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
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
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
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