key terms 3.2--Business growth Flashcards
what are diseconomies of scale?
rising long-run average costs as a business expands beyond its minimum efficient scale
what is economies of scale?
the reductions in average costs enjoyed by a business as output increases
what are external economies of scale?
the cost reductions available to all businesses as the industry growth
what are internal economies of scale?
the cost reductions enjoyed by a single business as it grows
what is a minimum efficient scale?
the output that minimises long-run average costs
what is backward vertical integration?
joining with a business in the previous stage of production
what is forward vertical integration?
joining with a business in the next stage of production
what is horizontal integration?
the joining of businesses that are in exactly the same line of business
what is integration?
the joining together of 2 businesses as a result of a merger or takeover
what is a merger?
occurs when 2 or more businesses join together and operate as one
what is synergy?
the combining of 2 or more activities or businesses creating a better outcome than the sum of the individual parts
what is a takeover?
the process of 1 business buying another
what is vertical integration?
the joining of 2 businesses at different stages of production
what is inorganic growth?
a business growth strategy that involves 2 or more businesses joining together to form one much larger one
what is organic growth?
a business growth strategy that involves a business growing gradually using its own resources
