Businesses Big and Small

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  • Organic Growth: means expansion of a single business by extending its own operations rather than by takeover/merger.


  • More secure- No risk of takeover
  • Cheaper
  • No loss of power
  • More control


  • Slower
  • Risky
  • Inorganic Growth: Refers to expansion by merger/takeover, bringing sudden increase in business size. 


  • Push costs down- economies of scale
  • Quicker- Increase market share overnight
  • Use established brands
  • Increase knowledge of different markets


  • Might have colliding business cultures
  • Could cause demotivation for employees

Effect of Inorganic Growth on Stakeholders


  • Happy, higher dividend payment, but more shareholders, so will end up with a lower proportion


  • Might have to change their work culture
  • New staff might annoy them
  • Demotivation
  • May feel that their job is more secure
  • Their wages might go up


  • Business has greater market share, so can increase price
  • May increase range of products

Reasons for businesses to grow

  • Increase turnover and profit, monopolize its market
  • Economies of scale. Cost per unit decreasing as output increases. Gives bigger firms a competitive advantage
  • Increase market share- more market power
  • Economies of scale arise when cost per unit decreases as output increases.
  • Economies of scale means that a business can decrease its price and keep a healthy profit margin therefore increase demand. More profit
  • Minimum Efficient Scale: The level of output at which cost per unit…


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