26411988
Description
Flashcards by Emily Cosh, updated more than 1 year ago
|
Created by Emily Cosh
over 3 years ago
|
|
| Question | Answer |
| what are the two types of growth | organic (internal) inorganic (external) |
| what are the methods of organic growth | new markets: changing the marketing mix to find new markets or expanding overseas new products: innovating and developing new products that aren't currently available new technology: investing in the latest technology or the ability to produce it themselves |
| what are the methods of inorganic growth | merger: where two or more businesses voluntarily agree to join up and work as one business take over: where one business buys another. to take over a company it is necessary to gain control by buying enough shares |
| what are the drawbacks of organic growth | -this type of growth can be too slow -if this type of growth is pursued, market share could fall as other businesses could expand more quickly |
| what are the benefits of organic growth | -tends to be easier to manage and control -tends to be less expensive and can often be paid for out of retained profit |
| what are the drawbacks of inorganic growth | -this can be expensive -mangers may lack the experience to deal effectively with the other business |
| what are the benefits or inorganic growth | -can reduce competition -market share can increase over night |
| what are the internal sources of finance | retained profit sales of assets |
| what are the external sources of finance | bank loan overdraft share capital |
| what are the benefits and drawbacks of retained profit | benefits: cheap- no interest has to be paid flexible - shareholders decide how much is reinvested and how much is paid out in dividends does not dilutes/ doesn't reduce ownership of the organisation drawbacks: less profit left over growth may be slow if it is dependant on this may upset shareholders who feel dividend payments are too low |
| what are the benefits and drawbacks of selling of assets | benefits: no finance needs to be paid business owners keep full control of the organisation drawbacks: not long term solution - just a one off normality reduces the value of the business depreciation means making the loss of assets |
| what are the benefits and drawbacks of bank loans | benefits: guaranteed the money for a certain period business owners keep full control interest rates may be fixed repayments are made in instalment drawbacks: security - normally has to be given to the bank as some of the assets of the business lack of flexibility - a business may take a loan of 500 but only use 250 |
| what are benefits and drawbacks of overdraft | benefits: flexiable - only have to be paid back the amount used intest only paid on the amount used drawbacks: an overdraft is repayable to the bank at any time usually high levels of intrest |
| what are the benefits and drawbacks of share capita | benefits: large sums of money can be paid capital doesn't have to be repaid there is no interest drawbacks: possible loss of control need to satisfy shareholders expectations of dividends and share price growth can be costly and time consuming |
| what are the types of ownership | sole trader: a business with one owner partnership: a business that has up to 20 owners |
| what are the benefits and drawbacks of sole traders | benefits: the sole owner has total control the sole owner keeps all the profit drawbacks: raising additional finance can be difficult due to an individuals limited resources |
| what are the benefits and drawbacks of partnerships | benefits: workload can be shared extra skills can be brought into the business drawbacks: profit has to be split |
| what is a franchise | when an existing business (franchisor) gives another business (franchisee) legal right to use their name |
| what are the benefits and drawbacks of a franchise | benefits: can take advantage of the experience and reputation of the franchisor the franchisee can sell a recognised good/service the franchisee can often benefit from expensive marketing campaigns paid for by the franchisor drawbacks: if another franchise did a poor job it could damage the image and reputation of other franchises the franchisee has to pay a percentage of sales revenue (royalties) to the franchisors it can be expensive to buy a franchise the franchisee doesn't have complete control over the business |
| what is a plc | this is a public limited company it is a business which raises capital through selling shares on the stock exchange. |
| what are the benefits and drawbacks of a plc | benefits: ability to raise finance through share capital limited liability considered more reliable greater public awareness drawbacks: more complex accounting and reporting procedures risk of potential takeovers increased public and media attention less privacy around financial performance |
Want to create your own Flashcards for free with GoConqr? Learn more.