Business 2

• Organic growth


  Growing through internal growth
• Innovation


  Adapting existing products to develop improved versions
• R&D


  Research and development activities to research and develop new products
• The marketing mix


  The 4 P’s price, place, product promotion
• Inorganic growth


  Growing through mergers or takeovers= external growth
• Merger


  when two farms mutually join together
• Takeover


  when one firm buys another one
• PLC


  Public limited company, a business that sells its shares on the stock exchange
• retained profit


  Profit left after the business has paid, dividends and taxation
• Selling assets


  The sale of items, the business owns
• Loan capital


  Finance recieved from the bank when taking out a loan
• Share capital


  The money invested into a business by shareholders
• How can a business grow internally?

  Opening more outlets, selling more targeting new markets or increasing the range of products
• What is the disadvantage of external growth?

  It is expensive and comes with increased risk
• What is a quicker way of opening lots of outlets

  Offering franchises
• What can larger firms benefit from?

  They can benefit from economies of scale, so can reduce the unit costs
• What is the disadvantage of a firm going to large?

  It can increase costs and lead to diseconomies of scale
• Aim


  Something the business is trying to achieve
• Objective


  More specific breakdown of an aim
• Survival


  Generating enough revenue to cover costs and therefore continue to trade
• Workforce


  The number of employees a business has
• Product range


  The variety and number products a business sells
• Entering markets


  When a business decides to open up in a market, it hasn’t been in before
• Exiting market


  choosing to leave a market
• How can a business change?

  Changing market conditions, technology, performance, legislation and internal reasons, such as an arrival of the new CEO.
• How can aims change?

  Focus on survival or growth, entering or exiting markets, growing or reducing our workforce and increasing or decreasing a product range.
• Globalisation


  Tendency for economies to trade with each other by global goods
• Export


  Selling goods or services to consumers in another country
• Import


  Buying goods or services from businesses in another country
• MNC


  Multinational company, a business that has operations in more than one country
• Free trade


  Trading between countries with no barriers
• trade barriers


  an action put in place to discourage free trade and protect the businesses of a specific country
• Tariffs


  Taxes charged on imports
• Trading blocs


  A group of countries that agreed free trade within external tariff walls.
• e-commerce


  Buying and selling goods online
• What must a business do to export successfully

  Keep cost down to be competitive, produce original and well designed items and deliver on time and provide excellent service and after sales service
• Why might the government set out barriers to trade?

  To protect domestic industry and reduce competition
• How can a business compete internationally?

  Use of the Internet and e-commerce changing the marketing mix: different products for different countries, charging different prices, based on popularity and reputation, adapting promotion to reflect cultural differences, and using retailers in countries where e-commerce is not well established.
• Ethical considerations


  Thinking about ethics which may lead to making morally valid decisions will lead to the manipulation of customer attitudes
• Ethics


  Weighing up decisions or actions based morality, not personal gain