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economies of scale
factors that cause a producer's average cost per unit to fall as output rises
total coast
Fixed plus variable
the cost curve graph
A graph that shows how total cost depends on quantity of output.
strategic alliance
A long-term partnership between two or more companies established to help each company build competitive market advantages.
External growth
Business expansion achieved by means of merging with or taking over another business, from either the same or a different industry
merger
Combination of two or more companies into a single firm
The role and impact of globalization on the growth and evolution of new businesses
Competition exchange of tech information knowledge
economies of scale and diseconomies
Economies of scale exist when long run average total cost decreases as output increases, diseconomies of scale occur when long run average total cost increases as output increases, and constant returns to scale occur when costs do not change as output increases.
joint venture
an agreement between two or more companies to share a business project
franchise agreement
an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory
variable costs
costs that vary with the quantity of output produced
Reasons for Diseconomies of Scale
1. Communication problems - too much communication via technology, volume of messages being sent, poor feedback, inadequate or delayed information leading to management inefficiency. 2. Alienation of the workforce - they feel insignificant and demotivated; failing to do their best. 3. Poor coordination and decision-making - too many departments, divisions and products; leads to slow decision making (too many meetings, approvals, etc.).
Merits of Large Organizations
i) Economy of Specialized and Up-to-date Machinery: (ii) Economy of Labour: (iii) Economies of Bulk buying and selling: (iv) Economies of Overhead Charges: (v) Economy in Rent: (vi) Experiments and Research:
Key features of globalization
1. Increased international trade as barriers to trade are reduced 2. Growth of multinational businesses in all countries as there is greater freedom for capital to be invested from one country to another 3. Freer movement of workers between countries
Role of Multinational Corporations
Corporations tend to establish operations in markets where their capital is most efficient or wages are lowest. By producing the same quality of goods at lower costs, multinationals reduce prices and increase the purchasing power of consumers worldwide.
aquisition
In classical conditioning, the initial stage, when one links a neutral stimulus and an unconditioned stimulus so that the neutral stimulus begins triggering the conditioned response. In operant conditioning, the strengthening of a reinforced response.
Internal growth
Expansion of a business by means of opening new branches, shops or factories (also known as *organic growth*)
Merits of small organizations
Potential for large employment. ... Requirement of less capital. ... Contribution to industrial output. ... Contribution to exports. ... Earning foreign exchange. ... Equitable distribution. ... Use of domestic resources. ... Opportunities for entrepreneurship.
External growth methods
There are many external growth strategies available to an expanding company. They include entering new markets, divesting or acquiring new business units, strategic alliances, partnering relationships and mergers.