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Worksheets3.2 Business Growth
Total questions: 25
Worksheet time: 13mins
Which of the following is a key objective of business growth?
To decrease market share
To increase economies of scale
To reduce customer base
To avoid competition
Economies of scale refer to:
A reduction in long-term average costs as output increases
An increase in profits without increasing output
A decrease in output but an increase in costs
The company becoming too large to manage
Which of the following is NOT an objective of business growth?
Increased market power over suppliers
Improved communication systems
Increased market share
Enhanced brand recognition
A major disadvantage of growth is diseconomies of scale, which occurs when:
Firms experience higher costs as they reduce production
Firms experience higher average costs as output increases
Firms fail to achieve any market power
Firms reduce prices to gain market share
What is overtrading?
When a business expands beyond its financial capacity
When a business buys too many shares
When a business offers too many products
When a business engages in too much advertising
Internal communication issues are common in growing businesses because:
It’s difficult to maintain a clear structure in larger firms
Managers become less involved in day-to-day operations
Employees struggle with increased workloads
All of the above
Which of the following is NOT a typical reason for mergers and takeovers?
Increasing market share
Gaining new technologies
Reducing business size
Achieving economies of scale
A merger refers to:
A business purchasing another to gain control
Two companies voluntarily joining together to form one company
A business reducing its size to improve efficiency
A company selling off its divisions
What is horizontal integration?
A business expanding into different geographical markets
A business acquiring another at the same stage of the supply chain
A business acquiring another company in a completely different industry
A business acquiring suppliers or distributors
Vertical integration occurs when:
A business takes over another business at a different stage of the supply chain
A business merges with a competitor
A business takes over a foreign firm
A business takes over a smaller business in the same market
Which of the following is a financial risk associated with mergers and takeovers?
High initial costs
Increased customer base
Improved economies of scale
Increased profitability
What is a potential financial reward of a successful merger or takeover?
Higher customer satisfaction
Decreased market share
Enhanced profitability
Worse supply chain management
One potential problem of rapid growth is:
Increased brand recognition
Diseconomies of scale
Improved economies of scale
Reduced market share
Overtrading is most likely to occur when:
Businesses expand rapidly without sufficient working capital
Businesses fail to expand quickly enough
Businesses operate in niche markets
Businesses reduce their product lines
The main difference between organic and inorganic growth is that:
Organic growth occurs through mergers and takeovers
Organic growth occurs through internal expansion of the business
Inorganic growth is less risky than organic growth
Inorganic growth is driven by natural market forces
Which of the following is a method of organic growth?
Taking over a competitor
Expanding product lines
Merging with another firm
Acquiring suppliers
Organic growth can be achieved by:
Entering new markets
Acquiring another business
Selling off divisions
Engaging in a hostile takeover
One advantage of organic growth is:
Faster expansion
Easier to manage compared to mergers and takeovers
Quick access to new markets
Immediate economies of scale
A disadvantage of organic growth is that:
It may be slower than inorganic growth
It involves high financial risk
It always results in diseconomies of scale
It cannot lead to new product development
Small businesses often survive in competitive markets by:
Differentiating their products and offering unique selling points (USPs)
Merging with larger competitors
Avoiding direct competition
Reducing customer service levels
One advantage of staying small is flexibility, which means:
Small firms can respond quickly to changes in customer needs
Small firms avoid competition altogether
Small firms expand faster than larger businesses
Small firms invest heavily in technology
Why is customer service a key advantage for small businesses?
They have more resources than larger firms
They can provide personalized service and build strong relationships with customers
They do not need to focus on profits
They do not have any competitors
How does e-commerce benefit small businesses?
It reduces competition
It allows them to reach a wider audience without significant investment
It requires large financial investments
It leads to lower quality products
Small businesses can benefit from e-commerce because:
It lowers the cost of entering new markets
It eliminates the need for customer service
It reduces internal communication problems
It allows them to avoid rapid growth
Staying small can help businesses focus on:
Large-scale mergers
Providing niche products and exceptional customer service
Expanding into international markets
Becoming market leaders
