Problems Arising from Growth (Edexcel A-Level Business): Flashcards
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Practise the cards
10 cards from this deck
Diseconomies of scale
Diseconomies of scale
Average costs rise as output increases
Minimum efficient scale
Minimum efficient scale
Output level that minimises long-run average costs
Main source of internal diseconomies
Main source of internal diseconomies
Challenges of managing large, complex organisations
Communication problem from growth
Communication problem from growth
Longer chains of command increase miscommunication
Motivation issue in large firms
Motivation issue in large firms
Workers feel insignificant, leading to demotivation
External diseconomies of scale
External diseconomies of scale
Problems affecting all businesses in particular area/industry
Silo mentality
Silo mentality
Departments reluctant to share information with others
Overtrading
Overtrading
Funding large orders without sufficient financial resources
Undercapitalised business
Undercapitalised business
Starting with insufficient capital to fund operations
% of business failures due to cash flow problems
% of business failures due to cash flow problems
80%