Business Growth Key Terms

What is lateral integration?

• A merger between two firms in the same industry

• A merger between two firms in different industries

• A merger between two firms that are competitors

• A merger between two firms that are suppliers

What are purchasing economies of scale?

• Purchasing economies of scale are gained when a business takes advantage of bulk buying arrangements and receives greater discounts on unit costs.

• Purchasing economies of scale occur when a business reduces its workforce to cut costs.

• Purchasing economies of scale are achieved by increasing the price of goods sold.

• Purchasing economies of scale refer to the benefits of having a larger physical store location.

What is external growth?

• A process of increasing sales through marketing strategies.

• Bringing together a number of organizations to form a single business, which may lead to loss of control and shared management.

• A method of improving internal processes and efficiency.

• A strategy focused solely on increasing product lines without collaboration.

What are marketing economies of scale?

• Savings in production costs due to bulk purchasing of materials.

• Reductions in marketing costs through savings in marketing and distribution operations.

• Increased sales due to higher advertising budgets.

• Lower operational costs from outsourcing marketing functions.

What is vertical integration?

• A merger between two firms in the same industry at different stages of production, such as a chocolate factory merging with a chocolate shop.

• A merger between two firms in different industries, such as a chocolate factory merging with a car manufacturer.

• A strategy where a company focuses solely on its core business and avoids mergers or acquisitions.

• A process where a company outsources its production to third-party manufacturers.

What is internal growth?

• A process involving mergers and acquisitions to expand quickly.

• A strategy focused on reducing costs and increasing efficiency.

• A method of reinvesting profits, expanding product range, and increasing sales activity.

• A technique for outsourcing production to lower costs.

What is conglomerate integration?

• A merger between firms in the same industry producing similar goods.

• A merger between firms in different industries producing unrelated goods.

• A partnership between firms to share resources and technology.

• A strategy to acquire competitors in the same market.

What are technical economies of scale?

• Technical economies of scale are gained when a business reduces unit costs by updating technology or using innovative production methods, such as flow manufacturing.

• Technical economies of scale are achieved by increasing the number of employees in a business.

• Technical economies of scale refer to the reduction of costs by outsourcing production to other companies.

• Technical economies of scale occur when a business increases its prices to cover higher production costs.

What are financial economies of scale?

• Financial economies of scale are achieved when a business can obtain finance at the lowest possible cost.

• Financial economies of scale refer to the ability of a business to reduce its workforce costs.

• Financial economies of scale occur when a business increases its product prices.

• Financial economies of scale are related to the marketing strategies of a business.

How can you tell a business is failing?

• A business has high profits and strong cash flow.

• A business has a loyal customer base and positive reviews.

• A business has low profits, poor cash flow, loss of customers, unfavorable customer reviews, and high employee turnover.

• A business is expanding and hiring more employees.