advantages and disadvantages of growth

positive 1 increased profits

Gained from increased sakes volume over time. This can be achieved if the business can maintain a constant profit margin per product sold

Positive 2 economies of scale

Achieved from a reduction in unit costs. This can be achieved by ensuring an increase in sales volume

Positive 3 greater market influence

Larger businesses can benefit from greater discounts and sell their products at lower prices, hence making it difficult for rivals to compete. A well-established brand will often attract larger customer numbers compared to their rivals

Negative 1 poor communication

It may be difficult to maintain high standards if communication between staff and various departments once a business increases in size. This will lead to lower levels of profit and may increase costs

Negative 2 lack of motivation

Employees may not feel valued working in larger businesses and may become demotivated. It is Important that managers demonstrate good standards of leadership and mentor colleagues in order to avoid low levels of staff morale

Negative 3 difficulties of co-ordination

It may be difficult to co-ordinate business activities and processes effectively if the large business has a wide geographical spread. Good communication between all managers in the business will reduce such difficulties