buisness growth

Vocabulary-style flashcards covering business growth strategies, linkage industries, and types of economies and diseconomies of scale as presented in the Principles of Business lecture notes.

Internal Growth (Modernising)

A form of business growth achieved by upgrading the facilities.

Mergers

A form of external growth where two or more businesses combine to form a single company.

Joint Ventures

When two or more businesses join together to set up a new business which they jointly own.

Takeovers/ Acquisitions

When one business gains control of part or all of another company.

Diversification

A strategy where a business moves into new areas of operation.

Linkage Industries

Industries that are connected because they depend on each other to obtain or to sell raw materials, where the output of one is the input of the other.

Forward Linkage

Occurs if the final or finished products of one industry are used in another industry as its raw material, such as sugar from a factory being used by a bakery.

Backward Linkage

Occurs when the demands of an industry lead to the establishment of other industries to produce for its needs, such as fast food restaurants leading to new vegetable and meat suppliers.

Division of Labour

The process where tasks are subdivided into smaller tasks, often resulting from employing more workers during business expansion.

Economies of Scale

The benefits that firms are able to enjoy because of expansion.

Internal Economies of Scale

The specific benefits enjoyed by a firm because of its own individual expansion.

Technical Economies of Scale

Savings experienced when unit costs of production decline because a business uses machinery and equipment to rise productivity.

Marketing Economies

The advantage expanding businesses have in taking benefit of bulk buying and receiving discounts on raw materials.

Financial Economies

The ability of larger firms to access loans more easily and at cheaper interest rates due to established reputations and adequate collateral.

Managerial Economies

Efficiency and output increases resulting from the employment of experts who specialize in management functions like marketing, personnel, and accounting.

External Economies of Scale

Benefits enjoyed by a business because it is part of a well-organized industry, such as government subsidies, tax holidays, and reduced duties.

Internal Diseconomies of Scale

Disadvantages arising from expansion, including high advertising costs, high maintenance costs for machinery, and difficulty in controlling the organization.

External Diseconomies of Scale

Industry-wide disadvantages such as shortages of raw materials, decline in the industry, and negative externalities like pollution.