NCFE - Business Growth

Business Growth

NCFE 1/2 Business and Enterprise​

Multiple Choice

Internal growth is also known as

• Merger

• Sales maximisation

• Organic growth

• Inorganic growth

Multiple Choice

External growth is also known as

• Organic growth

• Inorganic growth

• Merger

• Sales maximisation

Is business growth that arises from acquisitions or opening new stores rather than an increase in the company's current business

​External or Inorganic Growth

Where a business decides to expand its own activities by launching new products and/or entering new markets. Businesses do this in order to improve their chances of increasing their customers, revenues and profits.

Internal or Organic Growth​

Achieving Business Growth

Multiple Choice

Which of the following is most likely to be a benefit of business growth?

• Increased costs

• Increased sales

• Increased competition

• Increased chance of failure

Multiple Choice

Which of the following is NOT a method of internal (organic) growth?

• Increasing output

• Gaining new customers

• Developing new products

• Merging with / taking over another business

Multiple Choice

Dyson started by selling vacuum cleaners...they now sell hand dryers, washing machines, and fans. Which type of business growth is this an example of?

• Internal (organic) growth

• External growth

Multiple Choice

The first Tesco store was built in London. Tesco have since opened stores all accross the UK and in other countries. Which type of business growth is this?

• Internal (organic) growth

• External growth

Multiple Choice

An example of Organic growth is

• Merger

• Launching new products

• Acquisition

• Takeover

Multiple Select

The possible benefits of growing the business are

• Keeping control over decision making

• Larger potential profits

• Benefit from bulk buying discounts

• Security for the future of the business

Multiple Select

The disadvantages of Organic growth are

• There is little or no risk in growing slowly

• This is a very high risk strategy, opening lots of stores or taking on new staff is very risky

• Long period between investment and return on investment

• Growth may be limited and is dependent on reliability of sales forecasts

Multiple Select

Which two are examples of organic growth?

• When two businesses agree to join together

• When a business expands overseas

• When a business acquires a controlling interest in another business

• When one business buys another business

• When a business launches a new product

Open Ended

Slip Slop Ltd plans to sell 100% recyclable, disposable slippers to hotels and spas.  Explain ONE advantage and ONE disadvantage of this plan.  Recommend to Slip Slop Ltd whether it should go ahead with this expansion.  Justify your recommendations

Multiple Choice

Which of the following is an example of a horizontal merger/takeover?

• A chocolate producer buys another chocolate producer

• A chocolate producer buys a cocoa farm

• A chocolate producer buys a chain of coffee shops

• A chocolate producer buys a car producer

Match

Match the Key Terms to their definitions

• Where a manufacturing company joins with a business in the same industry that the the products it produces

• Where a business joins with another business in the same industry and at the same stage of production

• Where a manufacturing business joins with another business in the same industry that is responsible for sourcing its raw materials

• Where a business joins with another business in a completely different industry

Forward Vertical

Horizontal

Backward Vertical

Conglomerate

• Forward Vertical

• Horizontal

• Backward Vertical

• Conglomerate

Multiple Choice

Which of the following best describes the term 'diversification'?

• To join with a business in the same industry as you

• To join with a business that can supply you with raw materials

• To join with a business that sells something similar to you

• To join with a business in a completely unrelated industry

Multiple Choice

When a business merge or take over business in different sector

• Horizontal

• Vertical

• Conglomerate

Multiple Choice

Benefit of horizontal merger / take over

• less labor cost

• cultural differences

• economies of scale

• less investment

Multiple Choice

When Samsung is taking over another mobile phone company

• horizontal take over

• vertical take over

• horizontal merger

• vertical merger

Multiple Choice

When a milk company and a chocolate company decide to have the operation together

• horizontal take over

• vertical take over

• horizontal merger

• vertical merger

Multiple Choice

Disadvantages for customers of horizontal merger.

• higher profit

• more job opportunities

• less choice of product

• more choice of product

Multiple Choice

When a shoe company take over shoe retailers

• Vertical forward

• Horizontal forward

• Vertical backward

• Horizontal backward

Multiple Choice

Disadvantages of conglomerate

• lack of experience

• lack of focus

• less cost

• less job opportunities

Multiple Choice

Reasons for failure mergers and takeovers

• lack of skills

• lack of research and development

• different culture

• not enough capital

Open Ended

Like TWO downing men, Iberia and British Airways (BA) have long seen either other as a potential means of staying afloat. The rate at which the airlines have been sinking at last forced them into each others arms on November 12th 2009, when a merger was agreed.

Using the evidence, explain the type of integration involved in the agreed merger between BA and Iberia