Unit 1.

6 Growth and Evolution (Part 1)

Syllabus Objectives

Know how to clearly define EOS and

DOS and the different ways they
can be achieved as a business
grows. Be able to break concepts
down into individual characteristics
and see the broader picture how
they relate. E.g. A business is able
to reduce the average costs per unit
if it uses the same promotional
activities across a range of different
countries (marketing economies of
scale), however, this may reduce
their impact as they are then less
targeted to an individual country.
Know that small businesses can still
be very successful and have their
own advantages. Be able to
combine and synthesize these ideas
into a new idea and make a
judgment based on the weight of
evidence.. E.g. If a business owner
considers their local community and
offering personalized services as
the core of their business
objectives, then this may outweigh
the benefits of growing large. It may
be ebenficial for this business to
remain small and focus on
improving its marketing and human

Know that businesses may choose to grow in a number of different ways. Internally, businesses may
use their own resources to grow, whereas externally they may combine with other businesses or
individuals to achieve growth success. Be able to break concepts down into individual characteristics
and see the broader picture how they relate. E.g. Internal growth offers the advantage of a lower cost
approach and generally maintaining a greater level of control, however it is likely to take far longer for
full growth and success to be realized. This is different to external growth which is more rapid, but
requires greater financial investment and is more likely to reduce the level of control by the original
business management team.
Know the external growth options and the benefits and weaknesses of each. Be able to combine and
synthesize these ideas into a new idea and make a judgment based on the weight of evidence.. E.g. If
two businesses are considering a joint venture or a strategic alliance, understand the benefits of each
as well as the nature of the proposed new business, its time length and it likelihood of success (or
risk). If the new business can be separated from the original businesses and represents a risky
proposition, then a joint venture will allow the two main businesses to reduce the risk if the business

Example questions may include:

Define the term Diseconomies of Scale
[2
marks]
Explain two methods of internal growth
[4
marks]
Examine the benefits of a joint venture between company X and company Y
[6 marks]
Analyse the possible effects on North Korea if McDonalds was to enter the
country
[6 marks]
To what extent is the fast food industry globalized
[8
marks]