Business Growth Flashcards
What are diseconomies of scale
rising long-run average costs as a business expands beyond its minimum efficient scale
What are economies of scale
the reduction in average costs experienced by a business as output increases
What are external economies of scale
the cost reductions available to all businesses as the industry grows
What is indivisability
the physical inability, or economic inappropriateness, of running a machine or some other piece of equipment at below its optimal operational capacity
What is inorganic growth
a business growth strategy that involves two (or more) businesses joining together to form a larger business
What are internal economies of scale
the cost reduction experienced by a single business as it grows
What is minimum efficient scale
the output that minimizes long-run average costs
What is organic growth
a business growth strategy that involves a business growing gradually using its own resources
What is retained profit
profit after tax that is ‘ploughed back’ into the business
What is stake
a financial interest in a business which entitles the investor to part ownership
What is acquisition
the purchase of one company by another
What is backward vertical integration
joining with a business in the previous stage of production
What is a conglomerate
a very large single business organization made up of many different businesses producing unrelated products
What is forward vertical integration
joining with a business in the next stage of production
What is globalisation
where markets become so large that products could be sold anywhere in the world
