Business studies GCSE- Unit 2

This includes everything you need to know for the unit 2 exam 

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Business Studies-Unit 2
Chapter 6- The business organisation
Organic Growth- (or internal growth)- occurs when a business sells more of its
products.
External growth- (or integration)- occurs when a business joins together with
another business.
A merger- Occurs when two or more businesses join together with another
business.
A takeover (or acquisition) occurs when one business gains control of another.
A franchise- Occurs when one business sells the rights to its name and products
to another (a franchisee).
Economies of scale- Occur when the cost per unit falls as a business expands.
Diseconomies of scale- Occur when the cost per unit increases as a business
expands.
Types of integration:
Horizontal integration- Occurs when one firm joins with another firm at
the same stage of the production process.
Vertical integration- Occurs when one firm joins with another firm at a
different stage at the same production process.
Conglomerate integration- Occurs when one firm joins together with
another firm at a different type of production process.
Advantages of integration:
Benefit from sharing their ideas, experience, resources and skills, and by
having more power and status in the market.
Horizontal integration- can lead to economies of scale as more of the
same kind of output is being produced.
Vertical integration- Can ensure a firm keeps control of its supplies or
distribution which can improve quality and reliability and reduce costs.

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Conglomerate integration- Can spread risks as a firm is operating in more
than one market. This means a fall in demand in one market may be
offset by an increase in demand in another.
Disadvantages of integration:
Diseconomies of scale- are the problems involved with controlling,
communicating and motivating staff in a bigger business.
Culture clashes- Can occur because firms are used to doing things in
different ways.
Advantages of franchises:
The franchisor gets a fee from franchisees and a percentage of their
profits.…read more

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Employees may have more job security and receive greater rewards if
the business is growing and doing well. They might be proud to work for
a successful business and want to stay for longer. There may be greater
opportunities for promotion and new challenges as the business grows.
Suppliers may benefit from additional orders and more opportunities to
supply the bigger business; they may grow as well.
The local community may benefit if the business has more funds to
invest.…read more

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Strike- A strike is when employees stop working and bring production to
a halt. Strikes may occur if employees feel they are badly treated of
underpaid.
Complain- Employees, suppliers, the community or the government
could complain to the business. If they argue well enough the
stakeholders may succeed in getting the business to change its
approach.
Vote or sell shares- If shareholders do not like some of the decisions that
managers are taking, they can vote against them at the Annual General
Meeting.…read more

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Public limited companies are usually thought of as having more status
than private companies. This can impress customers.
Investors may be willing to buy shares because they should be able to
sells them later on relatively easily. There are usually many shares in
public limited companies and these are traded regularly, so if an investor
you decide you want to sell your shares you should be able to find
someone who wants to buy them.…read more

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Market share ­ As part of the growth objective, a business may set itself the
target of becoming the dominant firm in the industry.i.e. Having the highest
market share.
Market Leader- Is the biggest firm in a market, i.e. it has the largest market
share.
Innovation- Typically a business will start with a limited range of products and
services. Once the business has established itself, the owners and managers
may set targets to increase the number of new products on the market.…read more

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Ethical and Environmental Considerations
Customers, employees and investors are interested in all the different aspects
of business activities. We do not just want to know what a business offers and
at what price. We want to know how the product was made, what was used in
the production process, where it was made and how the suppliers and
employees were treated. Business ethics refers to what is regarded as right
and wrong behaviour.…read more

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The possible impact on revenues. Does the new location help the
business to attract customers?
The availability of resources. Does the new location offer staff with the
necessary skills and if so what will they cost? The availability of skilled
labour is one reason why many UK manufactures have moved abroad.
Overseas Location
Advantages of locating overseas
Cheaper labour- wages in countries such as china and India are much
lower than in the UK.
Access to resources that are not easily available in the UK.…read more

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Import- is a product brought from abroad
Quota- is a limit on the number of foreign goods imported into a country.
Tariff- is a tax on foreign goods imported into a country.
Marketing
A product portfolio- is the collection of products that a firm
produces.
A dog product- Has a low market share in a low-growth market.
A cash cow product- Has a high market share in a low-growth
market.
A question mark product- has a low market share in a fast growth
market.…read more

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Question mark
Also called `oil rigs' or `problem children', these products could turn
out to be very successful and the market is attractive because it is
growing so fast. However the moment the business cannot be sure
whether or not the product will succeed the business needs to
spend money promoting and developing to make sure they are
successful.…read more

Comments

davidsalter

Excellent notes covering some of the main areas. Students will need to make it more interactive by turning it into mind maps, posters etc

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