# data[].attributes.body
Growing the business to increase sales and profits - Tesco, Lidl

# data[].attributes.body
Growing through mergers/takeovers - horizontal(same business type) and vertical(different business type)

# data[].attributes.body
Economies of scale: premises, staff, purchasing, marketing

Synergies: merging - can sell off surplus assets, reduce competing products

Security: withstand threats and restrict new competition

Diversification: reduce dependence on one area

Supplies: merge with supplier to ensure access to raw materials

Markets: reduce dependence. e.g Kerry Group.

# data[].attributes.body
SWOT analysis recommended acquisitions to diversify business. Senior managers spent all their time control empire of unrelated businesses. Business began losing millions. Mercedes sold businesses and decided to stick to organic growth.

# data[].attributes.body
Amount:
Equity - large amounts available if business is attractive
Debt - large amounts if risk is low, but collateral required

Cost:
Equity - cheap as dividend payments are optional. However, share prices may fall and directors may be voted off board.
Debt - Expensive due to interest rates.

Control:
Equity - owners' control is diluted.
Debt - no loss of control but collateral is necessary.

Risk:
Equity - low risk as even if profits are low, only investors lose out and assets remain untouched. Low gearing.
Debt - high risk because if loans are not repaid, business may be liquidated and assets sold to pay debt. High gearing.

EG:
Gary Lavin, founder of VIT HIT and Organic Fanatic, chose equity over debt. Sold 17% of business to investor in return for €250,000.

# data[].attributes.body
Benefits: cheap, no interest
Disadvantages: shareholders may sell shares(cheap takeover bid), legal formalities, cost of being a PLC, hard to raise finance in time of recession

EG:
Enterprise Ireland has moved away from grants and now gives venture capital, in order to make a profit rather than giving free grants.
They gave €320,000 to Kingspan (building product manufacturer) to assist growth. Sold shares a few years later for profit of €11 million.

# data[].attributes.body
Benefits: free, no interest, no security needed, no effect on ownership
Disadvantages: profits must first be earned, shareholders may be unhappy and leave = low share price

# data[].attributes.body
Benefits: quick, repayments are structured to suit the borrower, interest is a tax-allowable business expense
Disadvantages: interest must be repaid, business may have high-gearing = hard to raise additional finance

# data[].attributes.body
1)Management structure must be put in place
2)Funding is needed
3)Financial structure and control must be put in place = budgets, CFFs to avoid overtrading
4)Human Resources - need HRM to avoid industrial relations problems

# data[].attributes.body
1)R&D - necessary to widen product mix to meet requirements of more customers
2)Planning - need to keep up-to-date with competitors - SWOT analysis every year
3)Profits/Dividends - must pay dividends to shareholders - can keep some as fund for more growth without debt

# data[].attributes.body
Implications of business expansion:

Organisational structure
In the short term, an expanding business may retain its organisational structure – especially if it is expanding organically.  However, it needs a clear line of authority and a definite chain of command to manage the changes.

In the long term, the business is likely to need some re-structuring to manage its expanded size efficiently.  An expanding business may need to change from a functional structure to a product or geographical structure.  It is easier for top management to monitor individual units when they are separated into distinct divisions.  Also, product or geographical divisions can respond more quickly to conditions in their own markets.

Product mix
In the short term an expanding business develops products to suit a range of market segments.  There should be an increased product mix as the business grows.

In the long term there will also be a wider product mix because of continuing market research and product development.  In an expanding business, the product mix could grow beyond the business’ original core products.  In the long term, the business will have to decide on new products, markets, promotion, distribution, brand names and possibly the company’s identity.

Profitability
In the short term, profits might decrease as the business absorbs the cost of expansion, e.g. researching, developing and launching a new product or acquiring a company.

In the long term profits should increase with the success of expansion.  These profits are usually the result of economies of scale and the increased market power that the expanded company will have.

Employment
In an expanding business, people will need to be trained, promoted, recruited and perhaps, made redundant. In the short term employment will increase as the business grows.  More staff will be needed to cope with the greater work load.

In the long term an expanded business will inevitably employ more workers.  However, the workforce may have experienced some losses through rationalisation – especially following a merger or takeover.

# data[].attributes.body
Widen product range, sell into new target markets, employee more sales people, reinvest profits

# data[].attributes.body
Buying an existing business
2011 - Musgrave Group bought Superquinn

# data[].attributes.body
Separate legal entity

# data[].attributes.body
Sold by owners to directors, managers, employees as a going concern

Why:
-Sell subsidiary as a going concern
-Parent company may need cash
-Owners may want to retire
-Owners may be unhappy with profits

# data[].attributes.body
Partnership to carry out some specific commercial operation(s)

Other business has local knowledge - funded by larger foreign firm

# data[].attributes.body
Buy majority/all voting shares
Expensive
Friendly/Hostile
2011 - Sysco Corporation bought out Pallas Foods Ltd for 175 million

# data[].attributes.body
Merging/Taking over another business

Why:
-spread risk
-produce more profitable products
-maximise use of resources

Horizontal/Vertical

# data[].attributes.body
Agreement to promote business interests of both businesses
Eg Fitbit and VISA
Mercedes Benz and SmartWatches
Benefits:
-voluntary(minimum legal formalities)
-remain separate legal entities
-skills shared
-easily ended
-increase range of products(competitive advantage)
-easier to succeed in global markets

# data[].attributes.body
Two or more firms agree voluntarily to merge
E.g Waterford PLC + Avonmore PLC = Glanbia PLC

Benefits:
-quick
-economies of scale
-access to new markets
-job creation
-expand + eliminate duplication

Disadvantages:
-redundancies  = industrial relations problems
-managers may have conflict = poor teamwork and decisions

# data[].attributes.attachment_link.title
Leaving cert & Junior cert Exam Revision | Studyclix makes exams easier

# data[].attributes.attachment_link.description
Leaving Cert and Junior Cert exam paper questions and marking schemes listed by topic. Studyclix makes exam revision and study easier

# data[].attributes.attachment_link.title
Leaving cert & Junior cert Exam Revision | Studyclix makes exams easier

# data[].attributes.attachment_link.description
Leaving Cert and Junior Cert exam paper questions and marking schemes listed by topic. Studyclix makes exam revision and study easier

# data[].attributes.body
(a) Starting
1)Start-up.
2)Management, finance, products, customers, sales and profits.
3)Want to break even - may use profits for expansion.

(b) Surviving.
1) Overcome the initial problems.
2) New problems - organisation, low profits, lack of finance for growth, cost of employing new staff.

(c) Growth
1) Expansion - afford to take commercial risk - credit, stocking a wider range.
2) Proper management.
3) Owners are reaping rewards.
4) Additional finance required to fund growth.

(d) Future
1) Some grow - diversification and acquisitions.
2) Some are happy with existing size - lost opportunities.
3) Some decline, close or sell out.
4) Management buy-out or new management.

# data[].attributes.body
Raising Finance
1) How much is required?
2) Source of finance -
A) Short term (bank overdraft for salaries, insurance)
B) Medium term (leasing for computer,machinery)
C) Long term (rent/purchase premises)

Legal entity
1) Sole Trader
2) Partnership
3) Private Limited Company (Limited Liability)

Production Methods
1) Job - Single product with specific requirements eg. making a suit,building a bridge
2) Batch - Medium quantities,range of goods eg. Baking bread/cakes of different sizes, printing books.
3) Mass - Large quantities of the same product eg. Bic Pens

Employing staff
Business must be aware of skills required and employ suitable staff.

# data[].attributes.body
Steps to improve cash flow:
-no delay in sending invoices
-avoid operating on an overdraft
-offer discounts to debtors to pay early
-ensure there are good credit and stock control systems
-certain assets may be leased rather than bought

Cash flow forecast:
An estimate of future movements of cash into and out of the business

Why:
-check when money is received
-check if business can pay debts as they fall due
-know when overdrafts are due, and for how much

Importance:
-enables firm to predict potential bank balance
-highlights when payments must be made
-shows how payments may be streamlined(delay paying some bills until paid by debtors, to avoid using an overdraft)
-opportunity cost may be maximised(delaying payments and lodging money in bank to earn interest)

Uses:
-guide for new businesses
-keep banks informed of business' financial position
-ensure budgets are adhered to

# data[].attributes.body
(a) Importance
1) Foresee difficulties (SWOT).
2) Impress investors.
3) Provide comparison(budgets).

(b) Parts
1) Introduction
Current situation in the business and prospects for the future.

2) Management
Key people involved on the management team and their experience.
3) Product + Production processes
Product to be sold and its USP.
4) Marketing plan & mix Information on existing customers, the level of sales and the potential for growth.
4a) Pricing policies
Prices necessary to succeed in target market. Information on competitors' prices should also be included.
6) Legal issues
Legal structure of business, e.g sole trader/PLC.
7) Location
Location of premises and its proximity to the firm's markets.
8) Finances
Cash flow forecast.
Sales and profits forecast.
Financial requirements, e'g short,medium,long term.
Reasons why additional capital is required.
Sources of funding.
9) Conclusions
Summary of main features of the business and an outline of a proposed timescale for implementing the plan.

# data[].attributes.body
Formation & dissolution :
Register for tax with Revenue Commissioners.
Register business name if different from the sole trader's.
No continuity of existence if sole trader dies.
Control :
Owned & controlled by sole trader who makes all the decisions.
Finance :
Equity finance by investing personal savings.
Profits & risk :
Keep all profit. Pay income tax on profits.
Unlimited Liability.

# data[].attributes.body
Formation & dissolution :
Register for tax with Revenue Commissioners.
Register business name if different from partners' names.
No continuity of existence if partner leaves/dies.
Control :
Owned & controlled by partners who make all decisions.
Finance :
Equity finance by bringing in new partners.
Profits & risk :
Partners share all profits and pay income tax on their share.
Unlimited Liability.

# data[].attributes.body
Formation & dissolution :
Register for tax with Revenue Commissioners.
Register company with Companies Registration Office.
Continuity of existence regardless of who owns shares.
Control :
Owned & controlled by shareholders(1-149) who elect Board of Directors to run the business on their behalf
Finance :
Equity Finance can be raised by selling shares.
Profits & risk :
Corporation Tax on profits.
Profits distributed amongst shareholders according to number of shares held.
Shareholders pay income tax on dividends.
Limited Liability.

# data[].attributes.body
Formation & dissolution :
Register with Revenue Commissioners.
Register co-op with Companies Registration Office.
Continuity of existence regardless of who owns shares.
Control :
Owned & controlled by members who elect management committee.
Finance :
Equity finance can be raised by bringing in new members.
Profits & risk :
Corporation Tax on profits.
Profits distributed among members.
Members pay income tax on dividends.
Limited Liability.