IB Business and Management Business Organisation and Environment 1.7 G

Views:
 
Category: Education
     
 

Presentation Description

IB Business and Management Business Organisation and Environment 1.7 Growth and Evolution I

Comments

Presentation Transcript

PowerPoint Presentation:

IB Business and Management .com IB Business and Management T he IB Diploma Business and Management course delivered IN STYLE , ONLINE . ©

PowerPoint Presentation:

z Growth & Evolution i 1.7

PowerPoint Presentation:

z introduction Driving & restraining forces for growth Continual aim Definition: Expansion in size of its operations Reap the benefits of larger scale production – economies of scale Larger market share to get better market standing & market power Means of survival in competitive environment To spread risks

PowerPoint Presentation:

z Measuring growth Value of sales turnover (revenue) Market share Sales % of industry total Value of capital employed # of employees hired

PowerPoint Presentation:

z Greater financial strength to withstand change s in external environment Growth is good, right? Greater risks to pursue much higher rewards can be taken Profitability brings security + investors & capital (reinforcing spiral of success)

PowerPoint Presentation:

z Thinking 1 owner = 5,000 kg wheat 10 owners = 50,000 kg wheat Who’s likely to be more profitable? Costs are key! Same sale price/kg

PowerPoint Presentation:

z Economies of scale Lower average costs of production per unit the larger a firm gets productivity efficiencies 50 cows 5000 cows A Business has to pass costs on

PowerPoint Presentation:

z Lower average costs of production per unit the more a firm produces productivity efficiencies $25K Quantity produced Cost per unit AC Q 1 Average cost 1 Q 2 Average cost 2

PowerPoint Presentation:

z Internal e.o.s . technical small large

PowerPoint Presentation:

z Internal e.o.s . financial small large

PowerPoint Presentation:

z Internal e.o.s . managerial small large marketing finance Human resources

PowerPoint Presentation:

z Internal e.o.s . specialization large small

PowerPoint Presentation:

z Internal e.o.s . marketing large small

PowerPoint Presentation:

z Internal e.o.s . small commercial large

PowerPoint Presentation:

z Internal e.o.s . small Risk-bearing large

PowerPoint Presentation:

z Economies of scale Not just Buying in bulk!!! Even small businesses can do this

PowerPoint Presentation:

z External e.o.s . Technological progress Improved transportation & communication networks Better trained labour Regional specialization How would a new technology company benefit from basing itself in silicone valley ?

PowerPoint Presentation:

z Why Remain small? diseconomies of scale Harder to control & manage effectively Mistakes & quality problems Communication problems Confusion, isolation → errors & quality problems outsourcing Subcontract production Keep control of intellectual property satisficing Personal reasons to forego growth

PowerPoint Presentation:

z Why Remain small? Benefits of being large e.o.s already done & dusted Benefits of being small Discussion map p. 117-118 Can a small firm survive & prosper? Reasons for Reasons against Conclusions & justifications Key points highlighted & then written out & explained in full Question 1.7.1: p. 119