1.5 Flashcards
Reasons for Growth (10 cards)
What is growth for a business?
expanding the business
What are the reasons for businesses to grow?
desire to run a large business, desire for profit and market share, , improve profitability, easier access to finance
What are ways growth can be measured?
sales revenue, profit, market share, impact, resilient business ecosystem
What are advantages of growth?
achieving econmies of scale, increase in marketshare sales revenue and profit, influence the prices of products, reduce of risk and increase stability, attract talented employees
What are disadvantages of growth?
expensive so might need to take a loan, problems with quality of products, loss of control of the business, labour turnover
What are advantages of growth nationally/globally?
- more tax revenue for the government means the money can help with the community
- reduce the rate of unemployment and increase incomes as this creates incentives for workers
What are disadvantages of growth nationally/globally?
- environmental issues like increased pollution as a business grows
- lost control of their operations with complex supply chains and organisation
What are reasons businesses stay small?
maintaining control, small market size, environment sustainability, more personalised services with customers
What are advantages of staying small?
- highly customised goods for customers
- personal relationships with customers
- more unique products sold in small quanitites at high prices (profitable)
- respond quickly to changing market conditions
What are disadvantages of staying small?
- easily harmed by changes in the wider economy
- less financial resources (ex: loans)
- harder to recruit staff due to wage competition
- struggle to achieve economy of scale