3.2.1 Growth Flashcards
1
Q
What is diseconomies of scale
A
The inefficiencies related to growing as a business that can lead to upward pressure on unit costs.
2
Q
What is overtrading
A
When a business experiences cash flow problems as a result of expanding too quickly without sufficient cash in the bank.
3
Q
What are the 3 arising problems that come from growth
A
- Diseconomies of scale
- Internal communication is worse
- Overtrading
4
Q
What are 3 contributors to diseconomies of scale
A
- Lack of control
- Lack of flexibility
- Poor motivation
5
Q
What does overtrading put a significant strain on
A
Financial resources
