Business Growth (Edexcel A-Level Business): Flashcards
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Business growth definition
Business growth definition
Expands operations, increases revenue, gains market share
Economies of scale
Economies of scale
Falling average costs as output increases
Minimum efficient scale
Minimum efficient scale
Output level where long-run average costs are lowest
Internal economies of scale
Internal economies of scale
Cost reductions arising from within the firm as it grows
External economies of scale
External economies of scale
Cost reductions benefiting all businesses in an industry
Principle of increased dimensions
Principle of increased dimensions
Capital costs don't rise proportionally to capacity
Financial economies benefit
Financial economies benefit
Access to wider funding sources and better interest rates
Market power over suppliers
Market power over suppliers
Large businesses can pressure suppliers to reduce prices
Diseconomies of scale
Diseconomies of scale
Average costs rise as output increases beyond optimal scale
Overtrading
Overtrading
Expanding too quickly without adequate financial resources