3.9.1 Business growth

Which of the following is NOT a reason why large businesses are more stable than small businesses?

• Larger businesses can reinvest profits to stimulate more growth.

• Larger businesses have a higher market share.

• Larger businesses have fewer employees.

• Larger businesses benefit from economies of scale.

What is an example of technical economies of scale?

• Employing managers with specialist skills.

• Buying in large quantities to get discounts.

• Using more advanced machinery.

• Spending more on advertising.

Which of the following best describes economies of scope?

• Producing multiple products instead of specializing in one.

• Increasing production to lower unit costs.

• Coordinating activities between different departments.

• Borrowing money at lower rates of interest.

What is a potential disadvantage of economies of scale?

• Increased costs due to producing more units.

• Difficulty in managing a larger business.

• Higher prices for consumers.

• Reduced variety of products.

What is the main reason for retrenchment in a business?

• To increase the number of employees.

• To reduce costs and improve profitability.

• To expand into new markets.

• To increase the variety of products.

Which of the following is NOT a benefit of the experience curve?

• Workers become more efficient.

• Costs per unit decrease.

• Production quality decreases.

• Technology and machines improve.

What is one of the advantages of organic growth within a business?

• It is faster than external growth.

• It allows the business to adapt to big changes in the market.

• It helps to maintain control over the business.

• It increases the market share quickly.

Which of the following is a disadvantage of organic growth compared to external growth?

• It is slower and more gradual.

• It increases the market share quickly.

• It requires less financial investment.

• It allows for easier management of the business.

According to Greiner's Model of Growth, what follows the 'Creativity - Leadership Crisis' phase?

• Phase 2 - Direction - Autonomy Crisis

• Phase 3 - Delegation - Control Crisis

• Phase 4 - Coordination - Red Tape Crisis

• Phase 5 - Collaboration - Growth Crisis

What is a potential problem for large companies as they grow in size?

• They find it easier to manage cash flow.

• They have fewer employees to manage.

• They may suffer from diseconomies of scale.

• They have less need for infrastructure.