3.1.7 Expanding a business

Which of the following is a method of external growth?

• Franchising

• Opening new stores

• Merger

• Outsourcing

Which of the following is a disadvantage to a business of growing through franchising?

• The receipt of royalties

• Some control is lost

• Expansion is slow compared to opening new stores

• High levels of risk for the franchisor

When one business acquires a controlling interest in another business it is classed as:

• Merger

• Takeover

• Franchising

• Outsourcing

Which of the following is a disadvantage of organic growth?

• Less likely to experience diseconomies of scale

• Growth may be slow

• Can often be financed through internal funds

• It is often hard to control and manage compared to external growth

Which of the following statements best describes the term economy of scale? The reasons why production costs of an item:

• Rises as a firm reduces in size

• Fall as a firm expands

• Rise as a firm expands

• Fall as a firm reduces in size

Which of the following is an example of inorganic growth?

• T-Mobile and Orange merge

• ALDI open a new store

• Marks & Spencer operate online

• British Airways plan to outsource call centres

Which of the following is the formula for average unit costs?

• Total costs divided by revenue

• Total output divided by total costs

• Total costs divided by total output

• Total output divided by total costs multiplied by 100

Selling goods online is an example of which expansion method?

• Franchising

• Opening new stores

• E-commerce

• Outsourcing

The total costs of producing 10,000 bottles of shampoo is £5,000. The average unit cost is:

• £0.20

• £0.50

• £2.00

• £5.00

When Kraft acquired a controlling interest of Cadbury it was classed as a:

• Merger

• Franchise

• Opening new stores

• Takeover