Study Notes
The topic of Enterprise, Business Growth, and Size covers the characteristics of entrepreneurs, the contents and importance of a business plan, government support for start-ups, methods of measuring business size, reasons for business expansion, and causes of business failure.
- Entrepreneur — a person who organises, operates, and takes the risk of a new business venture. Example: A person starting their own bakery.
- Business Plan — a document containing business objectives and important details about operations, finance, and owners. Example: A plan outlining a new restaurant's target market and financial projections.
- Internal Growth — business expands its existing operations. Example: A coffee shop opening a new branch.
- External Growth — when a business takes over or merges with another business. Example: A tech company acquiring a smaller startup.
- Horizontal Integration — when one firm merges or takes over another firm in the same industry at the same stage. Example: Two car manufacturers merging.
- Vertical Integration — when one firm merges or takes over another firm in the same industry but at a different stage of production. Example: A clothing retailer acquiring a fabric supplier.
- Conglomerate Integration — when one firm merges with or takes over a firm in a completely different industry. Example: A food company merging with a tech firm.
Exam Tips
Key Definitions to Remember
- Entrepreneur
- Business Plan
- Internal Growth
- External Growth
- Horizontal Integration
- Vertical Integration
- Conglomerate Integration
Common Confusions
- Mixing up internal and external growth methods
- Confusing horizontal and vertical integration
Typical Exam Questions
- What is an entrepreneur? A person who organises, operates, and takes the risk of a new business venture.
- What are the contents of a business plan? Business objectives, operations, finance, and owner details.
- How can a business expand externally? Through mergers or acquisitions.
What Examiners Usually Test
- Understanding of different business growth methods
- Ability to explain the role of government in supporting start-ups
- Knowledge of the contents and purpose of a business plan