1. Reasons for Business Growth
To maximise _______________
To gain control of the market – increasing market share, taking over competitors
To control the supply of raw materials, e.g.
To diversify – having more than one product, e.g.
cost savings from being larger - economies of scale means producing at lower cost

2. Why might a successful business decide to remain small?
It is easier to manage
Workers are often given greater responsibility and so work harder
Small firms are flexible
It works well as it is, eg customers know the business and brand loyalty has been established
The community benefits, because small firms are often labour-intensive (they use relatively more workers than they do machinery and land) compared to larger firms

3. Many successful businesses will grow
A successful product or service can lead to expansion. The expansion can be
Internal – growth from within the organisation
External – growth through outside influences eg mergers and takeovers.

4. INTERNAL GROWTH Product/service is successful Sales are good
Profits are made
Even more sales as more is being produced
More premises, equipment bought
Profits are reinvested
More profits are made
Profits are reinvested
… and so on

5. Boy visits chicken farm and is given some eggs
Chickens hatch and lay more eggs
Eggs sold and money used to buy more chickens
and so on
Profits used to build henhouses for more hens
More eggs increasing profits

6. EXTERNAL GROWTH There are 2 ways a business may grow externally
Merger – when 2 or more businesses agree to join together to create one business
Takeover (acquisition) – one business buys another. Usually the one making the takeover is the larger one

8. Horizontal Integration
This method of growth can be achieved by internal and external expansion (takeover, merger)
The businesses involved will be producing the same or similar products
They will also be at the same stage in the production chain (eg one farmer might take-over another farmer)
Example: A junk food company (_________) merging with another junk food company (_____________)

9. Vertical Integration
Vertical Integration involves the joining together of firms at DIFFERENT STAGES of production.
A junk food company taking over a farm -BACKWARDS VERTICAL INTEGRATION
E.g
a junk food company taking over a airline
-FORWARD VERTICAL INTEGRATION.
E.g.