AQA Applied Business Studies Unit 2

Business Studies Revision Notes
Unit 2: Growing as a Business
By Jessica Ellis…read more

Expanding as a business…read more

Growth
Growth is a common business objective and may
be achieved through:
· Internal growth (organic growth)
-occurs when a business sells more of its own products
· External growth (integration)
-occurs when a business joins together with another business
· Selling franchises
-when a business (the franchisor) sells the right to use its name,
logo and trading methods to another business (the franchisee)…read more

External Growth
There are different forms of external growth:
· Merger ­ occurs when two or more businesses
join together in order to create one larger
business.
· Takeover ­ occurs when one business gains
full control of another.…read more

Forms of Integration
· Horizontal integration:
when one firm joins with another at the same
stage of the production process.
· Vertical integration:
when one firm joins with another at a different
stage of the production process (for example, a firm
could join with its supplier). This can be either forward
or backwards.
· Conglomerate Integration:
when a firm joins with another in a completely
different type of production.…read more

Selling Franchises
Advantages of Selling Franchises: Disadvantages of Selling Franchises:
· The franchisor receives a fee and a · The original entrepreneur no longer
percentage of profits own all of the business (most of the
profits go to franchisees)
· The franchisee takes a large proportion
of profits and thus should be · Problems with one franchise can
motivated to make the business a reflect badly upon all of the others
success
· Franchisees can learn from each other
and work together to improve the
business
· The costs of marketing can be shared
between all the franchisees…read more