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Chapter 30 - Methods Of Growth - Edexcel GCSE Business

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Published in: Business | Business Strategy | Business Studies
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Revision summary of Chapter 30 - Methods of growth of the Edexcel GCSE Business syllabus.

Laurea C / Dubai

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  1. NETHODS OF GROWTH CHAPTER 30
  2. Learning Objectives Learning objectives • identify and explain the different forms of external growth • identify and explain different forms of organic growth • identify and explain different forms of external growth
  3. BUSINESS SCALE Businesses operate in different sizes and can grow In size over time... There are many more local businesses than there are local ones L BAL NATIONAL NATIONAL REGIONAL LOCAL Operates all around the world and in many different trading zones Operates accross several countries and/or trading zones Operates all over a country or trading area such as the EU Operates in a specific area, such as a county One or two operating in close proximinity Family businesses, sole traders and partnerships
  4. HlllOU9 ?? SOOH13H
  5. HOW CAN GROWTH OCCUR? the types of business growth ORGANICALLY business expands via internal means INORGANICALLY business expands via external means - mergers & takeovers HORIZONTAL VERTICAL FORWARD DIVERSIFIED BACKWARD
  6. ORGANIC GROWTH
  7. PRODUCT DEVELOPMENT using innovation and research to develop new or improve existing goods and services FRANCHISING selling the right to the brand and products to franchisees HOW CAN IT OCCUR? STOCK EXCHANGE converting to a public limited company to sell shares to the public on the stock exchange E-COMMERCE selling goods and services online to reach a wider market MARKET DEVELOPMENT reaching out to a wider market to increase sales, or selling in a foreign location
  8. type of growth product development market development franchising e-commerce stock exchange advantages wider audience - customers - better rep - more profits wider audience - risk mitigation well-known business - loyal customer base online services - more flexible - more customers easier to raise finance significant amounts can be raied disadvantages R&D is time-consuming and expensive R&D is time-consuming and expensive Very expensive Training and royalty fees Pay for own advertising • net very flexible • shipment • hurt building a customer base PLC - more competition - more difficult to run
  9. INORGANIC GROWTH
  10. HORIZONTAL INTEGRATION Occurs when a firm mergers with or takes over another firm in the same industry and at the same stage of production PIXAR advantages possible economies of scale eliminates a direct competitor increased power over suppliers disadvantages may result in a monopoly rationalisation may backfire
  11. VERTICAL FORWARD INTEGRATION Occurs when a firm mergers with or takes over another firm in the same industry and that is its customer For example, a textiles firm integrating with a clothing manufacturing business advantages business may choose to stop stocking competitors' products disadvantages consumers and institutions may suspect uncompetitive activity and react negatively
  12. VERTICAL BACKWARD INTEGRATION Occurs when a firm mergers with or takes over another firm in the same industry and that is its supplier advantages business may now control supplies to competitors disadvantages supplying business may become complacent due to having a secured customer
  13. DIVERSIFIED INTEGRATION Occurs when a firm mergers with or takes over another firm in a completely different industry amazon advantages diversification risk mitigation disadvantages may hurt the focus and direction of the businesses WHOLE FOODS MARKET
  14. N/A
  15. HOW CAN BUSINESSES FINANCE THEIR GROWTH? the types of business growth INTERNALLY RETAINED SALE OF EARNINGS ASSETS EXTERNALLY ouNERS' CAPITAL SHARE CAPITAL (STOCK EXCHANGE) 1 BANK LOANS VENTURE CAPITAL Cash given by an investor in return for a Large share of the business and input into decision making
  16. to 13 12 BUSIES PROFILE The Creative Kitchen Ltd Hands on play for children aged 3 - 6 years, in a safe environment Sue and Wk' set up their new venture. The Creabve Kitchm Ltd' two years ago. Ome tren blßines gme trom strength to strength _ Tre to create a sate. acitiog md exp«immta environmmt children to experience the tun The kitchen cm<ruct01. cwtom built and imported trom a manufacturer in has des•ed to provide the num realÉtjc • giay• envirmmmt srnall children The reviews reedbæk trom custonws ha arnaziv They are considering exparhm the number ot ounets they own and operate having established a high demand the in several different regions the 10 m Tt. Cm.ti« leg* Ltd

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