Expansion and Retrenchment: Why Do Firms Grow?

The video discusses business growth, focusing on expansion and retrenchment. It explores options for businesses to expand, stay the same, or retrench, using Alibaba and HP as case studies. The video contrasts planned and unplanned growth, highlighting examples like Netflix and Reggae Reggae Sauce. It explains why firms favor expansion, citing profitability, economies of scale, and market share as key reasons. The video concludes by summarizing the reasons behind business expansion and retrenchment.

How do economies of scale benefit firms in terms of profitability?

What role do share option schemes play in incentivizing employees during a company's growth?

Why might a firm aim to become a market leader through expansion?