1.6 Growth and evolution Flashcards
Economies of scale
The cost-saving benefits of operaring on large scale.
Diseconomies of scale
When unit costs increase due to the organization being too large and inefficient.
Internal economies of scale
To the fall in unit costs of production for a single organization as it experiences growth.
Extrenal economies of scale
To the fall in unit costs of production for all organization as the industry experiences growth.
Internal growth
Occurs when an organization expands using its own resources, without involving other organizations.
Extrenal growth
Occurs when a business relies on third party organizations for growth.
Mergers and acquisitions and takeovers
A form of external growth that occurs when one company buys a controlling interest in another company.
Joint ventures
An arrangement between two or more separate parties to pool their resources together to form a new legal entity.
Strategic alliances
Formed when two or more businesses join forces to benefit from growth without any fundamental changes to their own long-term strategies.
Franchising
To an agreement between a business giving the legal rights to other organizations to sell products under the franchisor’s brand name.
Globalization
The growing degree og integration and interdependence of the world’s economies.
A multinational company
An onrganization that operates, owns, or controls production and/or service facilities in two or more countries.
