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Business growth revision notes

Business growth

Business growth any form of expansion of the firm.

Signs of success and failures














































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Economies of scale
Economies of scale are gained when an increase in production causes a
decrease in production costs. Aka Economies of scale are the cost
advantage from business expansion.






Marketing economies of scale
Businesses can save in expenses associated with marketing such as
advertising and distributing aka marketing economies…

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Large businesses, in general, provide better security and fewer risks for
banks therefore banks are willing to allow them to borrow larger sums for
longer periods of time and at better rates.
Main way in which a business may grow
Businesses may either grow internally (organically) or externally.

Internal (organic)…

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To achieve a takeover, a firm would have to buy a large number of shares
so that it could control the voting in the other firm. The firm wishing to gain
control would have to offer very high prices to the existing shareholders for their
shares in order to secure…

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In business, integration is achieved through takeovers and mergers

There are 3 main types of integrations: horizontal integration, vertical integration
and lateral integration

Horizontal integration
This takes place between firms on the same level within the same type of
business.
HORIZONTAL
INTEGRATION









Vertical integration
This takes place between firms on…

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Forward vertical integration

This is where a firm expands by taking over another firm which works with the
same product but at a later stage in its chain of production. In this case, the
chocolate factory takes over the confectionery shop. This is forward vertical
integration because the factory makes…

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The firms may or may not be working on the same level.

This type of merger is also known as DIVERSIFICATION, and it takes place
mainly because the firm is expecting a decline in one of its markets and it is
branching out into other lines as a safeguard.

CONGLOMERATE…

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in its own right, this means that they
one branch cannot be unique it has
to follow the rules of the other
branches.


The owner is seen as a manager
rather than an owner.

Takeover New firm is likely to control Strained relationship at
UNFRIENDLY greater success as a result…

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outlet where it can control
sales of its own product.

Lateral Some economies of scale
integration can take place through joint
production.


There are also opportunities
for joint marketing
campaigns for the benefit of
both products.

Conglomerate The safeguard given through
integration having a variety of
commercial interests.


If one…

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Social and right implications of growth
MORAL: Modern trend in grocery and hardware items is through large supermarkets
situated on the edge of town. These large supermarkets offer competitive prices and a
wide variety of goods. They have large car parks with free parking all this contributes to
the success…

Comments

davidsalter

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This is a large and comprehensive set of notes about how businesses expand. There is more detail than might be needed for some of the boards so students should check their exact exam board requirements. I would recommend adapting the information into a more personal form eg produce your own flash cards, mind map etc.

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