Business Studies

Business Expansion

Internal Growth  - Growth from within the business (also called organic growth)

- Increasing sales

- New technology

- Widening product range

- Winning a larger share of main market

External Growth  - Growth by combining with other businesses

- Merge with other businesses

- Takeover other businesses

Economies of scale -  Cost benefits from growth

- Ability to buy in bulk

- Save money on transport

Diseconomies of scale  - Cost disadvantages from growth

- Breakdowns in communication

- Management being seen as far removed from the workers

Methods of Growth:

- Franchise

- One business sells the right to use its successful business format to another business

- Buy the right and pay a percentage of its profits as a royalty

- Some businesses don’t try to grow

- More concerned about survival

- Reaching objectives without expansion

Stakeholder conflict

- Stakeholders have a stake in the business

- Stake can be affected by the decision to expand

Internal Stakeholders  - those who are directly linked to the business, such as owners and employers

- Rely on business for their income

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