Expansion Of Firms

Question 1

Internal expansion

Answer 1

Expansion of the firm on its own ( X involve others )
Eg. Setting up a new branch

Question 2

External expansion/ integration

Answer 2

Expansion of firm by combining w/ another firm

Question 3

Horizontal expansion

Answer 3

Firm expands into a business producing the same product/ engaging in the same stage of production
( other companies that make the same product/ competitive product )

Question 4

Horizontal expansion adv

Answer 4

1. Enlarge the market share ( ⬆️ market power to influence the market price -> ( possibly earn higher profits ) )
2. Enjoy economies of scale: lower av production cost -> wider scope of specialization + hiring more management experts

Question 5

Ve