3.2 Business Growth Flashcards
1
Q
how does EOS create a competitive advantage?
A
- having more funds to buy stock
- more power over suppliers
- funds to pay for specialist staff
- better rep so banks are more willing to lend
2
Q
what is EOS?
A
unit costs/avrg costs decrease as a result of an increase in the level of output of the business
3
Q
What is purchasing EOS?
A
- bulk buying
- growing larger requires more stock
4
Q
What is technical EOS?
A
- larger businesses can afford higher cost machinery
- improves efficiency
- mass production techniques
5
Q
What is managerial/specialization EOS?
A
- managers can specialize in particular tasks
- quality of decision making can be better in a larger firm
6
Q
What is financial EOS?
A
- larger firms are less risky to invest into/ gain finance more easily
- small firms have a higher cost of finance
7
Q
What is marketing EOS?
A
- larger businesses can spread fc over a wider range of products
- decrease in avrg cost per unit
8
Q
what is risk bearing?
A
larger firms can spread risk by investing in more product and more markets. this is called diversification
9
Q
What is internal EOS?
A
arises from the increased output of the business itself
10
Q
what is external EOS?
A
occurs within an industry so all competitors benefit
11
Q
what are the objectives of growth?
A
- EOS
- increased market power over suppliers and customers
- increased market share and brand recognition
- increased profitability
