Post on 16-Jan-2017
GROWTH AND THE IMPACT OF GLOBALIZATION.
GROWTH AND EVOLUTION Economies of scale
How does a business benefit when it grows?
Average costs (unit costs)
Suppliers Bulk, transport
Economies of scale
Managers- specialize
Banks- lower interest rates
Diseconomies of scale
Costs begin to rise.
Communication breakdowns.
Decision making slows down.
Inefficiency
Diseconomies of scale
Motivation falls- productivity drops
Costs rise
IS IT BETTER TO EXPAND YOUR BUSINESS OR TO STAY SMALL?
Friendly atmosphere
Lower levels of debt
Different skills are needed to lead a large organisation.
ON THE OTHER HAND… Export
Less dependent on one product or one market.
Career opportunities
Less worry about making people redundant.
Owners increase their wealth.
INTERNAL (ORGANIC GROWTH) Increasing sales by
Advertising, cutting prices, recruiting more agents.
Developing better production techniques.
GROWTH THROUGH EXTERNAL SOLUTIONS Joint ventures
Strategic alliances
Mergers and acquisitions
Franchises