growth

• business growth is an increase in size of a firm, measured by output, scales, revenue, market share or profit

Type of growth:

• organic: internal expansion through increasing output or sales

• inorganic: external expansion through mergers or acquisitions

Types of integration:

• horizontal: firms at the same stage merge→ increases market share

• vertical: backward→ controls supply. forward→ controls distribution

• conglomerate: firms at different industries merge

Reasons for growth:

• Economies of scale: larger firms reduce average cost

• market power: ability to influence price and dominate competitors

• profit maximisation: growth increases revenue

• risk diversification: spreading risk across product/markets

• survival: competing with larger firms

Application 🌍

• supermarkets merging to increase market share

• big tech companies acquiring smaller firms

• fast food chains expanding globally

• amazon expanding logistics networks

🔥 EVALUATION:

🔴 1. Diseconomies of Scale:

firms may become inefficient as they grow.

growth may increase cost if the firm becomes too large and difficult to manage.

🔴 2. Cost of Growth

mergers are too expensive and risky.

🔴 3. Integration Problems

culture clashes between firms

🔴 4. Regulation

government may block mergers

🔴 5. Overexpansion

growing too fast can reduce quality.