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Business in the Real World

Expanding a business and economies of scale

  • 3 things to know
  • Both papers

Overview

Organic growth through franchising, new stores, e-commerce and outsourcing, mergers and takeovers, purchasing and technical economies of scale, diseconomies of scale and calculating average unit cost.

What you need to know

Answer each one before you reveal it.

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Key term

What is organic growth?

Key term

What is external growth?

Key term

What is franchising?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    What is organic growth?

    Model answer

    Organic growth is when a business grows from within, using its own resources. Opening new stores is an example.

  2. 2

    What is external growth?

    Model answer

    External growth is when a business grows by joining with or buying another business. Mergers and takeovers are the two main methods.

  3. 3

    What is franchising?

    Model answer

    Franchising is when a business sells others the right to trade under its name and use its methods. The franchisee pays a fee and a share of revenue.

  4. 4

    Why is franchising a way for a business to grow?

    Model answer

    Franchising can let a business open many outlets using franchisees' money and effort. The franchisor grows quickly with little risk.

  5. 5

    How can e-commerce help a business expand?

    Model answer

    E-commerce lets a business sell online to customers anywhere, at any time. The business can reach new markets without opening new shops.

  6. 6

    What is outsourcing?

    Model answer

    Outsourcing is paying another business to carry out some of a firm's work. Examples include cleaning, IT or manufacturing.

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Business in the Real World
Influences on Business
Business Operations
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The pays a fee and a share of revenue.
franchiseefranchisorshareholder

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AThe business pays more interest on the money it owes.
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Wage means pay based on the number of hours worked.
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