IGCSE Economics- Unit 4. Size of firms

1
Growth of Firms
Department of Economics and Business DCS
2
Introduction
Many businesses believe efficiency can be
improved by increasing the size and scale of
operations.
3
Introduction
Reasons for (and benefits of) Growth

• Aid survival
• Reduce risk
• Gain economies of scale / Reduce costs
• Increase future profitability
• Gain (or maintain) market share

4
Introduction
Reasons for (and benefits of) Growth

• Increase feeling of status and power for
  management etc
• Provide greater security and remuneration

5
Introduction
Factors Affecting Choice of Operational Scale

• Objectives of owners etc.
• Size of Market.
• Availability of workforce.
• Availability of finance.
• Technological development.
• Government policies (Monopolies etc)
• So Why do some firms remain small?