Business - 9225 OxfordAQA

Expanding A Business

Gbogbo ọrọ náà

A bakery that makes 200 loaves a day and a bakery that makes 20,000 do not simply differ in size. The larger one buys flour by the tonne at a price the smaller one will never be offered, runs an oven the smaller one could never fill, and spreads the cost of its accountant across a hundred times as many loaves. That is why growth is worth chasing. It is also why the larger bakery has three layers of management, a communication problem and staff who have never met the owner.

In this lesson you will learn the ways a business can get bigger, from opening new outlets and selling online to franchising, outsourcing, mergers and takeovers, and the arguments for and against each. You will learn what economies of scale actually are, with the two the specification names in particular, and what diseconomies of scale are and why they set in. And you will learn to calculate average unit cost, which is the number that turns the whole argument from an opinion into arithmetic.

Ebumnobi

  1. Methods of expansion.
  2. Benefits and drawbacks of expansion.
  3. Economies of scale.
  4. Diseconomies of scale.

Maapụ uche

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Akwụkwọ Ọmụmụ

Two bakeries, the same recipe, very different economics. The large one pays less for every sack of flour because it orders a hundred sacks at a time. Its ovens are the sort that only make sense if you are running them all day. Its delivery van does one round instead of six separate journeys, and the cost of its accountant, its insurance and its manager is divided across twenty thousand loaves rather than two hundred.

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Nnyocha Ọmụmụ

Ekele diri gi maka imecha ihe karịrị na Expanding A Business. Ugbu a na ị na-enyochakwa isi echiche na echiche ndị dị mkpa, ọ bụ oge iji nwalee ihe ị ma. Ngwa a na-enye ụdị ajụjụ ọmụmụ dị iche iche emebere iji kwado nghọta gị wee nyere gị aka ịmata otú ị ghọtara ihe ndị a kụziri.

Ị ga-ahụ ngwakọta nke ụdị ajụjụ dị iche iche, gụnyere ajụjụ chọrọ ịhọrọ otu n’ime ọtụtụ azịza, ajụjụ chọrọ mkpirisi azịza, na ajụjụ ede ede. A na-arụpụta ajụjụ ọ bụla nke ọma iji nwalee akụkụ dị iche iche nke ihe ọmụma gị na nkà nke ịtụgharị uche.

Jiri akụkụ a nke nyocha ka ohere iji kụziere ihe ị matara banyere isiokwu ahụ ma chọpụta ebe ọ bụla ị nwere ike ịchọ ọmụmụ ihe ọzọ. Ekwela ka nsogbu ọ bụla ị na-eche ihu mee ka ị daa mba; kama, lee ha anya dị ka ohere maka ịzụlite onwe gị na imeziwanye.

  1. Which one of the following is an example of external growth? A. Buying a competitor B. Launching an online shop C. Opening a second factory D. Training staff to work faster Answer: A
  2. A factory has fixed costs of 90,000 and variable costs of 6 per unit. It produces 10,000 units. What is its average unit cost? A. 6 B. 9 C. 15 D. 150,000 Answer: C
  3. Which one of the following is a cause of diseconomies of scale? A. Buying raw materials in larger quantities B. Poor communication between departments C. Spreading fixed costs over more units D. Using larger and more efficient machinery Answer: B
  4. Which one of the following best describes purchasing economies of scale? A. Borrowing money at a lower rate of interest because the business is large B. Buying in large quantities and being charged a lower price per unit C. Employing specialist managers for each department D. Using machinery that only pays for itself at high output Answer: B
  5. Which one of the following is a drawback to a franchisor of expanding by franchising? A. Growth is funded by the franchisee rather than the franchisor B. The franchisor receives a share of the franchisee's profits C. The franchisor has less direct control over the quality of service D. The brand becomes known in more towns Answer: C

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