Expanding a Business

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Reasons for Business Growth

To increase sales - This should lead to an increase in profit. However, profits will not increase if the business has decreased to price of products to encourage more customers to buy them.

To Increase market share - If the sales of the business grow faster than total sales in the market, its share of this market will increase. Retailers will be more prepared to stock the products of this business. However, it is more difficult to manage a larger business.

Take advantage of economies of scale - The risk is that it is often difficult to manage a large business and this could increase costs of each item produced.

Become more secure and benefit from some customers preffering to deal with large businesses - Large businesses are more secure than smaller ones. However, the risk of this large businesses can make losses and be forced out of business too.

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