Business chapter 6

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What is internal growth? and What is it also named as?
By selling more of its own products. Also known as Organic Growth.
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What is external growth? What is it also named as?
By joining with another business. Also known as Integration.
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What is selling franchises?
Selling the rights to the business's name and products to another business.
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When does a merger occur?
When two or more businesses join together to form a new business.
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When does a takeover occur?
When one business gains control of another.
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When does an franchise occur?
When one business sells the rights to its name and products to another.
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What is horizontal integration? and what are the advantages?
One firm joins another at the exact same stage of production. can lead to economies of scale as more of the same product is being produced.
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What is vertical integration? and what are the advantages?
When one firm joins another at a different stage of production. Can ensure a firm keeps control of its supplies which can improve quality and reduce costs.
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What is conglomerate integration? and what are the advantages?
When one firm joins with another firm in a different type of production process. can spread risks, fall in demand in one market may be offset by an increase in another.
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What are the disadvantages of integration?
Dis economies of scale, problems involved with controlling, communicating and motivating staff. And Culture clashes firms are doing things in different ways.
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When does a franchise occur?
When one business sells the rights to another business to use its name and sell its products.
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What are the advantages of franchising your business?
Grow your business, costs, easier management, develop your brand, motivated franchises, purchasing power.
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What are the disadvantages of franchising your business?
Not a fix for failing a business, costs, time, training and support.
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What are the advantages of growth for stakeholders?
Employees have more job security and recieve greater rewards. Suppliers benefit from additional orders, the local community may benefit if the business has more funds to invest. Government, both higher income tax being paid.
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What are the disadvantages of growth for stakeholders?
Suppliers may be bullied by a bigger firm, Employees may feel no longer part of business, communication would be difficult, the business may not invest into the community, government may not benefit if business relocates.
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What is a lobby government?
Stakeholders can get the government to force the business to change the policies, Marches and petitions are needed for support.
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What is boycott the products?
If customers feel they are being treated badly they can stop buying the product, this may force the business to change their policies.
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What is a private limited company?
Cannot publicly advertise its shares for sale and is often owned by family members.
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What is a public limited company?
Can advertises its shares and can be listed on the stock exchange.
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When does a flotation occur?
When a private limited company becomes a public limited company and has to shares listed on the stock exchange.
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What is the stock exchange?
A market for shares of public limited companies. large numbers of shares are being bought and sold all the time.
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What are the advantages of becoming a public limited company?
Advertise its shares to the general public, Public companies attrack more media coverage because htey usually have more shareholders, are usually thought to be bigger and have a bigger status. Investors are willing to buy shares,they can sell them on
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Disadvantages of being a public limited company?
Media coverage can be bad the media may pretray it the wrong way, plc cannot control who buys its shares a competitor may buy it. More regulated.
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What is the name for owners of a company?
Shareholders.
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What is a holding company?
A business that holds shares in other companies but does not actually produce anything itself.
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What is an subsidiary company?
A business that is owned by another.
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What is a market leader?
The biggest firm in a market.
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When does diversification occur?
When a firm moves into new markets. eg mars produces chocolate such as mars bars but also pet food (pedigree chum(
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What is business ethics?
Whether a business decision is seen as morally right or wrong.
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What are some environmental considerations?
Does the company recycle and if so how much? What does the company do to conserve energy? How does the company control its emission levels?
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What are protectionist measures?
They are policies that government use to protect their own businesses against foreign competition.
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What is a quota?
The limit on the number of foreign goods imported into a country.
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What are the advantages of locating over seas?
Cheaper labour, access to resources that are not easier in the uk, Financial incentives from foreign government. Avoids protectionist measures by foreign governments.
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What are the disadvantages of locating overseas?
May be different rules and regulations abroad, customers may have different tastes in products.
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Other cards in this set

Card 2

Front

What is external growth? What is it also named as?

Back

By joining with another business. Also known as Integration.

Card 3

Front

What is selling franchises?

Back

Preview of the front of card 3

Card 4

Front

When does a merger occur?

Back

Preview of the front of card 4

Card 5

Front

When does a takeover occur?

Back

Preview of the front of card 5
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