Unite 2 Business Studies

These r the key terms and notes on Business U2.

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  • Created by: Shak
  • Created on: 25-05-11 19:27

Methods of expansion:

A business can grow in size through:

  • Internal (organic) growth: the business grows by hiring more staff and equipment to increase its output.
  • External growth: where a business merges with or takes over another organisation. Combining two firms increases the scale of operation.
  • Franchising: where a business leases its idea to franchisees. This allows new branches to open across the country and internationally.
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Market share:

The proportion of total market sale sold by one business.

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Organinc Growth:

Expression from within the business (e.g. by opening more shop branches).

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Inorganic Growth:

Expression by merging with or taking over another business.

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Internet Selling:

Marketing products through the business's website.

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The firm that buys the franchise rights from the existing business.

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The Existing firm that sells Franchise right to another business.

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An agreement between business owners to combine two businesses and operate as a larger one.

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Purchasing another business from its owner.

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Horizontal Integration:

Joining two businesses in the same industry and stage of production. (e.g. two hairdressing Businesses).

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Vertical backward integration:

Joining two businesses in same industry but a different stage of production, towards the supplier (e.g. a computer manufacturer's takeover of a 'chip' maker).

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Vertical Forward integration:

Joining two businesses in the same industry  but a different stage of production, towards the customer (e.g. a farmer's takeover of a butcher's shop).

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Joining two businesses in different industries (e.g. an insurance company merges with a publishing business).

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Any business with more than a 25per cent market share.

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Payment made to shareholders from company profits- usually made annually.

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Divorce between ownership and control:

When directors control a public limited company and thousands of shareholders own it, but the two gropus may have different objectives.

Public Limited Company (PLC) : A company able to sell shares to the general public by being listed on the Stock Exchange.

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Gabby Tracey


its ok, not the best, but still useful

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