Flashcards
Topic 5.3 Big or Small?
Cards in this deck (31)
- 1Internal (Organic) GrowthOccurs when a business increases in size by selling more of its goods/services without taking over or merging with other businesses
- 2External GrowthWhere a business grows in size due to a merger or takeover
- 3Research And Development (R&D)The process of creating and designing new products and new methods of production
- 4MergerWhere two or more firms agree to join together. This is a voluntary agreement and results in the new business retaining the identity of both businesses
- 5TakeoverWhere one business buys another business
- 6Conglomerate IntegrationWhen firms with no obvious connections combine
- 7Horizontal IntegrationThis is when two firms in the same industry and at the same stage of the production process merge together or are taken over
- 8Vertical IntegrationThis involves two firms in the same industry, but at different stages of the production process. Joining in a merger or takeover.
- 9Backward VerticalIntegration with business suppliers
- 10Forward VerticalIntegration with customers and/or retail and distribution outlets
- 11Business GrowthA business grows when it sells more goods and services in one time period than in another time period
- 12Why businesses want to grow?-To generate more revenue and profits
-More market share
-More market power
-Survival
-Economies of scale
-Spreading the risk(Develop new product or branching out into new markets) - 13Economies of ScaleReducing the average costs of production in a large firm as output rises
- 14Bulk-Buying Economies of ScaleLower average costs as large businesses can buy in larger quantity
- 15Technical Economies of ScaleReductions in average costs of production due to the use of more advanced machinery
- 16Drawbacks of Growth-Communication Harder: more staff in same space
-Job insecurity-more staff in same role, likely one will be sacked
-Diseconomies of Scale
-Lack of flexibility - 17Legal MonopolyA business which has a market share of at least 25%.
- 18Pure MonopolyWhere that business owns 100% market share, so there is only one seller in the market
- 19Natural MonopolyWhere a large business can supply the market with products at a lower cost than if the market was supplied by many producers.
- 20Characteristics of a monopoly-High market power
-Very little competition
-No alternatives
-Market control
-(Pure Sense) only one seller - 21Sources of monopoly power-Mergers & Takeovers
-Legal Barriers
-Economies of scale
-Geographical barriers
-Marketing barriers
-Natural monopoly
-Technological barriers - 22Advantages of monopolies on individuals and society-Value for money: monopolies get lower prices from production and pass it on to customers
-More choice: monopolies have time and money for product development and innovation - 23Disadvantages of monopolies on individuals and society-Higher prices: there will be no alternatives so customers will have to pay this
-Low quality products
-Excessive profits: Lack of competition meaning monopolies can set high prices, keep gaining profits. - 24RegulatorPerson or body that supervises a particular industry or business activity . Monitor quality so monopolies don't sell products of low quality.
- 25Competition CommisionSet up by government, aim to encourage competitiveness in the market and make businesses fair for customers
- 26Self-regulationThe ability to monitor and control behaviour of stakeholders according to regulations.
- 27Advantages of self-regulation-Driven by these being regulated
-Flexible
-Low Cost - 28Disadvantages of self-regulation-Conflicts of interest
-Lack of confidence
-Lack of transparency - 29Pressure GroupsA group that tries to influence public policy in the interest of a particular cause. For example, Greenpeace, BMA, CBI, National Trust, RSPCA
- 30What pressure groups campaign for-Promote a cause
-Give advice
-Attract people to promote their cause - 31Responses to pressure groups-Accept argument, change practice
-Prevent its own arguments on issue
-Seek to publicise its new image
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- GCSE Economics Flashcards on Topic 5.3 Big or Small?, created by Edmund Lau on 06/12/2015.
- Created by
- Edmund Lau · Dec 2015
- Updated
- Feb 19, 2016
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