IB BM 1.5 and 3.2 Review | Baamboozle - Baamboozle

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What is ONE advantage and ONE disadvantage of using share capital as a source of finance?

Adv: raise a large amount of capital, no interest needed to be paid; Disad: time-consuming, lost of control etc.

Identify ONE advantage of vertical backward integration.

More assured supply of resources, absorb profit margins of suppliers

Identify TWO advantages that internal growth has over external growth.

Better control and coordination, Relatively inexpensive, Maintains corporate culture

Identify TWO advantages of a joint venture.

Synergy, Spreading costs and risks, Entry to new/foreign markets, Relatively cheap, Competitive advantages, Exploitation of local knowledge

What is ONE disadvantage of using an overdraft as a source of finance?

Cost of borrowing is high due to high interest rates compared to other loan-bearing sources of finance

What are the FOUR components of a good recommendation for 10-markers in IB BM?

JJOD: judgement, justification, other option, dependent factors

Identify THREE external growth methods.

Mergers and acquisitions (M&As), Takeovers, Joint ventures (JVs), Strategic alliances (SAs), Franchising

What is ONE disadvantage of leasing?

In the long-run, the cost of leasing can add up to be more than purchasing the asset outright.

What is ONE advantage and ONE disadvantage of setting up as a strategic alliance instead of a JV?

Adv: Quicker and cheaper to set-up, Dis: easier to disband

Differentiate between an acquisition and a takeover.

With vs. without permission of board of directors of company being acquired / taken over.

Provide TWO differences between crowdfunding and microfinance.

Loans are made by microfinance organization, and microfinance targets underprivileged.

Identify TWO advantages for a franchisee of a franchise agreement.

Relatively low risk, Relatively lower start-up costs, Training and advice, Large scale advertising performed by franchisor etc.