Business growth

• Importance of business growth

  • Increase marketshare
  • Increase revenue and improve profits
• How does growth occur

  • Employ more people
  • Open more branches
  • Increase sales or revenues
  • Increasing profits
• Internal growth (organic) - New product

  1. Innovation
  2. research
  3. Development
• Internal growth (organic) - marketing

  > Higher risk of developing new products- entering complex and expensive market
• Internal growth (organic) - marketing (Overseas markets)

  > Domestic to international

  > New market

  > Prove to be successful and increase profitability

  > Can be complex and expensive
• Internal growth (organic) - marketing (Amending the marketing mix)

  > Important when entering oversees market

  > Marketing mix: Price, Product, Place, Promotion
• Internal growth (organic) - marketing (Technology)

  > Use of e-commerce to enable customers to buy products

  > Items cheaper to produce , lower prices
• Advantages of (organic) growth

  • Business can maintain values without its interference from stakeholders
  • Higher production means the business can benefit from economies of scale and lower costs
• Disadvantages of (organic) growth

  • Long period between investments and return of investment
  • Growth may be limited and is dependent on the reliability of scales forecasts
• External (inorganic) growth

  • Mergers
  • Takeovers
• Advantages of inorganic growth

  • competition reduced
  • Marketshare increased
• Disadvantages of inorganic growth

  • It can be expensive to takeover/merge with another business
  • Managers may lack the experience to deal with the other business
• PLC

  • Shares sold publicly
  • Shareholders own part of the business
  • Floating on the stock exchange- selling shares on the market
• Advantages of PLC

  • Raise additional finances through share capital
  • Shareholders have limited liability
• Disadvantages of PLC

  • expensive to set up
  • Complex accounting and reporting requirements - time consuming, hire staff
  • risk of hostile takeover by rival company
• Retained profit 


  > Held back in the business for reinvestment

  Advantage- cheap, quick and convenient, easy access

  Disadvantage- Limited money, once its gone its gone
• Selling assets (internal) 


  > Selling unwanted assets: Machinery, equipment

  Advantages- Convenient, quick,

  Disadvantages- not get full value or even sell them, might need assets on the future
• Owner's savings (internal) 


  Advantages- quick, cheap, convenient

  Disadvantages- the owner might not have enough savings or may need the cash for personal use
• Loan capital (external) 


  > Capital borrowed from the bank, paid back in instalments

  Advantages- regular repayment over a period of time

  Disadvantages-

  • take a while for loan to be approved and business may not qualify
  • Interest applied- expensive
  • Business ask for collateral (Security)
• Share capital (external) 


  > Money raised from selling shares in return for capital

  > Private limited company

  Advantages- does not have to be repaid, no interest, choose who to offer shares to

  Disadvantages- Profits made are paid to shareholders in dividends, control is diluted
• Stock market floatation 


  > Public limited company, offers shares to public to buy

  Advantages- raise large amounts of capital as it is easy for the public to buy shares through a stockbroker or bank, Shares don't have to be repaid and no interest, gain recognition

  Disadvantages- Complicated and expensive and could lose control as anyone can buy shares
• why business aims and objectives change

  • change in market condition
  • legislations
  • Performance
  • technology
  • management
• aims and objectives- technology

  • Website development
  • Manufacturing developments
  • Software development
  • Mobile technology developments
  • Contactless, online, and mobile payment systems developed
• aims and objectives- performance

  • make improvements to raise sales revenue and profit
  • impact of their marketing
  • productivity
• aims and objectives- legislation

  • legislations have impacts on aims and objectives
  • Equality Act 2010
  • Laws and regulations are legally binding
• aims and objective- internal reasons

  • strategic decisions made within a company
  • Entering new market
  • Develop new product or service
• aims and objectives as business evolves

  • focusing on survival and growth
  • Entering a new market- increase marketshare
  • Exiting a market- due to shrinking, poor performance of product, new marketcopening, business failing
  • growing/reducing work force
  • increasing or decreasing product range
• Globalisation 


  flow of products, goods, technology, information and jobs across international boundaries
• Multinational 


  A business that has operations in more than one country
• Benefits of globalisation

  • Increased market
  • Access to cheaper labour and raw materials
  • International specialisation (employees)
  • Increase innovation due to competition
  • Transfer of knowledge and skills
• Drawbacks of globalisation

  • international competitions
  • Power of multinational brands
  • Effects of events in other countries
• impacts of imports

  • consumers are able to buy goods and services from overseas leading in an increase in consumer choice
  • Foreign imports to the UK increase competition for UK firms
• Strong pound

  • Imports cheaper
  • Exports expensive
• Weak pound

  • Imports expensive
  • Exports cheaper
• Advantages of multinational

  • access to more customers
  • potential more sales and profit
  • potential to grow product range
  • increased brand awareness
• Disadvantage of multinational

  • increased responsibility
  • More risk
  • Potential failure
• Purpose of barrier to trade

  • raise money for the government
  • encourage trade within a country
  • Protect jobs
  • Increase demand for domestic goods
• Tariff


  > Tax on imports, discourage buying from abroad

  Advantages-

  > Money for government

  Business in domestic country have better chances to compete

  Disadvantages-

  > Imported goofs and services become more expensive

  > Cause other countries to impose tariffs in response
• Trading bloc

  > Group of countries that work together ti provide special deals for trading

  Advantages-

  > Promotes free trade- no tariffs

  > Free movement of labour

  > Good trading relationships

  Disadvantages-

  > Importing and exporting to countries outside go bloc can be expensive

  > Countries can often only be part of one trading bloc
• competing internationally- internet + e-commerce

  • open 24/7
  • Cheap to operate compared to physical stores
  • Gives access to potential customers
  • Easy to sell to overseas customers
  • Access to cost-effective promotional methods