1.7 Expanding a Business

Question 1

Internal growth

Answer 1

(also known as organic growth) occurs when a business gets bigger by selling more of its products.

Question 2

External growth

Answer 2

(also known as integration) occurs when a business gets bigger by joining or buying other businesses.

Question 3

Franchise

Answer 3

occurs when a franchisor sells the rights to its products to a franchisee; this is usually in return for a fee and percentage of turnover.

Question 4

Franchisee

Answer 4

buys a franchise usually in return for a fee and percentage of turnover.

Question 5

Franchisor

Answer 5

sells a franchise usually in return for a fee and percentage of turnover.

Question 6

Outsourcing

Answer 6

Occurs when a business uses another business to produce for it

Question 7

A merger

Answer 7

When two or more businesses join together to form a new business

Question 8

A takeover

Answer 8

When one business buys control of another one

Question 9

Economies of scale

Answer 9

When a business’s unit costs of production falls as its output rises and the business expands

Question 10

Diseconomies of scale

Answer 10

Occur when the cost per unit increases as the business expands