2.1. Business Growth and Competitive Advantage

Which of these are forms of growth?

• External Growth

• Organic Growth

• Internal Growth

• Inorganic Growth

What is Risk Bearing EoS?

• Where you choose to slow down the rate of expansion to match the steady pace of economic growth.

• Where a business is more likely to receive a loan from a bank as they are considered to be a 'less risky' investment.

• Where a business has multiple products/services to spread risks - if one fails they have another to fall back on.

• Where you take the risk of the decision as you know you will not have to deal with the consequences - another party will.

What is backwards vertical integration?

• Where a business expands closer to the selling of the final product.

• Where a business expands by purchasing another firm at the same stage in the supply chain.

• Where a business expands closer to the extraction of the raw materials.

• When a business purchases an unrelated business in a different industry.

What is the lowest point on the LRAC curve called? (Q3 for this example)

• The minimum efficient scale.

• The maximum efficient scale.

• The optimum efficient scale.

• The minimum inefficient scale.

When does a firm have a competitive advantage? (Hint, these are the definitions of four different means of advantage)

• When they have the lowest opportunity cost when producing the product compared to rivals.

• The ability of a party (an individual, or firm, or country) to produce a good or service more efficiently than its competitors.

• A condition or circumstance that puts one in a favourable or superior position.

• When its goods or services are deemed better quality than rivals by consumers.

True or False: Typically, organic growth is faster than inorganic growth.

• False

• True

What is R&D?

• Spending capital to hire more staff to increase productivity.

• Investment in research with the intention of improving good, introducing new ones and improving methods of production.

• Research and developwoment.

• Real & Direct.

What is diseconomies of scale? (DoS)

• 2

• When a company or business grows so large that the costs per unit increase.

• Cost advantages reaped by companies when production becomes efficient.

• Where unit costs start to rise again, when output increases.

How many types of growth are there (that we need to know)?

• 
• 
• 
• 

What is external EoS?

• Business-enhancing factors that occur outside a company but within the same industry

• EoS that is outside.

• When costs fall outside of the market.

• When unit costs decrease due to external shocks.