Why do businesses want to grow?

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  • Why do businesses want to grow?
    • Bigger market share
      • This increases their likelihood of survival, and all of these other factors as well
        • This is important for a new business, as it is very risky
    • Increase in bargaining power
      • Suppliers are more like to give the business a better deal if they are ordering more
    • Reduce competition
      • The less competition there is, the higher their brand recognition is, and the higher their profits will be
        • Higher profits means further growth
    • More economies of scale
      • The bigger the business, the more stock they are going to want to buy, so suppliers will give them economies of sclae so lower costs. This means they can charge lower prices, and still get the same profit
        • Finance: they can get better interest rates from the bank, as there is more security on the loan
        • Administrate: even though the company is bigger, the documents only have to be done once
        • Technology: they can afford to invest in specialist machinary, which has a better output
        • Purchasing: bulk buy
    • Key measurement of success comparing to other businesses in the same market
      • They want to be viewed as doing well compared to competition
    • Reputation
      • If the business is well know, they are likely to be picked over competition, so have an increased market share
        • This creates customer loyalty, so they are likely to see repeat sales, and they can afford to charge higher prices


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