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Business Growth - Coggle Diagram
Business Growth
Ethical implications of Growth
Environmental Damage
Unfair wages for employees
Unfair prices for customers
Exploiting workers in developing countries
Economies of Scale
Marketing Economies of Scale
Saving money as advertising and deliveries are cheaper
Financial Economies of Scale
Saving money as interest rates are lower for loans
Technical Economies of Scale
Saving money using technology
Purchasing Economies of Scale
Saving money by buying in bulk and getting discounts
Internal Growth
Introduce new product range
Advantage
More sales as they appeal to more people
Disadvantage
Expensive to develop new products
Increased Sales Activity
Advantafge
Increased awareness so more sales
Disadvantage
Expensive to advertise/run promotions
Reinvesting Profits
Advantages
Do not need to pay any interest
Disadvantage
Not as much finance available
External Growth
Mergers
Agreed joining with another business.
Can use resources of both businesses.
Takeovers
Purchase over 50% of shares
May be Hostile
Franchises
Get % of profits from smaller outlets
Easy form of expansion.
May lose control of new outlet.
Factors limiting growth
Too much competition
Not enough demand
Lack of Finance
Roles of the Competition and Markets Authority
Investigate mergers to ensure they are fair
Hears appeals against its decisions.
Enforces customer protection laws
Signs of Success and Failure
Failure
Higher employee turnover
Bad reviews from customers
Loss of Profit
Success
Increase of Profit
Good Word of Mouth
Increased customers
Advantages and Disadvantages of Growth
Advantages
Economies of Scale (Saves money)
Greater market influence (can set prices for suppliers)
Increased Profits/Sales
Disadvantages
Difficulties with Communication
Demotivation of employees
Difficulti to co-ordinate/control more branches