Key term
Edexcel A-Level Business 9BS0
Meeting Customer Needs
Marketing Mix and Strategy
Managing People
Entrepreneurs and Leaders
Financial Planning
Managing Finance
Resource Management
External Influences
Business Objectives and Strategy
Decision-Making Techniques
Influences on Business Decisions
Assessing Competitiveness
Globalisation
Global Markets and Business Expansion
Global Marketing
Global Industries and Companies
Business Growth
- 4 subtopics
- 18 things to know
- Paper 2 and Paper 3
What Business Growth covers
Business growth is the second section of Theme 3. It covers why a business grows at all, the economies and diseconomies that come with size, the difference between growing organically and buying growth, and the reasons a business might deliberately stay small.
Where it is assessed
Paper 2 and Paper 3
Theme 3, examined on Business activities, decisions and strategy, then the pre-released synoptic paper.
Check the Pearson Edexcel specification ↗The 4 subtopics
Each one has its own page.
- GrowthThe objectives behind growth, internal and external economies of scale, market power, market share and brand recognition, and the diseconomies of scale, communication problems and overtrading that follow when a business grows too far.Open →
- Mergers and takeoversMergers against takeovers and the motives for each, horizontal and forward and backward vertical integration, the synergies and financial rewards a deal promises, its financial risks, the problems of rapid growth such as overtrading and culture clashes, and hostile and friendly takeovers.Open →
- Organic growthHow organic growth differs from inorganic, the methods available, and the control, culture and financing advantages of growing under its own steam.Open →
- Reasons for staying smallProduct differentiation, niche markets, e-commerce and customer service as survival strategies, and the flexibility a small business keeps.Open →
What you need to know
Answer each one before you reveal it.
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Evaluation
Why do businesses grow to gain market power and share?
Key term
Why do businesses grow, and what are diseconomies of scale?
Key term
Identify one problem arising from business growth related to organisational structure.
Key term
What is the key distinction between economies of scale and diseconomies of scale?
Evaluation
Why do businesses merge or make a takeover?
Key term
Distinguish horizontal from vertical integration.
Evaluation
What rewards can a merger or takeover deliver?
Evaluation
What can go wrong after a merger or takeover?
Key term
Give two examples of diseconomies of scale that can result from rapid growth.
Numbers
State two integration challenges a business might face after a merger or takeover.
Key term
How does organic growth differ from inorganic growth?
Process
What are the methods of organic growth?
Evaluation
What advantages does organic growth have over acquisition?
Key term
What internal constraint may limit a business's ability to pursue organic growth?
Process
How can a small business compete on differentiation?
Process
How does customer service help a small business survive?
Evaluation
Why might a small business owner deliberately choose not to pursue growth?
Take Business Growth further
The same content, four other ways.
Commonly confused
Pairs that lose marks when they are blurred together.
Organic growth vs External growth
Organic growth: expansion using a firm's own activities and resources. External growth: expansion by combining with or acquiring another firm.
Questions from this topic
Each one with the model answer underneath.
- 1
Why do businesses pursue growth in relation to their cost structure?
Model answer
To achieve economies of scale, which reduce average costs as output increases.
- 2
What are the two broad categories of economies of scale?
Model answer
Internal economies of scale (arising from within the firm) and external economies of scale (arising from industry growth).
- 3
What are purchasing economies of scale?
Model answer
Cost savings from buying inputs in bulk, allowing the firm to negotiate lower unit prices from suppliers.
- 4
What are technical economies of scale?
Model answer
Cost savings from using larger, more efficient machinery or production processes that are only viable at higher output levels.
- 5
What are managerial economies of scale?
Model answer
Cost savings from employing specialist managers whose expertise can be spread across a larger output, reducing average management costs per unit.
- 6
What are financial economies of scale?
Model answer
Cost savings from larger firms being able to access finance at lower interest rates and on more favourable terms than smaller firms.
What is inside Levo
Six ways to work the same material.
Business Growth revision questions
- What does Business Growth cover in Edexcel A-Level Business?
- 4 subtopics: growth, mergers and takeovers, organic growth and reasons for staying small. Each one has its own page with questions and model answers.
- How is Business Growth organised?
- By the Edexcel 9BS0 specification, subtopic by subtopic, so it matches the order you are taught it in.
Every question in Business Growth, on a schedule.
Attempt a question from memory, write the correct version, then attempt it again. Levo records the jump between your first attempt and your last, and brings each question back on the day you are due to forget it.
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