3.2.1 objectives of growth

Question 1

what is growth

Answer 1

the expansion of businesses market share in their market or into new markets

Question 2

why is growth important

Answer 2

growth will help attract new investors, help a business stand out, allow a business to gain advantages

Question 3

what are the objectives of growth

Answer 3

-gain economies of scale
-increase market power over customers and suppliers
-increase market share
-increase brand recognition
-increase profit

Question 4

how will growth allow for economies of scale

Answer 4

many businesses will be able to expand the business overseas where they can produce more for less, also a bigger business will have more power over suppliers in which they can purchase higher quantitys at a lower price .

Question 5

what types of internal economies of scale are there

Answer 5

-managerial
-purchasing
-technical
-financial
-marketing

Question 6

what types of external economies of scale are there

Answer 6

-transport links
-skilled labour/ specialisation
-favourable legislation

Question 7

managerial eos

Answer 7

large firms can employ specialist managers who are skilled they will be more efficient

Question 8

financial eos

Answer 8

large firms can benefit from lower interest rates on loans

Question 9

purchasing eos

Answer 9

larger firms can purchase raw materials in higher quanititys at lower prices

Question 10

marketing eos

Answer 10

large firms can spread advertising costs over a number of sales

Question 11

technical eos

Answer 11

larger firms can spread cost over its machinery as it produces more

Question 12

transport links eos

Answer 12

more transport links allow people to get to work quicker
can also improve logistics of moving goods around the country, which will help save costs on fuel and make transport morew efficient

Question 13

skilled labour eos

Answer 13

universities and apprenticeships have allowed people to specialise in one sector, this will allow them to be very skilled in this job and can produce goods quicker and more efficient. this lowers costs

Question 14

favorable legislation eos

Answer 14

governments can support some industries with subsidies which can save businesses costs

Question 15

how can businesses gain power over customers from growth

Answer 15

larger businesses will be able to reduce prices, this can attract customers to buy from them. also a large business can force other businesses out of thr market so the customers have restricted choice

Question 16

why can problems arise from growth

Answer 16

being large business isnt only good, large businesses can be hard to manage and require careful planning to keep big

Question 17

what problems arise from growth

Answer 17

-dis-economies of scale
-overtrading
-internal communicatons

Question 18

why can internal communications be a problem

Answer 18

a large business will have many layers in their heirachy, this can make getting information from the top to the bottom a very long process.
within the way communication can be mis-interpreted and will delay the info
this can reduce a businesses efficiency.

Question 19

what types of DEOS are there

Answer 19

managerial
communication
geographical

Question 20

managerial DEOS

Answer 20

a manager may work more for self interest rather than the interest of the business

Question 21

communication DEOS

Answer 21

communication is slow and hard which can affect efficiency

Question 22

geographical eos

Answer 22

firms with lots of operations and bases can have logistics problems