Business Topic 2.1.1 - 1.4

• What is organic growth in a business?

  Internal expansion.
• What are methods of organic growth?

  New products - new products/services attract new customers, retain existing ones, and stay ahead of competition.

  New markets - new geographical regions allow businesses to offer access to new customer bases
• What are the impacts of organic growth?

  • Sustainable expansion: expansion without relying on external financing
  • Control: full control over their operations, products & market positioning
  • Investment in innovation: fosters long term competitiveness & resilience
• What is inorganic growth?

  External expansion
• What are methods of inorganic growth?

  • Merger: involves two or more companies combining to form a single entity. This creates diversification of products/services to provide to new markets
  • Takeover: when one company purchases another allowing for a rapid expansion of their market share.
• What are the impacts of inorganic growth?

  • Rapid expansion: offers rapid expansion & market penetration
  • Financial risk: may involve significant financial investment or reliance on external financing
• What is a public limited company (PLC)?

  A type of business that offers shares to public and has limited liability. This business type if chosen by businesses seeking substantial growth.
• What are sources of internal finance?

  • Retained profit: reinvestments from profits to fund growth
  • Selling assets: selling non core assets can generate funds
• What are sources of external finance?

  • Loan capital: loans provide immediate capital whilst retaining ownership and control over operations
  • Share capital: accessing capital from investors in exchange for ownership stakes
• Why business aims & objectives evolve in response to? (pt1)

  Market conditions - changes in consumer preferences cause business to adjust aims and objectives to capitalise emerging opportunities.

  Technology - changes in technology change aims and objectives in order to leverage technology effectively to stay ahead

  Performance - revise their aims and objectives in response to performance metrics such as revenue growth & market share
• Why business aims and objectives evolve in response to? (pt2)

  Legislation - changes in law modify a businesses aims and objectives to ensure legal compliance and mitigate risks

  Internal reasons - reassess their strategic direction and goals based on internal strengths, weaknesses, opportunities and threats
• How business aims and objectives change as businesses evolve?

  Focus on survival or growth - as a business evolves, its objectives evolve towards growth aiming to expand market shares

  
  

  Entering/Exiting new markets - entering new markets involve market penetration/expansion. Exiting may be driven by reducing costs

  
  

  Growing or reducing workforce - expanding workforce via hiring new employees. Reducing may happen due to cost cutting objectives

  
  

  Increasing or decreasing product range - product innovation are objectives of increasing products whereas decreasing is driven by streamlining objectives
• What are the impacts of globalisation on businesses?

  Imports:

  Competition from overseas - globalisation has lead to competition from rivals around the world

  Buying from overseas - globalisation has offered easier access to a wide range of goods and services from oversea markets

  Exports:

  Selling to oversea markets - globalisation has opened new opportunities for businesses to expand into international markets

  Changing business locations - has enable businesses to operate in various locations around the world

  Multinationals - corporations that operate in multiple countries and regions
• What are barriers to international trades?

  Tariffs - taxes or duties imposed on imports and exports. Tariffs increase the cost of imported goods whilst protecting industries.

  Trade blocs - regional trade agreements facilitate trade by reducing or eliminating barriers to trade.
• How do business compete internationally?

  The use of the Internet and E-commerce: allows businesses to reach global audiences and expand their customer base

  Changing the marketing mix to compete internationally: adjusting price, product, place and promotion to suit international markets
• What are the impacts of ethical & environmental decisions on a business?

  Ethical considerations - encompasses principles of fairness, honesty and social responsibility.

  Environmental considerations - how businesses use and conserve their resources, carbon emissions and climate change.

  Potential impact of pressure group activity - may influence a business' marketing mix