Growth of firms

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  • Growth of firms
    • Main objective of firms
      • maximise profit
    • The larger the firm the more control it has over it's market
      • can make more profit
    • How they grow
      • External
        • Merger or take over
          • Firms join together
      • Internal
        • Increasing sales
          • Buy new equipment, outlets or factories
          • Buy in more labour
          • Market its products in a more effective way
    • Firms need to grow
      • Produce more to sell more
        • Provide what is wanted
          • Gain more profit
      • In order to produce more
        • land
        • Labour
        • Capital
      • Could be limitations
    • Benefits of growth
      • no longer competition
      • new ideas
      • gain from economies of scale
      • increased market share
      • Increased profit
    • Costs of growth
      • costs a lot to merge/take over
      • business may have different objectives and targets
      • diseconomies of scale
      • Higher prices to pay
      • Two managers may not agree
      • less choice for customers
      • Job loss/insecurity

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