1.7 Expanding a business

Which of the following is a method of external growth?

• Franchising

• Opening new stores

• Merger

• Outsourcing

Which of the following is a disadvantage to a business of growing through franchising?

• The receipt of royalties

• Some control is lost

• Expansion is slow compared to opening new stores

• High levels of risk for the franchisor

When one business acquires a controlling interest in another business it is classed as:

• Merger

• Takeover

• Franchising

• Outsourcing

Which of the following is a disadvantage of organic growth?

• Less likely to experience diseconomies of scale

• Growth may be slow

• Can often be financed through internal funds

• It is often hard to control and manage compared to external growth

Which of the following is an example of inorganic growth?

• T-Mobile and Orange merge

• ALDI open a new store

• Marks & Spencer operate online

• British Airways plan to outsource call centres

Selling goods online is an example of which expansion method?

• Franchising

• Opening new stores

• E-commerce

• Outsourcing

When Kraft acquired a controlling interest of Cadbury it was classed as a:

• Merger

• Franchise

• Opening new stores

• Takeover

When a furniture manufacturer uses another business to produce sofas on its behalf it is known as:

• Merger

• Outsourcing

• Takeover

• Franchising

Which of the following is a disadvantage of growth through e-commerce?

• The business does not have to open a physical store

• Customers can be accessed 24 hours a day

• An online store adds another purchasing opportunity for customers

• Customers may buy online and stop using any physical stores

A franchisee is...

• The business that sells the franchise

• The individual who buys the franchise

• The person who lends someone the money to open a franchise

• The business that sells the franchisor