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CHAPTER 3 - Coggle Diagram

- - - - Limitation: Could be misleading
  - - - Limitation: A high level of output doesn't mean that a business is large
  - - - Limitation: Doesn't mean that the busniess is big
  - - - Limitation: Some business use production methods which employs very few people
- - - - history and summary of the business, and the objective of the business
    - - Describe what the business sells or delivers and strategy for continuing in the future. This section may also include full details of the product and how it is to be manufactured and distributed
    - - predicted costs - fixed costs and variable costs
      - forecast flow and working capital
      - projected future financial accounting statement several year or more into the future
      - projections of profitability and liquidity ratios
    - - Describe the market the business is targeting about: Total market size, predicted market growth, target market, analysis of competitors, predicted changes in the market in the future, forecast sales revenue from the product
    - - Describe the organisational structure, management, management and details of employees required. It usually includes the number and level of skills required for the employees
    - - Describes the physical location if applicable, internet sales or mail order. Also describe how the firm delivers products and services to customer
    - - explain how the business intends to satisfy customer needs and gain brand loyalty. A summary should be include to bring together all the points from above that should demonstrate the business will be successful
- - - - Horizontal intergration
        
        Definition
        
        Merge/ take over in the same industry at the same stage of production
        
        Benefits
        
        Economies of scale
        
        Higher marketshare
        
        Reduces competitors
      - Vertical intergration
        
        Definition
        
        Merge/ take over in the same industry but different stage of production ( It can be forward/ backward)
        
        Benefits of forward vertical intergration
        
        Assured outlet for its product
        
        Profit margin is absorbed by the expanded business
        
        Prevented from selling competing models of car
        
        Information about consumer needs and preferences can be obtained
        
        Benefits of backward vertical intergration
        
        Profit margin of supplier is absorbed
        
        Cost of components and supplies could be controlled
        
        Assured supply of important components
      - Conglomerate intergration (Diversification)
        
        Definition
        
        Merge/ take over in a completely different industry
        
        Benefits
        
        Spread risks
        
        Transfer of ideas between the different sections