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