Unit 2: Business Organisation
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- Created on: 28-04-15 19:13
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- Unit 2: The Business Organisation
- Reasons for expanding business
- Increase Sales
- Increase Market Share
- Take advantage of economies of scale
- Reasons for not expanding a business
- To keep control
- To avoid too much risk
- To offer a personal service to customers
- Economies of scale: The reason why average costs of each item fall as a firm expands
- Main Methods of Internal Expansion
- Produce more of current products
- Current products into new markets
- Launch a new product
- Internet Selling
- Offer franchises to other businesses
- A merger is when two firms join together to form a new firm.
- A takeover is when an existing firm expands by buying another firm
- Mergers and takeovers do not always go successfully
- Main object will change to becoming and staying profitable.
- Multinational Firms
- Producing in various countries keep transport costs down
- Increase knowledge of local market
- Access cheap labour
- Can create employment for locals
- May drive out local industries
- Reasons for expanding business
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