2.1.1 Business growth

Which of the following is true in relation to sources of finance for growing and established businesses?

• Selling assets is an external source of finance
• Share capital is an external source of finance
• Retained profit is an external source of finance
• Loan capital is an internal source of finance

Which of the following is a benefit of inorganic growth?

• Often easier to manage and control than internal growth
• Market share can be increased overnight
• Tends to be less expensive than organic growth
• Growth is often slow

Which of the following best describes the term takeover?

• When two firms agree to join together to make one new business
• When a business finds a new market in another country
• When one business purchases another business
• When a business brings something new to the market

Which of the following is a benefit of using retained profit as a source of finance to fund business growth?

• It does not need to be paid back
• The business is at risk of takeover
• Interest is payable on the money borrowed
• Money can be paid back in instalments over the long-term

Which method of growth will most likely reduce the number of businesses that operate in a domestic market?

• Expansion overseas
• Opening of new stores
• Takeover of another business in the home country
• Entry into new foreign markets

Which of the following is a disadvantage to a retailer that operates through a number of physical stores of growing through the use of e-commerce?

• The business does not have to open more bricks and mortar stores
• 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

Which of the following is true in relation to sources of finance for growing businesses?

• A private limited company can raise finance through the stock exchange
• Interest payments have to be made when using retained profit
• A public limited company can sell more shares to fund growth plans
• Selling an unused building is an example of loan capital

Selling goods online is an example of which method of growth?

• Merger
• Opening new physical stores
• Takeover
• Changing an element of the marketing mix

Which of the following best describes growth by expanding overseas? When a business:

• Finds new customers to buy its products in its domestic market
• Purchases another business in its home country
• Finds a new market in another country
• Invests heavily in research and development

Which of the following is an advantage to a growing business of changing business ownership and becoming a public limited company?

• Owners have unlimited liability
• Shares can be sold to the public to raise finance
• Financial accounts are published
• Shares can only be sold to invited investors