Edexcel GCSE (9-1) Business (1BS0) · Spec 2.1.1, 2.1.2, 2.1.3 and 2.1.4
Growing the business
Read the notes, then try the questions. Each one is marked the moment you press Check, and shows the right answer and why.
Key ideas
- Organic (internal) growth comes from inside, such as opening new shops. External (inorganic) growth is by merger or takeover.
- Aims change over time. A firm may move from survival to growth after steady profits, or back to survival if a rival takes sales.
- A tariff is a tax on imports. It raises costs for firms that import. A trade bloc is a group of countries that trade freely with each other.
- Globalisation lets firms make, buy and sell in other countries.
- Ethical behaviour means doing what is right, not just what is legal. Bad publicity from a pressure group can cut sales.
Key terms
- Merger
- Two businesses joining together to form one.
- Takeover
- One business buying enough of another to control it.
- Tariff
- A tax on imported goods.
- Trade bloc
- A group of countries that trade freely with each other.
- Globalisation
- Businesses and markets becoming more connected across the world.
- Ethical behaviour
- Acting in a way that is morally right, even when the law does not require it.
Common mistakes
- Treating opening a new branch as external growth. It is internal growth.
- Saying a tariff makes imports cheaper. It makes them dearer.
- Thinking ethical and legal mean the same. A firm can behave ethically beyond what the law requires.
Exam tip
In an 'Evaluate' question, finish with a decision that is justified, compared with the other choice, and tied to the business's own situation. A summary that repeats earlier points earns little.
Free practice questions
8 questions, 15 marks. Answer, then press Check. The marking guide explains how the marks are worked out. Nothing is saved.
- Question 1 · Choose more than one[2 marks]
Which TWO of the following are methods of external (inorganic) growth?
Choose 2.
- Question 2 · Multiple choice[1 mark]
A bakery's aim in year one was survival. It now plans three more shops. Which change in aim does this show?
- Question 3 · True or false[4 marks]
Decide whether each statement about changing business aims is true or false.
1. A business may move from aiming to survive to aiming to grow once it makes steady profits.
2. Business aims never change once they are written in the business plan.
3. A new competitor taking sales is an internal reason for changing objectives.
4. Falling sales on one product can lead a business to reduce its product range.
- Question 4 · Multiple choice[1 mark]
The UK adds a 20% tariff to imported bicycles. What is the most likely effect on a UK shop that imports them?
- Question 5 · Matching[4 marks]
Match each trade term to its meaning.
- Question 6 · Multiple choice[1 mark]
A clothing retailer chooses to pay its overseas factory workers above the local legal minimum. This is an example of which type of behaviour?
- Question 7 · Multiple choice[1 mark]
What is the most likely effect on a business of bad publicity from a pressure group campaign?
- Question 8 · Multiple choice[1 mark]
Which of the following best illustrates globalisation affecting a UK business?