3.2.1- business growth

Question 1

What is business growth?

Answer 1

The point at which a business needs to expand and seek options to generate more profit

Question 2

What are some objectives of growth?

Answer 2

• achieve EOS
• increased market power over customers
• increased profitability

Question 3

What is average cost per unit?

Answer 3

Total costs/ output

Question 4

What can happen as a business gets more market power?

Answer 4

-It becomes more dominant as a result rivals are left with a smaller market share and may be forced to close down.
-Can charge higher prices
-may attract attention of authority’s as it may be felt like they are exploiting customers

Question 5

What are 3 problems of big businesses?

Answer 5

1) diseconomies of scale= when a business is so big that the cost per unit increases
2) overtrading= where a business takes more orders then it can handle, this can result in cash flow problems
3)problems with internal communication