1.7 Expanding a business

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

Resource summary

	Created by Jack Macklin almost 7 years ago