Business revision 4

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Benefits of a growing business
As a business grows it gains two major advantages over its smaller rivals. Large firms have more influence over market price. They're big enough to be price setters.
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Economies of scale
Economies of scale are a major source of competitive advantage for large firms.
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Methods of expansion
A business can grow in size through: Internal (organic) growth - the business grows by hiring more staff and equipment to increase its output. External growth - where a business merges with or takes over another organisation. Combining two firms incr
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Risks of expansion
The risk of expansion means that some owners are reluctant to chance funds. They opt instead to stay small and earn a relatively risk-free profit.
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Smaller businesses
There is potentially a major drawback to avoiding growth. Small businesses can be at a cost disadvantage compared to their larger rivals enjoying economies of scale. As small firms cannot compete with the low prices set by their larger rivals, they h
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Other cards in this set

Card 2

Front

Economies of scale are a major source of competitive advantage for large firms.

Back

Economies of scale

Card 3

Front

A business can grow in size through: Internal (organic) growth - the business grows by hiring more staff and equipment to increase its output. External growth - where a business merges with or takes over another organisation. Combining two firms incr

Back

Preview of the back of card 3

Card 4

Front

The risk of expansion means that some owners are reluctant to chance funds. They opt instead to stay small and earn a relatively risk-free profit.

Back

Preview of the back of card 4

Card 5

Front

There is potentially a major drawback to avoiding growth. Small businesses can be at a cost disadvantage compared to their larger rivals enjoying economies of scale. As small firms cannot compete with the low prices set by their larger rivals, they h

Back

Preview of the back of card 5

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