1.7 Expanding a business

Jack Macklin
Flashcards by Jack Macklin, updated more than 1 year ago
Jack Macklin
Created by Jack Macklin over 2 years ago


Year 10 Business Studies Flashcards on 1.7 Expanding a business, created by Jack Macklin on 24/01/2018.

Resource summary

Question Answer
Ways a business may grow Bigger workforce More offices More factories Different areas of business
Merger When 2 businesses of similar size agree to join together.
Takeover When one business buys another smaller company. Eg a local sports shop being taken over by sports direct
Internal expansion When a business grows by increasing production by building a new factory or shop. Eg a new amazon warehouse
Franchisee Buys a franchise, usually in return for a fee and percentage of turnover
Franchisor Sells a franchise, usually in return for a fee and percentage of turnover
Market capitalisation Measures the value of all a business's shares
E-commerce The act of buying or selling a product using an electronic system such as the internet
Outsourcing Occurs when a business uses another business to produce for it
Economies of scale When a business's unit costs of production fall as its output rises and the business expands
Diseconomies of scale When the cost per unit increases as a business expands
Advantages of business expansion It can lead to economies of scale The business has more power in the market More status, easier to launch products More expensive to be taken over and therefore safer
Disadvantages of business expansion Decision making is slower Employees feel isolated as there is a large number leading to demotivation Controlling and coordinating products in many different places can be difficult and less efficient All the disadvantages lead to diseconomies of scale
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