3.2 Flashcards

1
Q

diseconomies of scale

A

the cost disadvantage that accompanies a business when it expands beyond its minimum efficient scale, the costs per unit of output increase

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2
Q

economies of scale

A

the cost advantages that a business can exploit by increasing the scale of production, which leads to a lower cost per unit of output
increasing size or speed - lowers the costs - increases efficiency

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3
Q

external economies of scale

A

the cost reductions available to all businesses as the industry grows

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4
Q

internal economies of scale

A

the cost reductions available by a single business as it grows on its own

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5
Q

minimum efficient scale

A

the minimum number of output that should be produced in order to achieve cost reduction per unit of output - form of cost advantages

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6
Q

backward vertical integration

A

joining with a business in the previous stage of production

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7
Q

forward vertical integration

A

joining with a business in the next stage of production

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8
Q

horizontal integration

A

the joining of businesses that are in exactly the same line of business

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9
Q

integration

A

the joining together of two businesses as a result of a merger or takeover

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10
Q

merger

A

occurs when two (or more) businesses join together and operate as one

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11
Q

synergy

A

the combining of two or more activities or businesses creating a better outcome than the sum of the individual parts

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12
Q

takeover

A

the process of one business buying another

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13
Q

vertical integration

A

the joining of two businesses at different stages of production

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14
Q

organic growth

A

a business growth strategy that involves a business growing gradually using its own resources

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15
Q

inorganic growth

A

a business growth strategy that involves two or more businesses joining together to form a much larger one

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