Organisational growth Business objectives Businesses have many and

Organisational growth

Business objectives Businesses have many and varied objectives, however, they are often related to the following: Survival Profit Growth Providing a service

Reasons for growth Benefits associated with growth include: Economies of scale (lower average unit costs) Increased sales and profits Greater power through increased market share Security from spreading financial risk

Measuring growth The size of an organisation can be measured through: Market share Volume of sales Profits made Company value Number of employees

Methods of growth Organic (internal growth) Increased sales from. . . New customers in existing markets New product lines Inorganic (external growth) Acquisitions Mergers

Problems associated with growth As firms grow they may experience diseconomies of scale (increased average costs). The reasons for this include: Lack of co-ordination Diminished motivation Ineffective communication Slow decision making

Scale of production Firms cannot always produce at the most efficient level of output. The scale of production will depend on: Level of demand for products/services offered The number of competitors in the market The aims and objectives of the organisation