business expansion

Home > Flashcards > Print Preview

The flashcards below were created by user murphyainec on FreezingBlue Flashcards. What would you like to do?

  1. what is organic growth?
    natural, slow expansion of the business
  2. organic expansion
    • >increase sales
    • >franchising
  3. what is franchising?
    when the original owner grants permission to other entrepreneurs to copy his idea exactly and set up an identical business to his, in return for a fee
  4. what is inorganic growth?
    quick expansion of a business achieved by merging with taking over or forming a strategic alliance with another business
  5. what is a strategic alliance?/
    two businesses agree to co-operate with each other on a single business project but still remain two seperate businesses... joint venture e.g.disney and mcdonalds
  6. what is a merger?
    two seperate businesses voluntarily agree to join together permanently to form one larger business... amalgamation life and irish permanent formed irish life and permanent plc
  7. what is a takeover?
    when one business takes control of another by buying it outright, with or without its consent... acquisition e.g.meteor and eircom
  8. psychological reasons for expansion
    • >ambition
    • >challenge
  9. defensive reasons for expansion
    • >economies of scale
    • >to protect supplies
    • >to protect distribution e.g. coke and BK
    • >diversification e.g. gillete and parker pens
  10. offensive reasons for expansion
    • >eliminate competition e.g. ryanair aer lingus
    • > asset stripping (no intention of running business)
    • >to acquire new products e.g. ideas, products, staff
    • >to increase profits
  11. long term sources of finance
    • >equity caital
    • >debt capital
    • > retained savings
  12. contrast debt and equity
    • >equity.. few loans..few repayments..less chance of going bankrupt
    • debt.. lots of loans..higher chance of going bankrupt

    • >equity.. permanent source of finance.. does not have to repay capital until business closes down
    • debt.. must repay in full on a particular date in future

    • >equity.. does not have to pay dividends.. directors choice
    • debt.. must pay interest whether making profit or not

    • >equity..does not have to provide security
    • debt.. security needed so risk losing assets if cannot repay

    • >equity.. dividends not tax deductable
    • debt.. interest tax deductable.. so pays less tax

    • >equity.. selling shares.. lose control
    • debt.. does not effect control
  13. factors to consider when choosing finance for expansion
    • >cost
    • >security
    • >tax implications
    • >control
  14. list things affected by business expansion
    • >share price
    • >products
    • >management
    • >finances
    • >supplies
    • >profits
    • >employees
    • >customers
  15. importance of irish business expanding in ireland
    • >more taxes (corporation)... improved infrastructure
    • >less unemployment
    • >spin off effect
    • >if charge low price.. lower cost of living
  16. importance of irish business expanding abroad
    • >increased sales abroad.. increase in employment here
    • >exporting goods improves balance of payments
    • >exporting bring foreign currency into ireland
    • >exporting impoves our international relations

Card Set Information

business expansion
2011-11-08 18:12:32

chapter 18
Show Answers:

What would you like to do?

Home > Flashcards > Print Preview