Types Of Growth

Question 1

What is horizontal integration?

Answer 1

Buying a similar type of firm

Question 2

What is vertical integration?

Answer 2

Buying a supplier or outlet

Question 3

What is lateral integration?

Answer 3

Buying a related business at the same stage of production

Question 4

Why do some firms want to grow?

Answer 4

Lower costs, securing supplies and outlets, to beat competitors and to produce a wider range of products

Question 5

What is internal expansion?

Answer 5

A business opens more outlets, employs more staff, sells more products etc

Question 6

What is external expansion?

Answer 6

Merger, takeover

Question 7

What is managerial economies?

Answer 7

Larger the company the cheaper it is to employ specialist staff

Question 8

What is risk bearing economies?

Answer 8

Larger the company the easier to sell a range of products in different markets

Question 9

What are financial economies?

Answer 9

Larger the company the easier it is to borrow money

Question 10

What is purchasing economies?

Answer 10

Larger the company the easier it is to buy in bulk, resulting in a discount