WEBVTT 00:00:00.500 --> 00:00:03.955 Welcome to GCSE Edexcel Business revision. 00:00:04.105 --> 00:00:06.854 Unit B U S 6: Growing the business. 00:00:09.533 --> 00:00:18.834 Internal or organic growth expands the business through its own activities, such as opening another branch, developing products or selling into new markets. 00:00:21.500 --> 00:00:26.555 Innovation and research and development can produce improved products or processes. 00:00:26.705 --> 00:00:32.709 Development costs occur before success is certain; customer research and testing can reduce the risk. 00:00:35.367 --> 00:00:40.795 New markets can be reached through a changed marketing mix, technology or overseas expansion. 00:00:40.945 --> 00:00:45.745 A website can extend reach but needs suitable delivery, promotion and support. 00:00:48.400 --> 00:00:53.509 Organic growth allows more gradual expansion and can preserve the business's culture. 00:00:53.659 --> 00:00:58.682 It may be slow, and success depends on finance, demand and management capacity. 00:01:01.333 --> 00:01:05.191 External or inorganic growth combines existing businesses. 00:01:05.341 --> 00:01:12.293 A merger joins businesses into one organisation; a takeover occurs when one business acquires control of another. 00:01:14.967 --> 00:01:19.569 External growth can quickly increase customers, capacity or expertise. 00:01:19.719 --> 00:01:26.289 It can also be expensive and create integration problems, duplicated roles and clashes in working practices. 00:01:28.967 --> 00:01:33.661 Growth can spread some fixed costs over more output or improve bargaining power. 00:01:33.811 --> 00:01:40.657 Larger scale does not automatically reduce every cost: coordination problems can make the business less efficient. 00:01:43.333 --> 00:01:49.221 A public limited company (plc) has limited liability and can offer shares to the public. 00:01:49.371 --> 00:01:54.917 A plc is a privately owned business, not the same as a government-owned organisation. 00:01:57.567 --> 00:02:03.165 Public share offers, including a stock-market flotation, can raise substantial share capital. 00:02:03.315 --> 00:02:10.898 Existing owners may lose some control and shareholders expect information and returns; a flotation has costs and requirements. 00:02:13.567 --> 00:02:17.497 Internal finance includes retained profit and selling assets. 00:02:17.647 --> 00:02:25.751 Asset sales raise cash but may reduce capacity if needed equipment is sold; retained profit may be limited or needed elsewhere. 00:02:28.433 --> 00:02:31.601 External finance includes loans and share capital. 00:02:31.751 --> 00:02:39.258 Loan repayments and interest put pressure on cash; share issues dilute ownership but do not require scheduled loan repayments. 00:02:41.933 --> 00:02:44.387 Match finance to the project and risk. 00:02:44.537 --> 00:02:52.833 A long-lived expansion usually needs finance that remains available long enough, rather than relying entirely on a short-term overdraft. 00:02:55.500 --> 00:03:00.130 Fictional case: a bakery could open its own second shop or buy a rival. 00:03:00.280 --> 00:03:07.649 A takeover gives immediate premises and customers, but purchasing and integrating it may cost more than the bakery can safely fund. 00:03:10.300 --> 00:03:13.254 Objectives can change as the business evolves. 00:03:13.404 --> 00:03:20.421 A start-up may prioritise survival; an established business may pursue growth, higher profit or a larger market share. 00:03:23.100 --> 00:03:25.797 Market conditions can change priorities. 00:03:25.947 --> 00:03:33.391 Falling demand may lead to cost reduction, a smaller workforce or withdrawal from an unprofitable market rather than expansion. 00:03:36.067 --> 00:03:40.961 New technology can enable online growth or make an old product less attractive. 00:03:41.111 --> 00:03:45.975 Objectives should reflect both the opportunity and the business's ability to adapt. 00:03:48.633 --> 00:03:51.373 Actual performance influences decisions. 00:03:51.523 --> 00:03:58.401 Strong profit and cash may support investment; poor results may make financial security the immediate objective. 00:04:01.067 --> 00:04:05.667 Legislation may require changes to products, staffing or operations. 00:04:05.817 --> 00:04:12.787 Internal reasons, such as new leadership, owner priorities or available skills, can also change objectives. 00:04:15.467 --> 00:04:22.303 A business may enter or exit markets, increase or reduce its workforce, and widen or narrow its product range. 00:04:22.453 --> 00:04:26.326 Growth is one possible direction, not an inevitable goal. 00:04:29.000 --> 00:04:38.854 Changes affect connected functions: a sales-growth objective needs marketing, enough operational capacity, suitable people and finance to support them. 00:04:41.533 --> 00:04:46.898 Fictional judgement: a retailer losing money in a region might close stores to protect survival, 00:04:47.048 --> 00:04:52.082 but closure costs and damage to customer access should be weighed against future savings. 00:04:54.733 --> 00:04:59.124 Globalisation is increasing connection between economies and markets. 00:04:59.274 --> 00:05:03.460 Businesses may buy, sell, produce or compete across national borders. 00:05:06.133 --> 00:05:09.987 Imports are bought from overseas; exports are sold overseas. 00:05:10.137 --> 00:05:17.431 Imported supplies can offer lower costs or greater choice, but delivery, exchange rates and quality must be considered. 00:05:20.100 --> 00:05:27.299 Overseas competitors can increase domestic competition, putting pressure on prices or encouraging differentiation. 00:05:27.449 --> 00:05:31.807 Globalisation can create opportunities and threats for the same business. 00:05:34.467 --> 00:05:38.378 Exporting can enlarge the market and spread risk across countries. 00:05:38.528 --> 00:05:45.987 It also brings language, cultural, legal, delivery and currency issues, so a successful domestic offer may need adapting. 00:05:48.667 --> 00:05:51.696 A multinational operates in more than one country. 00:05:51.846 --> 00:05:58.485 Locations may be chosen for access to customers, labour, materials, transport or other business conditions. 00:06:01.167 --> 00:06:06.073 Moving production can reduce particular costs or bring the business closer to a market. 00:06:06.223 --> 00:06:11.903 Coordination, reputation, training and supply reliability may offset some savings. 00:06:14.567 --> 00:06:16.807 A tariff is a tax on imports. 00:06:16.957 --> 00:06:24.817 It can raise the cost of imported products or materials and affect competitiveness; the importer may absorb the cost or pass it on. 00:06:27.467 --> 00:06:33.172 A trade bloc is a group of countries with agreements intended to reduce trade barriers between members. 00:06:33.322 --> 00:06:38.868 Trade conditions with non-members can differ; do not assume all tariffs everywhere disappear. 00:06:41.533 --> 00:06:46.974 E-commerce can help businesses reach international customers without a shop in every country. 00:06:47.124 --> 00:06:52.344 They still need to manage payment, delivery, returns and local customer expectations. 00:06:55.000 --> 00:07:05.046 Adapt the marketing mix: product features or promotion may change for local needs, prices must reflect costs and competition, and distribution must fit the market. 00:07:07.700 --> 00:07:19.187 Worked example: a tariff of 10 percent on goods with a taxable import value of 5,000 pounds adds 500 pounds , giving 5,500 pounds before other charges. 00:07:19.337 --> 00:07:23.305 The effect on final selling price depends on the firm's decision. 00:07:25.967 --> 00:07:29.633 Ethics concerns judgments about acceptable business behaviour. 00:07:29.783 --> 00:07:37.420 Ethical choices can go beyond minimum legal requirements, such as paying suppliers fairly or avoiding misleading promotion. 00:07:40.100 --> 00:07:45.592 Ethical sourcing and fair treatment may improve reputation, customer loyalty and recruitment. 00:07:45.742 --> 00:07:50.530 They can also increase costs, and customers may be unwilling to pay a higher price. 00:07:53.200 --> 00:07:59.311 Environmental considerations include energy use, emissions, waste, packaging and resource use. 00:07:59.461 --> 00:08:06.349 Sustainability means considering whether activity can continue without unacceptable harm or resource depletion. 00:08:09.000 --> 00:08:14.812 Reducing waste or energy use can save money as well as reduce environmental impact. 00:08:14.962 --> 00:08:20.427 Other measures, such as cleaner equipment, may need substantial investment before savings occur. 00:08:23.100 --> 00:08:29.040 Trade-offs arise when a choice improves ethics or sustainability but reduces short-term profit. 00:08:29.190 --> 00:08:33.667 Long-term reputation, efficiency and risk can change that comparison. 00:08:36.333 --> 00:08:42.379 Pressure groups may use campaigns, publicity, petitions or boycotts to influence business behaviour. 00:08:42.529 --> 00:08:47.883 They can affect demand and encourage changes to sourcing, products, packaging or promotion. 00:08:50.533 --> 00:08:55.052 Claims about ethical or environmental performance need credible evidence. 00:08:55.202 --> 00:09:01.974 Unsupported claims can damage trust; changing promotion without changing actual practice may be ineffective. 00:09:04.633 --> 00:09:12.215 Fictional judgement: a clothing retailer considering higher-cost responsibly sourced fabric should compare customer willingness to pay, 00:09:12.365 --> 00:09:15.373 supplier reliability and its long-term brand, 00:09:15.523 --> 00:09:19.392 rather than assume ethics always increases or reduces profit. 00:09:22.067 --> 00:09:24.157 That completes Growing the business. 00:09:24.307 --> 00:09:27.653 Revisit the notes and test yourself on the revision website.