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Flashcards in Expanding A Business Deck (14)
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1
Q

What are the possible impacts of competition for a business?

A

Competitors would have a positive and negative impact on the business

2
Q

How are businesses able to use competition to gain a competitive advantage?

A

Business can learn from their competitors mistakes

Businesses increase innovation to stay ahead of their competitors

3
Q

What are the two economies of scale?

A

Purchasing

Technical

4
Q

What is purchasing economies of scale?

A

This is when larger companies get discounts from their suppliers because they are buying lots of units in bulk.

5
Q

Technical economies of scale?

A

This happens because larger companies are able to invest in expensive, specialist machinery and equipment.

6
Q

What are the three diseconomies of scale?

A
  • Coordination issue
  • Lower employee motivation
  • Communication issues
7
Q

What are coordinate issues?

A

As a firm grows, the way the firm functions or operates becomes more complex.

8
Q

What is Communication issues?

A

In a larger business, communication becomes more difficult because of the size of the workforce and the number of different divisions in the business.

9
Q

What is economies of scales?

A

Economies of scale describe businesses benefiting from a reduction (fall) in the average unit cost of their product or service because of increasing production

10
Q

What is diseconomies of scale?

A

Purchasing economies of scale is when firms making a lot of things get discounts because they buy lots of materials.

11
Q

How can a business expand?

A

Launching new products
Increase production capacity
Open new stores

12
Q

What is franchising?

A

Franchising is where a company gives someone the right to sell its products and use its trademarks.

13
Q

What are some advantages of franchising?

A

The business can expand without needing large amounts of investment.

The business also does not have to be concerned about some of the risks of becoming a larger corporation

Franchising increases brand awareness of the firm’s products or services.

14
Q

What are some disadvantages of franchising?

A

the franchiser does not have complete control over how they operate.

If a franchise is run badly, then a single franchise or store can negatively affect the brand image.