3.2.1 Growth

Question 1

Business growth

a stage…

and seeks

Answer 1

A stage where a business reaches the point for expansion and seeks additional options to generate more profit

Question 2

4 main objectives of growth

Answer 2

-To achieve Economies of scale (EOS)

-Increased Market power over customers & Suppliers

-Increased Market share and brand recognition

-Increased profitability

Question 3

Economies of Scale (EOS)

Answer 3

The reductions in average unit costs enjoyed by a business as output increases

Question 4

Choosing to grow enables a business to benefit from EOS T/F?

What is the main benefit/effect of achieving EOS

Answer 4

True

The Average costs of production becomes reduced

Question 5

If cost of production is low this will allow a business to do what

Linked to pricing

Answer 5

Reduce prices which will give them a competitive advantage.

Question 6

How does achieving EOS overall impact a business?

what types of businesses tend to achieve EOS?

Answer 6

profitability will increase

Larger businesses tend to achieve EOS

Question 7

What is the main reasons why EOS occur

Answer 7

Internal economies
PMTMF

Question 8

Overall why is EOS good? 2 reasons

Answer 8

1) Higher profit margins (as it costs less per item to make your product, you will have more profit in your pocket)

2)More funds for investment
-Can even give shareholders higher dividends-means it will be easier to attract investment in the future