Theme 3: Buisness Growth

Question 1

Internal growth

Answer 1

-Organic growth increasing levels of the factors production
-Internal growth has control over exactly how this growth occurs

Question 2

Horizontal intervention

Answer 2

• increase economies of scale
  -reduce competition
  -increase market share

Question 3

Organic growth

Answer 3

-long term strategy
-firms rely on the strength of the market to grow
-less risky
-firm is not building up debt and the growth is sustainable
-reduce conflict in objectives

Question 4

Vertical integration

Answer 4

-mergers or takeover another firm in the same industry

-increase their efficiency through economies of scale
-more control of the market cost advantage over competitors
-more certainty over their production
-create barriers to entry limit the entrance of new firms less efficient market
-firm has little incentive to reduce their average costs

Question 5

Horizontal integration

Answer 5

Merger of two firms in the same industry and the same stage of production

-grow quickly can lead to monopoly power and potential of lower inefficiency
-increase output quickly economies of scale

Question 6

Constraints on buisness growth

Answer 6

-size of the market
-access to finance
-owner objectives
-regulations

Question 7

Macroeconomic effects on firms growth

Answer 7

-influence a firms growth low levels of demand in the economy
-gloabalisation easier for firms to export goods and services
-buying of firms by foreign direct investment balance of payment