objectives of growth

Question 1

1. to achieve economies of scales

definitions

Answer 1

• occurs when unit/average costs fall as a result of an increase in the level of output of the business

Question 2

why is eos a good thing?

Answer 2

• higher profit margins
• competitive advantage = reduce price, to gain more market share
• give shareholders higher dividends = they may increase investment or attract new investors

Question 3

what is internal eos?

Answer 3

arise from the increased output of the business itself
e.g. managerial, technical

Question 4

what is external eos?

Answer 4

occurs within an industry i.e. all competitors benefit
e.g. purchasing power

Question 5

2. increased profitability

Answer 5

• measurement of profitability

Question 6

3. increased market share and brand recognition
   advantages

Answer 6

• greater control and influence over the market
• stronger consumer loyalty
• innovating/investing in marketing
• rising market share = better distribution = wider brand recognition = easier to persuade retailers to stock products launched under the same umbrella brand

Question 7

4. increased market power over customers and suppliers
   advantages

Answer 7

• long-term increase in profitability
• customers have less choice over where to buy from
• porters 5 forces model
• market dominance = charge high process whilst benefiting from eos
• suppliers have fewer choice over where to sell their products