Theme 3.2 - Business Growth Flashcards
1
Q
3 Points
Reasons to grow
A
- Constent expansion
- Economies of scale
- Increased market share & profitability
2
Q
What are internal economies of scale
A
Growth is scale of production within business
3
Q
What are external econo
mies of scale
A
Increase of size in industry in which B operates in
4
Q
3
Problems of growth
A
- Diseconomies of scale
- internal communication issues
- overtrading
5
Q
2
What are benfits of inorganic growth
A
- Elimination of competition
- Economies of scale
6
Q
Forwards + backwards
What is vertical intergration
A
- Forward,(merger/takeover) with a firm forward in the supply chain
- Backwards, firm further back in supply chain
7
Q
What is organic growth and how is it achieved
A
Driven by internal expansion using things such as reinvested profits of loans
8
Q
How can we generate organic growth
A
- greater market share
- Product diversification
- New store
9
Q
Adv + disadv of Organic growth
A
Pace of growth manageable, less risk
Pace of growth can be slow and irritating, limited access to finance
