Business expansion
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| 3 types of reasons for business expansion and growth | show 🗑
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| show | Protecting essential raw material supplies, labour supplies, Economies of scale, Profitability/financial strength, Diversification., Eliminate competition, Reduce costs and risk, Survive economic shocks
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| Protecting essential stock of supplies | show 🗑
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| Economies of scale | show 🗑
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| Profitability/financial strength | show 🗑
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| show | A business spreading its risks by getting into a different line of business. For example adding products, or selling to foreign countries.
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| Aggressive reasons for expansion | show 🗑
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| show | This is often a reason for expansion whereby one company may merge with or take over a competitor to eliminate a threat to its market share.
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| show | Expansion may allow a company to acquire new technology and new products developed by competitors. Helps to acquire certain patents, processes, expertise or technologies that enhance the overall profitability of the business in the short and long term.
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| Psychological reasons for expansion | show 🗑
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| show | Bank overdraft, accrued expenses, trade credit.
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| Bank Overdraft | show 🗑
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| Accrued Expenses | show 🗑
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| Trade Credit | show 🗑
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| Medium Term Sources of Finance | show 🗑
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| show | Over a five year period or less. Immediate possession of good however ownership doesn’t transfer until the last instalment is made. Expensive source of finance. No security is required but the HP Co. may repossess the asset if default.
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| Leasing | show 🗑
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| Long Term Finance | show 🗑
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| Equity/Share Capital/Owners Capital | show 🗑
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| show | Is money invested by the owners or shareholders and is low risk and does not require security. A firm financed mostly by Equity is lowly geared.
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| show | Is loans from financial institutions, is high risk as interest and capital must be repaid, irrespective of profitability.
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| show | Growth, Exporting, Licensing, Franchising.
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| show | Merger, Takeover/Acquisition, Strategic Alliance/Business Alliance/Joint Venture.
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| show | A friendly/voluntary amalgamation or joining together of two or more firms for their mutual benefit, trading under a common name. It involves mutual consent of two equal companies to combine and become one entity.
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| Takeover/acquisiton | show 🗑
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| show | An agreement between two or more independent businesses to pool resources and/or expertise to work together for their mutual benefit over a specified period of time or to complete a specified project, while all parties maintain their separate identities
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| show | Arrangement whereby the existing business with the proven business mode grants a contractual licence/permission to the person setting up the business to use its name, logo & business idea in return for a fee or percentage of profits/sales
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| show | A business expands gradually through the use of its existing products or by developing new products.
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| show | Another company called a Holding Company owns 51% of its voting shares
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| show | Long Term Loan that has a fixed interest rate and fixed repayment date.
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| Name 3 agencies that give grants | show 🗑
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Created by:
Lanaftz
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