3.1.7 - Expanding a business

• What is the process of increasing a business' size called?

  Expansion
• How does organic growth occur in a business?

  By increasing output, customer base, or products
• What is inorganic growth?

  Growth by joining or buying another business
• What does integration refer to in business?

  Two or more businesses joining together
• What is franchising?

  Sale of rights to use/sell a product by a franchisor to a franchisee.
• What does a franchisor provide to a franchisee?

  Standards, training, and support
• What is e-commerce?

  Business transactions carried out electronically
• What is outsourcing in a business context?

  Contracting another business for activities
• What does risk refer to in business?

  Possibility of lower than expected returns
• What are mergers?

  Agreement between businesses to join together
• What is a takeover?

  One business takes control of another
• What are economies of scale?

  Cost advantage of producing on a large scale
• What happens to unit costs as output increases in economies of scale?

  Unit cost decreases
• What are diseconomies of scale?

  Increased unit costs from excessive growth
• What are technical economies of scale?

  Benefits from investing in expensive machinery
• How do technical economies of scale benefit large businesses?

  They allow investment in cost-saving machinery