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Internal Growth
this is growth from within the business, it can be achieved by: opening new stores, increasing product range, moving into new markets and find new ways to sell
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External Growth
occurs when businesses grow by integrating (joining) with another business
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A merger
The businesses reach an agreement to join together and operate as one business. Tends to be mutual benefits to both businesses
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A takeover
one business buys another business, Tends to be more hostile as the buying business is the main one to benefit
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Horizontal integation
both firms operate at the stage of the production process e.g 2 banks. Gain market share, Reduces competition, Bigger and more powerful, Stronger negotiating power with supplies.
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Vertical integation
the firms operate at different stages of the production process e.g. a fashion manufacture buys a cotton business. Secures the supply of materials, Cuts out a middle layer, Limits supplies to competitors
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Diversification
the firms operate in different industries e.g. a car manufacture integrates with stationery retalior e.g. a fashion buys a fashion retailer. Firm is at the last stage in the production process, Secures an outlet for the products, Cuts out a middle
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Disadvantages of mergers and takeovers
Takeovers can be very expensive, Difficult to control due to the size, Different business structures and practice to bring together, Opposition from stakeholders, Managers may lack experience, May attract negative publicity if the business fails
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Aims
are the medium to long term intentions of a business, mainly expressed qualitatively.
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Objectives
are the medium to long terms targets of a business, mainly expressed quantitatively. Objectives should be SMART. Specific, Measurable, Achievable, Realistic, Timed
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The aims of a business might include:
Survival, Profit, Growth, Market share, Customer satisfaction, Ethical and sustainable
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Dominant business
is one that has the highest market share.
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Lack of competitors this can help them to: (There are a number of benefits in being the largest organisation)
Develop and maintain customer loyalty, also restrict output and charge higher prices
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Economies of scale such as :(There are a number of benefits in being the largest organisation)
Bulk buying, reducing unit cost, advertising, helping to develop brand image
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Use of its financial resources to maintain its position: (There are a number of benefits in being the largest organisation)
Predatory pricing, selling at a loss to price firms out of the market, research and development, to produce new products
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Expanding internationally
An organisation that has achieved its growth objective in the UK might look to international markets in order to continue its growth. These can provide new markets for exports, increasing revenue and profit.
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Economies of scale
means the more of a product or service you to buy the cheaper the unit price/ cost
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Diseconomies of scale
means as a business grows the price of products or services becomes expensive rather than cheaper
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Best location
the business location that provides the maximum benefit to a business through the combination of qualitative factor.
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Product portfolio analysis
is the collection of products that a firm produces
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Dogs
is product that has a low market share in a low-growth market
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Cash cow
is product that has a high market share in a low-growth market
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Question market
is product that has a low market share in a fast-growth market.
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Star
is product that has a high market share in a fast-growth market
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Product life cycle
shows the sales of a product overtime. There are five stages associated with the product life cycle:Development, Introduction, Growth, Maturity and Decline
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Development
before the product has been launched onto the market: Sales are zero and the product is therefore not contributing to revenue, spending on research and development is likely to be high
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Introduction
ju
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Limited companies
have their own legal identity, their owners are not personally liable for the firm's debts.
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Other cards in this set

Card 2

Front

External Growth

Back

occurs when businesses grow by integrating (joining) with another business

Card 3

Front

A merger

Back

Preview of the front of card 3

Card 4

Front

A takeover

Back

Preview of the front of card 4

Card 5

Front

Horizontal integation

Back

Preview of the front of card 5
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