2.1

Question 1

Objectives of growth

Answer 1

Increased sales/turnover/growth/profit/dividends, employee welfare, market power, environment

Question 2

Define economy of scale

Answer 2

Reduction in the cost of production due to an increase in the scale of output

Question 3

How would you price to increase profits

Answer 3

High price

Question 4

How might you price to gain a competitive advantage

Answer 4

Cut prices

Question 5

Name the external economies of scale

Answer 5

Impact the whole industry

Community of labour/supplier
Efficient technologies

Question 6

Internal economies of scale

Answer 6

Technical
Managerial 
Purchasing
Marketing
Financial

Question 7

How can Eos lead to a higher standard of living

Answer 7

People have a higher purchasing power

Prices lower

More bought

Question 8

Monopoly VS monopsony

Answer 8

Monopoly - influence on the market

Monopsony - influence on the supplier market

Question 9

What is the minimum efficient scale

Answer 9

Lowest level of output at which costs are minimised

If costs increase, diseconomies of scale occur

Question 10

Negatives of Eos

Answer 10

Indefinite

Question 11

Diseconomies of scale

Answer 11

Communication inefficient
Skill shortage
Management quit

Question 12

Benefits of a strong culture

Answer 12

Loyal staff
Creative
High moral - high productivity

Question 13

Organic VS inorganic

Answer 13

Organic is within

Inorganic is merger or takeover

Question 14

Advans of organic growth

Answer 14

Cheaper
Less chance of a culture clash
High morale - workers have a chance to reach the top

Question 15

Advans of inorganic growth

Answer 15

Quicker
Higher market power
Shared overheads (rationalisation)
Economies of scale

Question 16

Benefits of r&d

Answer 16

Competitive advantage
Growth
Market share

Question 17

What makes up the digital economy

Answer 17

Infrastructure (networks)
E business (Skype calls)
E commerce (selling goods and services)
Social media

Question 18

Advans of digital economy

Answer 18

Easy access to markets
Cut out distribution channels
More power to buyers

Question 19

What is structural change in the digital economy

Answer 19

Reallocation of resources

Demand is falling - producers leave

Demand is rising -
Producers enter

Question 20

What is micro marketing

Answer 20

Target small groups (individuals) with personalised recommendations or promotions

Question 21

Benefits and drawbacks of online shopping

Answer 21

Open all the time
More efficient
Returns simple
Impulse buying

Security
Expensive

Question 22

How small firms compete

Answer 22

USPS 
Flexible to demand 
Customer service 
Niche
Good relationships with stakeholders