3.2 - Business growth

Question 1

Give 3 problems arising from growth

Answer 1

• diseconomies of scale
• poor internal communication
• overtrading

Question 2

Define Internal & External Economies of scale, giving examples

Answer 2

https://www.tutor2u.net/economics/reference/what-are-the-differences-between-internal-and-external-economies-of-scale

Question 3

Diffirentiate between merger, joint venture & takeover

Question 4

Define synergy

Answer 4

The interaction or cooperation of two or more organizations or other agents to produce a combined effect greater than the sum of their separate effects:
“the synergy between artist and record company”

Question 5

Give 4 objectives of growth

Answer 5

Objectives of growth:
* to achieve economies of scale (internal and external)
* increased market power over customers and suppliers
* increased market share and brand recognition
* increased profitability

Question 6

Describe conglomerate

Answer 6

Conglomerates are large parent companies with smaller independent entities (subsidaries) that may operate across multiple industries.
Can be created through mergers and aquisitions

Question 7

Give organic growth stratergies

Answer 7

Organic growth involves strategies such as:

• Developing new product ranges (product development stratergy)
• Launching existing products directly into new international markets (e.g. exporting) (Ansoff Market development stratergy)
• Opening new business locations – either in the domestic market or overseas
• Investing in additional production capacity or new technology to allow increased output and sales volumes