The Growth Of A Business

Question 1

What does growth affect the most in a business?

Answer 1

The business’s orgnizational structure, capital, labour, use of technology and potential for export.

Question 2

What effect does the growth of a business have on the orgnizational structure?

Answer 2

1. The number of departments may increase
2. More specialist workers may be employed, e.g. accountants and IT personnel
3. There may be greater delegation (sharing) of work
4. The communication network becomes greater, hence there will be a wider communication gap between top management and employees.

Question 3

What effect does the growth of a business have on capital?

Answer 3

1. There may be need for more capital to finance the day-to-day operations
2. The business may rely more heavily on technology and machines.
3. It becomes easier for the business to source capital from investors and financial institutions.
4. The possibility of survival is improved in a tough economy.

Question 4

What effect does the growth of a business have on the labour?

Answer 4

1. There is an increase need for specialist workers including management positions.
2. More persons may be employed.
3. There may be greater division of labour.

Question 5

What effect does the growth of a business have on the use of technology?

Answer 5

The business may invest in more sophisticated technology (automation, CAD, CAM, CAI)

Question 6

What effect does the growth of a business have on the potential for export?

Answer 6

1. The business may grow pass the domestic level of production into the surplus level.
2. The business gets the opportunity to participate in the global market, thus promoting further growth.

Question 7

What is Internal growth?

Answer 7

Occurs when a firm expands through the use of its own resources (profits).

Question 8

What are three examples of internal growth?

Answer 8

1. Opening other sales outlets.
2. Increasing capital.
3. Employing more workers.

Question 9

What is Opening other sales outlets.?

Answer 9

For example a bakery that was providing to other retailers opens its own retail shop.

Question 10

What is increasing capital?

Answer 10

for example, the business can invest in new assets (equipment, machinery) that improve its productivity.

Question 11

What is Employing more workers.?

Answer 11

Larger businesses can employ not only more persons but also more specialist persons which can contribute to greater profitability.

Question 12

What is external growth?

Answer 12

Generally occurs when one firm takes over or merges with another.

Question 13

What are three examples of external growth?

Answer 13

1. Joint Mergers
2. Mergers (amalgamation)
3. Takeovers (acquisitions)

Question 14

What is a Joint Venture?

Answer 14

Involves two or more businesses pooling their resources and expertise to achieve a particular goal. Eg-

Question 15

What is a Merger (amalgamation)?

Answer 15

Is the voluntary combining together of two or more business into a single business that is mutually agreed by the firms management and shareholders.

Question 16

What is a Hortizontal Integration?

Answer 16

Whehn the businesses merged were formally competitors.

Question 17

What is a Vertical Integration?

Answer 17

When the businesses merged were customer and supplier.

Question 18

What