Businesses Big and Small

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

Advantages:

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

Disadvantages:

• Slower
• Risky

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

Advantages:

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

Disadvantages:

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

Effect of Inorganic Growth on Stakeholders

Shareholders:

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

Employees:

• 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

Consumers:

• 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…