports
  • Exports
  • Changing business location
  • Multinational corporations
• Tariff


  A tax on imports
• Trade bloc


  A group of countries that act together to promote trade amongst themselves
• The use of the internet and e-commerce allows businesses to access international markets without having to locate there or distribute through foreign retailers
• Businesses will have to adapt the marketing mix in order to meet different customer needs around the world
• Examples of ethical behaviour

  • Treating workers and suppliers fairly
  • Being honest with customers
  • Ethical sourcing of materials
  • Investing in the community
  • Caring for the environment and operating sustainably
• Short-term environmental impacts of business

  • Traffic congestion
  • Air, noise and water pollution
• Long-term environmental impacts of business

  • Climate change
  • Depletion of natural resources
• Design mix


  The variables that contribute to a successful product design, including function, cost and appearance
• Stages of the product lifecycle

  • Research and development
  • Introduction
  • Growth
  • Maturity and saturation
  • Decline
• Product extension strategies


  • Modifying the product
  • Targeting a new market
  • A new marketing campaign
  • Changing the packaging
• Differentiation


  Making your product different from the competition
• Methods of differentiating a product/service

  • Unique and catchy product name
  • Quality
  • Design
  • Formulation or function
  • Packaging
  • Customer service
  • Across the value chain
• Pricing strategies


  • Profit margins
  • Competitor pricing
  • Low trial price
  • High volume low margin
  • Low volume high margin
• Influences on pricing strategies

  • Technology
  • Branding
  • Competition
  • Costs
  • Market segment
  • Stage in product lifecycle
• Promotional methods


  • Advertising
  • Sponsorship
  • Product trials
  • Special offers
• Brand


  A named product which consumers see as being different from other products and which they can associate and identify with
• Benefits of branding


  • Brand loyalty
  • Encourages purchase of other products
  • Assurance of quality
  • Ability to charge premium prices
  • Greater consumer awareness
  • Increased sales and market share
• Factors to consider when choosing a business location

  • Cost
  • Accessibility for customers
  • Proximity to competitors
  • Proximity to labour market
  • Proximity to resources
  • Transport links
• Benefits of retailing


  • Customers can browse and try products
  • Business can use displays
  • Easier to provide help and advice to customers
  • Many customers enjoy a physical shopping experience
• Benefits of e-tailing (e-commerce)

  • Reduce costs as no high street shop needs to be rented or bought
  • 24/7 shopping from anywhere increases convenience
  • Can access markets from around the world
• Types of production processes

  • Job
  • Batch
  • Flow
• Productivity


  The output per worker
• Higher productivity leads to higher profits
• Impacts of technology on production

  • Speeds up the production process and reduces costs
  • Requires retraining of staff
  • Ensures consistency and fewer defects
  • Less flexible than employees
• Just-in-time (JIT)


  A stock management system that keeps stock levels low to reduce costs
• Procurement


  The process of finding and buying the stock and materials by the business