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Describe three reasons for business expansion other than to increase profit. - Leaving Cert Business - Question C - 2005

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Describe three reasons for business expansion other than to increase profit.

Worked Solution & Example Answer:Describe three reasons for business expansion other than to increase profit. - Leaving Cert Business - Question C - 2005

Step 1

Reason 1: Personal Satisfaction

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Answer

Many small enterprises, particularly sole traders, expand to achieve personal satisfaction. They are often driven by the desire to test and succeed with new product ideas or approaches. This pursuit not only enhances their self-esteem but also satisfies their ambition for personal growth within their business endeavors.

Step 2

Reason 2: Security of the Enterprise

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Answer

Expanding a business can also help to secure its future. By becoming a larger player in the market, businesses can reduce risks associated with fluctuating demand. For example, by diversifying their product offerings, they can ensure that they are less vulnerable to changes affecting any single product line.

Step 3

Reason 3: Synergy in Operations

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Answer

Business expansion can create synergy where combined enterprises contribute more to their collective productivity than they would individually. This occurs when expanded operations enhance efficiencies or reduce costs, thereby allowing those involved to achieve greater outcomes together than they could achieve by operating separately.

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