Students’ Name: _______________________________________ Date: ______/05 /2023

Parent’s name

________________________

Module 1: Business Studies

 Topic: WHY SOME BUSINESSES GROW AND OTHERS REMAIN SMALL

Grade Level  Objectives:

7 

Why some businesses grow and others remain small

Growth is a long - term objective of most, but not all, business. Some businesses prefer to remain
small, while others wish to expand.

Why owners may want to expand their business?

Expanding a business can bring many benefits, including increased profits and a larger share of
the market.

Increase in profits

When a business grows, its profits may increase. Growth must result in an increase in output –
good and services produced. If the output is sold then sales increase. Increased sales usually
increase revenue and, if the business has kept control of its costing during its growth, should
also increase profit.

Increase in Market Share

An increase in market share may also result from business growth. This benefits the business
because its products and s and brand become more widely known and this market is easier for
the business to continue to grow.

Economies of scale

As the business grows it may benefit from reduced average costs as a result of economies of
scale. If a business can lower the costs of producing its products, its profits will increase .
Instead, it may decide to lower the price of its products and become more competitive –
resulting in higher sales.

Greater power to control the market

Larger businesses in an industry have greater power to control market activities. They have
greater control over their own prices and may even be able to set the prices for all other business
in the industry to follow. Large and powerful firms may even be able to influence policy to their
advantage.

Protection from the risk of takeover

Public limited companies are often at risk of takeover. This achieved by buying at least e