business 3.2

Question 1

what are some reasons businesses grow

Answer 1

desire for stronge rmarket power
to obtain higher market shae#re
desire to reduce costs by benefitting from eos
product diversification
easoer access to finance

Question 2

what are some problems that arise from growth

Answer 2

diseconomies of scale
internal communication
overtrading(business takes on more than it can handle)

Question 3

what are the internal economies of scale

Answer 3

managerial
financial
marketing(lower cost of advertising)
purchasing(bulk buying)
technical(spreading cost of machinery)
risk bearing(product diversification)

Question 4

What are some external economies of scale

Answer 4

infrastructure improvemnt
skilled labour
favourable legislation
geographical cluster

Question 5

why do companies choose to integrate with others

Answer 5

strategic fit
eos
synergies
elimination of competition
shareholder value

Question 6

what are some problems caused by rapid growth

Answer 6

strain on cash flow
quality control issues
diseconomies of scake
customer service issues
culture clash
managerial complexities

Question 7

What are some financial risks of inorganic growth

Answer 7

cultural differences
regulatory hurdles
debt
overpayment
integration challenges

Question 8

what are some financial rewards of inorganic growth

Answer 8

increased market share
synergy
divesification
access to new markets
increased value

Question 9

what is organic growth generated by

Answer 9

gaining greater market share
product diversificattion
opening new stores
international expansion

Question 10

what are some reasons firms choose to remain small

Answer 10

inability to access finance
provide a product in niche market
owners goal is satisficing
by remaining small they can respond to quickly changing customer needs and preferences
offer more personalised service
reduce risk of diseconomies of scale