Business Objectives and Growth Factors Quiz
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Questions and Answers

Which internal factor can significantly influence a business's objectives?

  • Legislation
  • Competition
  • Culture (correct)
  • Market Conditions

What external factor might lead a business to adjust its objectives to remain competitive?

  • Leadership changes
  • New technology (correct)
  • Employee performance
  • Corporate culture

Which of the following is NOT considered an internal factor affecting business objectives?

  • Performance
  • Market Demand (correct)
  • Leadership
  • Culture

How can government legislation impact a business's objectives?

<p>By creating new sales opportunities (A)</p> Signup and view all the answers

What consequence might arise due to shifts in market conditions?

<p>An adjustment of profit objectives (D)</p> Signup and view all the answers

Which of the following is a target for a growing business?

<p>Take over other businesses (C)</p> Signup and view all the answers

In a struggling business, which objective is most likely to be prioritized?

<p>Achieve enough sales to break even (D)</p> Signup and view all the answers

Which business objective is associated with an expanding market?

<p>Growth (B)</p> Signup and view all the answers

What might a business aim to do in a negative economic climate?

<p>Retrenchment (A)</p> Signup and view all the answers

Why might a business focus on improving efficiency regardless of the economic climate?

<p>To lower costs and maintain profits (A)</p> Signup and view all the answers

What is a characteristic of internal (organic) growth?

<p>The business introduces new products or enters new markets. (D)</p> Signup and view all the answers

Which method of external growth involves businesses at different stages of production?

<p>Forward vertical merger (A), Backward vertical merger (C)</p> Signup and view all the answers

How can a business achieve lower costs as a result of growth?

<p>By achieving economies of scale. (D)</p> Signup and view all the answers

What is the primary difference between a merger and a takeover?

<p>A merger is voluntary, whereas a takeover is not. (B)</p> Signup and view all the answers

Which of the following is a potential benefit of entering new markets as a method of internal growth?

<p>Higher sales revenue. (B)</p> Signup and view all the answers

What is an example of a conglomerate merger?

<p>A software company merging with a food production firm. (C)</p> Signup and view all the answers

What role does new technology play in the growth of a business?

<p>It can enhance processes and develop new products. (B)</p> Signup and view all the answers

Which type of merger combines firms that operate at the same stage of production?

<p>Horizontal merger (A)</p> Signup and view all the answers

What is one of the main benefits of globalization for businesses?

<p>Access to technology and resources (A)</p> Signup and view all the answers

How can globalization create challenges for businesses operating internationally?

<p>It introduces foreign competition. (D)</p> Signup and view all the answers

Which of the following describes imports?

<p>Goods and services received from another country (A)</p> Signup and view all the answers

What is a potential drawback of relocating operations due to globalization?

<p>Challenges of adapting to foreign consumer needs (D)</p> Signup and view all the answers

Why might smaller local businesses be threatened by international businesses?

<p>International businesses often provide unique products that local businesses cannot replicate. (D)</p> Signup and view all the answers

What is a primary disadvantage of selling assets to finance growth?

<p>The business loses ownership of valuable resources. (A)</p> Signup and view all the answers

Which of the following is an example of an external source of finance?

<p>Share capital (B)</p> Signup and view all the answers

How does retained profit serve as a source of finance?

<p>It is the safest form of finance as it avoids risk. (B)</p> Signup and view all the answers

What is a potential risk associated with share capital?

<p>Loss of control over the business. (B)</p> Signup and view all the answers

What typically influences the cost of borrowing funds for a business?

<p>The type of financing used and market conditions. (D)</p> Signup and view all the answers

What is one of the fixed responsibilities when a business uses loan capital?

<p>Making regular interest payments. (C)</p> Signup and view all the answers

What could potentially happen if a business cannot meet its loan repayments?

<p>The business could face cash-flow issues. (D)</p> Signup and view all the answers

What is a characteristic of using retained profits for expansion?

<p>It does not require repayment. (C)</p> Signup and view all the answers

What is one primary way a public limited company (PLC) raises capital?

<p>Selling shares on a stock exchange (C)</p> Signup and view all the answers

Why might a business prefer internal financing over external financing?

<p>To maintain control and avoid debt. (A)</p> Signup and view all the answers

Which of the following is a key benefit of becoming a PLC?

<p>Limited liability for shareholders (C)</p> Signup and view all the answers

What is a disadvantage of using loan capital for financing growth?

<p>The requirement for periodic payments. (D)</p> Signup and view all the answers

What is a potential risk faced by public limited companies?

<p>Increased risk of takeover (C)</p> Signup and view all the answers

Which factor may lead to public limited companies negotiating better prices with suppliers?

<p>Their size and market presence (D)</p> Signup and view all the answers

One drawback of being a PLC involves which of the following aspects?

<p>Complex decision-making (B)</p> Signup and view all the answers

How does becoming a PLC affect the decision-making process within the company?

<p>Greater influence of external shareholders (D)</p> Signup and view all the answers

What happens to the level of media attention when a company becomes a PLC?

<p>It significantly increases (A)</p> Signup and view all the answers

What is the effect of becoming a PLC on financial performance transparency?

<p>Decreases financial privacy (B)</p> Signup and view all the answers

What is the primary purpose of imposing quotas on imports?

<p>To restrict the amount of specific goods entering the market (A)</p> Signup and view all the answers

Which of the following best describes protectionism?

<p>Imposing regulations that limit the flow of imports (B)</p> Signup and view all the answers

What is one implication of subsidies for domestic producers?

<p>They increase the competitive edge against foreign producers (D)</p> Signup and view all the answers

Which of the following is NOT a reason for imposing trade barriers?

<p>Preventing a surplus of goods in the domestic market (C)</p> Signup and view all the answers

How does a trade bloc, such as ASEAN, affect member countries?

<p>It promotes trade and may give preferential treatment to members (B)</p> Signup and view all the answers

Flashcards

Internal Growth

A business expands by itself, introducing new products or entering new markets.

External Growth

A faster way for a business to grow by joining forces with another.

Merger

Two or more businesses voluntarily agree to join and work as one.

Takeover

One business buys another to gain control by acquiring enough shares.

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New Markets

Expanding into new markets, regions, or customer segments.

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New Products

Developing new products or improving existing ones through innovation or research.

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Backward Vertical Integration

A business joins with another at a previous stage of production, such as a supplier.

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Conglomerate

Businesses with no common business interest join together.

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Public Limited Company (PLC)

A business that can raise funds by selling shares on a stock exchange.

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Stock Market Flotation

The process of a private limited company becoming a PLC by selling shares on the stock exchange.

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Ability to Raise Finance

A major advantage of PLCs, allowing them to raise capital easily through selling shares to the public.

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Limited Liability

Shareholders are only responsible for the amount they invested in the company, not its overall debts.

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Prestige and Reliability

PLCs are often perceived as more reputable and trustworthy due to their public profile.

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Complex Accounting and Reporting

PLCs need to follow strict rules and regulations for accounting and reporting their financial performance.

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Risk of Takeover

PLCs are more vulnerable to being acquired by other companies due to their public ownership.

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Increased Media Attention

Increased media attention and scrutiny due to their public profile.

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Business Objectives Change

Changes in a business's goals, targets, or aspirations.

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Internal Factors

Factors that are within the company's control, like the skills of its leaders or the values it promotes.

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External Factors

Factors that are outside the company's control, such as the overall economy or government regulations.

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Company Culture

The collective attitudes, beliefs, and behaviors of a company's employees and stakeholders.

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Market Conditions

The overall economic climate, including consumer spending, inflation, and unemployment.

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Retrenchment

A business strategy where a company reduces its product range, operations, or workforce to maintain profits or efficiency during a challenging economic climate.

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Efficiency

Focusing on improving operational efficiency to reduce costs, increase productivity, and maximize profitability, regardless of economic climate.

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Profit

A business objective that aims to generate and increase profits, a key driver in any economic climate.

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Growth

A business strategy prioritizing growth by expanding operations, product lines, or market reach, often during periods of economic expansion.

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Break Even

A business objective focused on achieving enough sales to cover all expenses and break even, often used during challenging economic conditions.

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Quota

A trade barrier that sets a limit on the amount of a good that can be imported into a country.

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Protectionism

Government actions that aim to restrict international trade to protect domestic industries or achieve specific economic goals.

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Trade Bloc

An agreement between a group of countries to promote trade among themselves, potentially offering preferential treatment to member countries.

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Subsidies

Financial assistance provided by a government to domestic producers to help them compete with foreign businesses.

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Dumping

Selling goods in a foreign market at a price lower than their cost of production, often to gain market share.

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Internal sources of finance

Funds generated from within the business itself. This includes profits retained by the business, and sale of unused assets.

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External sources of finance

Funds raised from outside the business. Examples include loans, share capital, and grants.

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Retained profit

Profit kept by a business, instead of being distributed to shareholders.

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Loan capital

Money borrowed from a financial institution, usually with a fixed interest rate and repayment terms.

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Share capital

Capital raised by selling shares in a company.

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Risk of losing control

The risk that the owner(s) of a business may lose control of their business through the sale of shares.

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Cost of finance

The cost of borrowing money, which can vary depending on the source of finance.

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Availability of finance

The availability of sources of finance is not always guaranteed. Factors like the size of the business and its creditworthiness can influence accessibility.

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Risk associated with loan repayments

The risk of not meeting the terms of a loan, which could lead to financial problems for the business.

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Cash-flow problems

The potential for a business to experience cash flow difficulties if it is unable to make regular loan payments.

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Exports

Goods and services shipped from one country to another.

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Imports

Goods and services shipped from one country into another.

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International Business

A company with operations and markets all over the world.

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Globalization

The interconnectedness of businesses and economies across the globe.

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Location

When a business relocates its operations to take advantage of lower costs or closer markets.

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