Why expand business

why owners want to expand their business

Open Ended

What do you notice about the growth of Emirates Airlines ?
Why do you think Emirates Airlines has expanded so significantly over the years?

Poll

XYZ Electronics is a small business that specializes in manufacturing and selling consumer electronics. The owners have decided to expand their operations. They want to increase their profits by taking advantage of economies of scale. Currently, they produce 1,000 units of a product per month, and they believe that by increasing their production to 5,000 units per month, they can reduce the cost of production per unit. This would enable them to lower their prices and attract more customers, ultimately leading to increased sales and higher profits.

What is the primary motivation of the owners of XYZ Electronics for expanding their business?

• increase in profits

• increase in market share

• economies of scale

• greater power to control market

the cost advantages that businesses can achieve by increasing their production and output.

2. economies of scale

growth results in increase in output.
Increased sales increase revenue and if costs are controlled, increased profits

​1. increase in profits

why owners want to expand

Reorder

Reorder the following and write in your copy book :

• economies of scale enable companies

• to lower their prices

• thus attract more customers

• leading to increased sales

• and higher profits

1

2

3

4

5

• 1
• 2
• 3
• 4
• 5

Multiple Choice

Company: EcoTech Solar Solutions

EcoTech Solar Solutions is a renewable energy company specializing in solar panel production. The owners recognize that by expanding their manufacturing capabilities, they can take advantage of economies of scale. This would lead to reduced production costs per unit, making their solar panels more affordable for customers. Lower costs would also increase their competitiveness in the market, attract a larger customer base, and boost overall profitability.

What specific advantages can EcoTech Solar Solutions expect to gain by achieving economies of scale in their solar panel production?

• Increased production costs per unit and higher product quality.

• Lower production costs per unit, enhanced market competitiveness, and higher profitability.

• Reduced customer demand and the ability to focus on niche markets.

• Greater environmental sustainability and a larger market share.

-greater control over own prices
-able to set prices for other businesses
- may influence governement policy

4. greater power to control market

helps business - products & brand widely known

3. increase in market share

why owners want to expand

Open Ended

A take over is 'one company "taking over" or gaining control of another company, often to expand its operations or influence in the market.'

do you think growth/expansion can be one strategy to avoid the risk of takeover in the market ? give reasons for your answer

Poll

Company: ABC Pharmaceuticals

ABC Pharmaceuticals is a well-established pharmaceutical company that has faced potential takeover attempts from larger, multinational corporations. To protect their independence and maintain control over their operations, the owners decide to expand. They believe that by growing their business and increasing their financial strength, they can deter hostile takeovers. This expansion strategy is driven by a desire to safeguard the company's identity and maintain its unique market position.

why does ABC Pharmaceuticals want to avoid takeover ?

• safeguard company identity

• maintain its unique market position

• increase profits

• protect their independence

• maintain control over their operations

Why owners want to expand

5. protection from risk of take over

complete the sentences in your copy book :

Companies choose to grow because it ............................. therefore ...................................leading to ....................................... A larger company will have .................................................... and ..........................................................

(safeguard company identity, maintain its unique market position, increase profits, protect their independence ,maintain control over their operations)

Plenary : answer in notebook

Identify and explain two possible reasons why Nestle took over the Hsu Fu Chi company

Poll

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