IGCSE Economics Paper-2: Specimen Questions with Answers 60 - 61 of 100

Passage

Managers today, regard buying of a company as an access into the market.

Question 60 (4 of 5 Based on Passage)

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Short Answer▾

Distinguish between vertical and horizontal integration.

Explanation

  • Horizontal and vertical integrations are often used by many businesses working in the same industry and production process.
  • In a horizontal integration, a company acquires another that has same level of value chain in an industry. While, on the other hand vertical integration involves the acquisition of business operations of same production level.

In Vertical Integration, a company goes through a vertical integration to acquire the operation of company in the production process of the same industry.

Why a company choose to integrate vertically:

  • To strengthen their supply chain
  • To reduce their production costs
  • To capture upstream or downstream profits
  • To access new distribution channels.

Therefore, to achieve all these above benefits, a company acquires another, either before or after the supply chain process.

Question 61 (5 of 5 Based on Passage)

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Short Answer▾

Explain the expansion strategies of a business.

Explanation

Every business requires growth and expansion for its wellbeing and to achieve its goals. Many entrepreneurs find all possible ways to expand their business often find hard in today՚s slow-growth economy. Here are five small business expansion strategies that can help a business owner in meeting their targets better.

  • Add new products and services: Adding new products and services may sound simple but finding the best products that are in demand as well guarantee that it will work well can as be challenging. Startups may figure out products and services that their customers want and are ready to pay the price for itby doing market research, you can take a better decision.
  • Sell more to your customers: Perform a market segmentation analysis to find what type of customer are likely to buy your product so you can focus on sales and marketing better. This analysis is based on segments of customers based on their age, gender, location, buying history, etc.
  • Expand business into new territories: Try to expand your business by finding new customers in different niches or different locations. For instance, if you own a retail store, then you can open a new shop at new locations in different geographic areas.
  • Reach out to new customer markets: Many businesses prefer to target their sales and marketing efforts to few segments of customer based on their age, gender, and location, interests, etc. But, do you think that there might be other customer markets as well who might be viable for your products and services? Therefore, reach out to right target customers via different marketing mediums.
  • Target new sales and delivery channels: We all know that internet has taken every business under their shed. Whether a new startup or already established business, everyone is seeking the benefits of selling via online. As by reaching online, you can target a bigger audience base and reach a greater number of customers. With the help of advertising online and using search engine optimization (SEO) methods, your business could easily be available online.

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