What is internal (organic) growth + its methods ->
when a business expands by growing its own activities
-new products (innovation, research and development)
-new markets (through changing the marketing mix or taking advantage of
technology and/or expanding overseas)
advantages and disadvantages of organic growth ->
+ less risky as the business grows by doing what it is already good at so retains its
culture, economies of scale, higher market share and low costs and higher prices
- growth is slower
- long period of investment and return on investment
what does external (inorganic) growth usually involve? ->
merger
takeover
advantages and disadvantages of external growth ->
+ economies of scale, increased revenue and market share, reduces competition
- clash of cultures, diseconomies of scale (communication problems), lack of trust,
can be expensive
type of business ownership for growing businesses + advs & disadvs ->
public limited company
+ lots of finance raised, limited liability, greater public awareness, considered more
prestigious and reliable
- disagreements between shareholders, risk of takeover , less privacy around
financial information, profit shared, more complex accounting and reporting
procedures, increased public and media attention.
internal sources of finance for established businesses ->
retained profit
selling assets
(owners savings)
external sources of finance for established businesses ->
loan capital
share capital, including stock market flotation
why do business aims and objectives change as a business evolves? ->
in response to external:
market conditions
technology
legislation
competition
internal reasons:
performance
leadership
, culture
how do business aims and objectives change as a business evolves? –>
-focus on survival (struggling businesses) or growth (growing businesses)
-entering or exiting markets
-growing or reducing the workforce
-increasing or decreasing the product range
impact of globalization on business ->
-imports: inc competition from overseas, buying from overseas cheaper
-exports: selling to overseas markets helps growth but is difficult and need expertise
-changing business locations: lower labour costs, closer to raw materials, closer to
market ect
-multinationals: businesses that operate in more than one country
adv and disadv of multinationals ->
- bring lots of job and employment to area
However
- smaller local businesses can lose out especially in LEDC's
adv and disadv of globalisation ->
+ new market opportunities
- access to technology and resources
However
- threat from foreign competition
- challenge of adapting products and services to meet the needs of foreign
customers
barriers to international trade ->
- tariffs
- trade blocs
- quotas (physical limit)
- subsidies ( money given to help domestic producers to dec prices)
- non- tariff barriers (quality or safety standards)
how do businesses compete internationally? ->
-using e-commerce and the internet
-changing the marketing mix to fit that country's culture (glocalisation, changing
products to meet needs)
examples of ethical issues for businesses ->
workers- wage, working conditions, allowing flexible working
suppliers- fair prices, fair expectations, paying on time
customers- customer service, sincerity( giving them a product because they actually
need it), clear and accurate info about products
when a business expands by growing its own activities
-new products (innovation, research and development)
-new markets (through changing the marketing mix or taking advantage of
technology and/or expanding overseas)
advantages and disadvantages of organic growth ->
+ less risky as the business grows by doing what it is already good at so retains its
culture, economies of scale, higher market share and low costs and higher prices
- growth is slower
- long period of investment and return on investment
what does external (inorganic) growth usually involve? ->
merger
takeover
advantages and disadvantages of external growth ->
+ economies of scale, increased revenue and market share, reduces competition
- clash of cultures, diseconomies of scale (communication problems), lack of trust,
can be expensive
type of business ownership for growing businesses + advs & disadvs ->
public limited company
+ lots of finance raised, limited liability, greater public awareness, considered more
prestigious and reliable
- disagreements between shareholders, risk of takeover , less privacy around
financial information, profit shared, more complex accounting and reporting
procedures, increased public and media attention.
internal sources of finance for established businesses ->
retained profit
selling assets
(owners savings)
external sources of finance for established businesses ->
loan capital
share capital, including stock market flotation
why do business aims and objectives change as a business evolves? ->
in response to external:
market conditions
technology
legislation
competition
internal reasons:
performance
leadership
, culture
how do business aims and objectives change as a business evolves? –>
-focus on survival (struggling businesses) or growth (growing businesses)
-entering or exiting markets
-growing or reducing the workforce
-increasing or decreasing the product range
impact of globalization on business ->
-imports: inc competition from overseas, buying from overseas cheaper
-exports: selling to overseas markets helps growth but is difficult and need expertise
-changing business locations: lower labour costs, closer to raw materials, closer to
market ect
-multinationals: businesses that operate in more than one country
adv and disadv of multinationals ->
- bring lots of job and employment to area
However
- smaller local businesses can lose out especially in LEDC's
adv and disadv of globalisation ->
+ new market opportunities
- access to technology and resources
However
- threat from foreign competition
- challenge of adapting products and services to meet the needs of foreign
customers
barriers to international trade ->
- tariffs
- trade blocs
- quotas (physical limit)
- subsidies ( money given to help domestic producers to dec prices)
- non- tariff barriers (quality or safety standards)
how do businesses compete internationally? ->
-using e-commerce and the internet
-changing the marketing mix to fit that country's culture (glocalisation, changing
products to meet needs)
examples of ethical issues for businesses ->
workers- wage, working conditions, allowing flexible working
suppliers- fair prices, fair expectations, paying on time
customers- customer service, sincerity( giving them a product because they actually
need it), clear and accurate info about products
