growth Flashcards
what is organic growth within a business
organic growth is expansion from within a business - selling more products, increasing market share ect
what is external growth
using external factors outside of a business to grow e.g mergers, takeovers and ventures
what is economies of scale
as the scale of production increases the cost of production decreases
give three examples of economies of scale in action
-larger firms that order from suppliers in bulk will be able to get deals or discounts which reduces the over all costs
-larger business’s can hire more managers to increase efficency
-larger firms can invest in more matchinary to increase production speed and efficiency
what is economies of scope
business’s that sell a wide range of products -have a large product portfolio- will have lower unit costs as the fixed costs get spread across there wide product range - this is why amazon can produce products with very little costs
what is the experience curve
the more experience a business has in an area the more effient it will become in that area
what is retrenchment
this is when a business becomes smaller - downsizing in certain areas in order to reduce costs
what is diseconomies of scale
this refers to when a firm becomes larger and therefore becomes harder to manage increasing unit costs
give an examples of disecomomies of scale
-communication becomes increasingly diffictult in larger business’s with long chains of command
what is overtrading
when a business expands too quicky without the resources to support that growth
describe the leadership crisis on greiners growth model
when a business starts up it requires a strong leader to give the firm direction and structure
describe the autonomy crisis on greiners growth model
more manager needed, seniour managers can no longer control everything that is happening
describe the control crisis on greiners growth model
as the business grows it becomes harder to control and the seniour managment team may feel as if they have lost control over the business
describe the red tape crisis on greiners growth model
this is where follow the control crisis a firm puts too many prociderrs in place and this then decreases overall effiency
descibe what is meant by the growth crisis
at this point the business will struggle to grow internally and to grow further they will have to turn to external growth methdos e.g a takeove
