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1.6 Growth and evolution - notes

So far we have examined the nature of business activity, types of organisations and objectives and investigated the nature of stakeholders. We have also considered the impact of the external environment on the firm in terms of the opportunities and threats it provides and prepared and evaluated a range of decision making tools.

One of the main aims of a firm is to grow. To assist this process, firms use a range of techniques including those examined in earlier sections - planning, setting strategic and corporate objectives and SWOT and PEST analysis. In this section we move on to look at the impact of this growth and ways in which it can be achieved. We also consider the driving and restraining forces for growth and evolution of different businesses.

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By the end of this section you should be able to:

  • Apply the concepts of economies and diseconomies of scale to business decisions
  • Evaluate the relative merits of small and large scale organisations and recommend an appropriate scale of operation for a given situation
  • Explain the differences between internal and external growth
  • Evaluate joint venture, strategic alliances, mergers and takeovers as methods of achieving growth
  • Analyse the advantages and disadvantages of a franchise for both franchisor and franchisee and evaluate the use of franchising as a growth strategy

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  • Explain the value of the Ansoff matrix as a decision making tool and apply the tool to a given situation
  • Evaluate internal and external growth strategies as methods of business expansion
  • Examine how Porter's generic strategies may provide a framework for building competitive advantage