Reasons For Growth:

Economies of scale:
Economies of scale are generated when increasing production lowers the average cost of each unit
produced.

Two reason:

• If a company can get a discount by buying component parts in bulk it can lower its variable cost per
unit

• Second by increasing production a company can spread its fixed costs over a greater number of units.

Economies of scope:
Economy of scope states the average total cost of a company's production decrease when there is an
increasing variety of goods produced.

Market leadership:
Market leadership occurs when a firm holds the number one or number two position in an industry in
terms of sales volume.
Influence, power and survivability:
Laeger businesses usually have more influence and power than smaller
firms.
Larger businesses can typically make a mistake yet survive more easily
than entrepreneurial ventures.

Need to accommodate the growth of key customers:

Sometimes firms are compelled to grow to accommodate the growth of a key customer.
Ability to attract and retain talented employees:
It is natural for talented employees to want to work for a firm
that can offer opportunities for promotion, higher salaries and
increased level of responsibilities.

Growth is firm's primary mechanism to generate promotional

opportunities for employees.

This Photo by Unknown author is licensed under CC BY-SA-NC.