A level business 3.9 AQA Final Exam Questions With Complete Verified Solutions.
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Course
A-level BUSINESS
Institution
A-level BUSINESS
Define Growth - Answer when there is an increase in the size of an organisation's operations
Growth occurs in terms of ... x3 - Answer Physical assets (i.e. purchasing new premises)
Number of employees
Increasing product range
Reasons for growth X2 - Answer Enter into new markets...
A level business 3.9 AQA Final Exam
Questions With Complete Verified
Solutions.
Define Growth - Answer when there is an increase in the size of an organisation's operations
Growth occurs in terms of ... x3 - Answer Physical assets (i.e. purchasing new premises)
Number of employees
Increasing product range
Reasons for growth X2 - Answer Enter into new markets - spread risk
Gain economies of scale and reduce costs
Define Retrenchment - Answer when there is an reduction in the size of an organisation's operations
Reasons for retrenchment x2 - Answer Focus on core competences - reduces loses or sell off less
profitable parts of the business
Increase efficiency
Types of growth x2 - Answer Organic growth
External growth
Define organic growth - Answer when an organisation increases their sales through expanding the
scope of their internal operations
Organic growth examples include x2 - Answer Expanding the current asset base (buying new factories
or premises from where to operate)
Increasing the product range
,Organic growth is funded through x3 - Answer Retained profit
new share issue
Loan capital
Define external growth - Answer when an organisation increases their sales through integrating with
other businesses
External growth examples x2 - Answer Mergers
takeovers
External growth funded through - Answer External sources of finance
Organic growth pros x2 - Answer abality to maintain culture , management style , brand image and USP
Potentially less risk then external growth
Organic growth cons x2 - Answer Can be slower then external growth
Risk of missing out on opportunities in fast growing market
Organic growth most appropriate when x2 - Answer Business has USP and strong brand image
Business has a unique culture
External growth pro x2 - Answer Gain synergies and economies of scale
Reduce level of competition
External growth cons x3 - Answer •Difficulties of merging two companies - cultures and systems
•Impact on motivation - job losses, reorganisation of work and uncertainty
•Buying another organisation's liabilities
, External growth most appropriate when x2 - Answer •Business a strong management team able to
integrate cultures
•Significant economies of scale and scope are achievable
Define Economies of scale (EoS) - Answer The benefits to a business, in the form of lower average unit
costs, from increasing the size of operation
Type of economy: Purchasing - Answer Bigger business (powerful)> supplier = neogatiate discounts/
longer periods of trade credit/reduced average cost/flexible design specification/delivery arrangments
Type of economy: technical - Answer Bigger organsiation = more advanced/sophisticated technology
they are able to afford.
= aid in + productivity and - average costs
Type of economy: managerial - Answer Bigger organisation = pay specialist employees to furfil
particular roles
Type of economy: Financial - Answer Large organisation = + likely able to negotiate favourable interest
rates from lenders
= - cost of borrowing money
Define Diseconomies of scale - Answer When a business grows so large that the costs per unit increase.
As output rises
Types of diseconomy: Communication - Answer Bigger organisation = +difficult/cost to communicate
with all people
+ time/effort to ensure everyone has understood communication = + communication costs
Type of diseconomy: Coordination - Answer Large organisation = communication = more
difficult/ensuring everyone is working towards the same goal
Needs new managment structures/monitoring systems to execute plans
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