3.2 - Business Growth Flashcards
(15 cards)
DoS
A rise in avg/unit costs experienced as a business grows in size
EoS
When average costs can fall as total output increases in a b
External EoS
Avg cost reductions available to all b as the industry grows
Financial EoS
Large firms have +ve when they try to raise finance as they will have a wider variety of sources to choose from and they can often gain better interest rates
Growth
Expand sales rev of b, in hope prof will increase too
Internal EoS
When b invests in expanding prod —> lower average costs experienced
Purchasing/marketing EoS
Large firms are likely to get better rates when buy raw materials in bulk
Specialisation EoS
As a firm grows they can afford to employ specialist managers e.g. marketing, HR
Tech EoS
Large b can be often more efficient through use of capital equipment
Horizontal Integration
Joining of businesses that are in exactly the same line
Merger
Two b join together and op as one
Takeover
When one b acquires a majority shareholding of another b to gain control
Vertical integration
Join of two businesses at different stage of production
Inorganic (external) growth
Expansion by either merging with, or taking over another business
Organic growth
Expansion from within, for example expanding product range, or no of business units and locations
