What Is A Business

Question 1

Reasons someone starts a business

Answer 1

To producing goods or to supply services
To distributing products
Fulfilling a business opportunity
Providing a service to benefit others)

Question 2

Organic Growth

Answer 2

Open more stores
Use ecommerce
Outsourcing
Franchising

Question 3

External Growth

Answer 3

Merger
Takeover

Question 4

Pros and Cons of Organic Growth

Answer 4

Advantages:
a business can maintain its own values
lower risk
higher production means the businesscan benefit from economies of scale and
lower average costs
Disadvantages:
return on investment could take a long
time
slower growth
growth may be limited and is dependent
on the reliability of sales forecasts

Question 5

Pros of external growth

Answer 5

reduced competition
market share can be increased quickly
potential for economies of scale

Question 6

Cons of external growth

Answer 6

it can be expensive to takeover or merge
with another business
managers may lack the experience to
deal with the other business
there may be culture clashes which lead
to diseconomies of scale

Question 7

Outsourcing

Answer 7

Outsourcing occurs when a business pays another
firm to produce its products

Question 8

Economies of scale

Answer 8

This is when the average unit cost of producing a product, falls as the business grows.