2.1.1a Internal (organic) growth: new products and new markets Quiz: Pearson Edexcel Business, Unit 6

The 20 questions

1. What is internal (organic) growth?

   • Growth that comes only from the business receiving a government grant to fund its expansion
   • Growth that comes from taking over another business that is already trading in the same market
   • Growth that comes from within the business, such as launching new products or entering new markets
   • Growth that comes from a merger with a competitor on the stock exchange, creating a larger group

2. Which of these is an example of internal growth?

   • A business developing a new product through research and development
   • A business taking over a rival firm to gain its customers and its market share
   • A business merging with another firm to form a new company with shared ownership
   • A business buying shares in a competitor from the stock market each year

3. Which of these is a way a business can achieve internal growth through new markets?

   • Merging with a foreign company that already serves the market in that region
   • Taking over a supplier that has no customers in the country at all yet
   • Expanding overseas to sell its existing products in another country
   • Buying a competitor that already sells in that country to gain its customers

4. A business launches a new product line after investing in its own research and development. What type of growth is this?

   • External (inorganic) growth
   • Merger growth
   • Internal (organic) growth
   • Takeover growth

5. Which of these best describes innovation as a source of internal growth?

   • Reducing the number of products offered to customers each year to focus on the best-selling lines
   • Creating new products or improved processes that give the business a competitive advantage
   • Copying the products of competitors and selling them at a lower price with no real changes
   • Selling existing products at a lower price than competitors in every market they serve over time

6. How does changing the marketing mix help a business achieve internal growth?

   • It means the business must stop selling its products to anyone
   • It removes the need for the business to advertise its products at all
   • It always reduces sales by making products less attractive to customers
   • It can attract new customers or win greater share in existing markets

7. A business uses technology to sell its products overseas for the first time. Which method of internal growth is this?

   • External growth through a merger
   • New products, through research and development
   • External growth through a takeover
   • New markets, through expanding overseas

8. What is a key feature of internal (organic) growth compared with external growth?

   • It is usually slower and funded from the business's own resources
   • It requires the business to buy shares in other companies
   • It requires the business to merge with a competitor before it can start
   • It is always faster and always cheaper than external growth

9. Which of these would be an example of a business growing through new products?

   • A clothing brand launching a new eco-friendly range of jackets
   • A clothing brand buying a rival clothing firm that already has a range
   • A clothing brand merging with a shoe company to form a new group
   • A clothing brand selling its existing range to a single customer

10. A business aims to grow by reaching new customers in its home market. Which approach fits best?

    • Buying shares in a supplier so that it controls the supply chain
    • Taking over a business that already sells to its customers
    • Merging with a business that serves customers in another country
    • Changing its marketing mix to appeal to a different customer group

11. Which of these is a limitation of internal growth?

    • It can take a long time to build up enough sales and capacity
    • It always leads to the business losing all of its customers
    • It means the business cannot use any technology to grow
    • It means the business must give up its legal structure

12. Why might a business choose internal growth rather than a takeover?

    • It means the business automatically receives all of the competitor's customers
    • It stops the business from having to produce new products
    • It means the business never has to fund any investment at all
    • It keeps control in its own hands and avoids the cost of buying another company

13. Which of these shows a business using innovation for internal growth?

    • A business designing an app that customers can use to order goods
    • A business selling off its assets to reduce its debts
    • A business merging with a competitor to share costs and customers
    • A business buying a supplier to secure its raw materials

14. A business invests in research and development to improve its product. What is the likely outcome for its growth?

    • It will stop all future growth because it has spent money
    • It will be forced to close because research costs too much
    • It may gain new customers and increase sales over time
    • It will lose all its customers because the product has changed

15. Which of these is most likely to be an example of internal growth through new markets?

    • A UK bakery selling its shares to an investor
    • A UK bakery taking over a rival bakery in the same town
    • A UK bakery merging with a supermarket chain
    • A UK bakery opening its first shop in another city

16. Why might a business prefer internal growth to external growth?

    • Internal growth means the business is no longer subject to competition
    • Internal growth removes the need for the business to hire any staff at all
    • Internal growth can be more controllable and avoid the risks of combining two businesses
    • Internal growth always gives a business more customers than external growth in one step

17. Which of these best defines a 'new market' as a method of internal growth?

    • Selling existing or new products to customers who the business has not served before
    • Merging two existing markets into a single new market, combining the customers of each business
    • Buying a company that sells products in a different market, so that the business gains its customers
    • Selling products to the same customers in the same place as before, with no change to the range

18. A business expands internally by hiring extra staff and buying more equipment. What is this growth called?

    • Merger growth
    • Diversification through a takeover
    • Internal (organic) growth
    • External (inorganic) growth through acquisition

19. Which of these is a method of external (inorganic) growth?

    • Expanding into a new overseas market with existing products
    • A takeover of a competitor
    • Launching a new product developed in-house
    • Improving existing products through the business's own research

20. Which of these best describes a merger?

    • Two businesses agreeing to combine into one new business
    • A business giving its shares to its employees for free
    • One business buying a new factory from a supplier
    • A business selling a single product line to a competitor

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