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Expanding a business
Study how businesses expand, why growth can lower unit costs, and why growth can also create coordination and motivation problems.
7
Objectives
10
Flashcards
10
Questions
90 min
Study time
AqaGcseBusinessBusiness in the real world
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Syllabus checklist
What you need to know
7 objective pages available
Methods of expansion3 objectives
- Discuss advantages and disadvantages of business growth methods.
- Explain organic growth through franchising, opening new stores and e-commerce expansion.
- Explain outsourcing and external growth through mergers and takeovers.
Economies and diseconomies of scale4 objectives
- Explain how growth can create unit cost advantages through economies of scale.
- Explain purchasing economies and technical economies of scale.
- Explain how growth can create diseconomies of scale through communication problems, coordination issues and reduced staff motivation.
- Calculate and interpret average unit costs.
Key terms
discussadvantagesorganic growthfranchisingtakeoversoutsourcingeconomies of scaleExplainpurchasing economiesdiseconomies of scaleaverage unit costCalculate
Exam tips
- Methods of expansion exam tip 1: Use precise subject-specific vocabulary when you explain how to discuss advantages and disadvantages of business growth methods..
- Methods of expansion exam tip 1: Use precise subject-specific vocabulary when you explain how to explain organic growth through franchising, opening new stores and e-commerce expansion..
Common mistakes
- Methods of expansion common mistake 1: Answer by clearly explaining how to discuss advantages and disadvantages of business growth methods..
- Methods of expansion common mistake 1: Answer by clearly explaining how to explain organic growth through franchising, opening new stores and e-commerce expansion..
Practice preview
- PixelPrint serves small retailers while taking a loan; the case evidence includes capacity utilisation of ?2,848, sales of 283 units, and a 15% change in costs or demand. Which option best applies Discuss advantages and disadvantages of business growth methods?
- CloudCart serves health-conscious consumers while cutting delivery times; the case evidence includes cash inflow of ?8,750, sales of 945 units, and a 43% change in costs or demand. Which option best applies Discuss advantages and disadvantages of business growth methods?
- SwiftServe serves premium buyers while launching a product; the case evidence includes labour productivity of ?3,704, sales of 709 units, and a 21% change in costs or demand. Which option best applies Discuss advantages and disadvantages of business growth methods?
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