Session (1.3.5) Why a Business Might Remain Small and Others May Grow

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Objectives

By the end of this session, you should be able to:

understand why businesses want to grow;
explain the difference between internal and external growth;
explain horizontal and vertical integration;
understand the problems associated with growth and hence why some businesses choose to remain small.

Engage

Although there are many famous examples of entrepreneurs who started a business and grew quickly to a very large size, these actually make up a small proportion of all businesses. The majority of businesses would be categorised as small and surprisingly some of the owners of these small businesses are happy to remain small.

Start by watching this five minute lesson on why some businesses grow and why others remain small. Try to jot down reasons while you are watching.

WATCH – Why Some Businesses Grow (YouTube)

Learn

READ AND MAKE NOTES – Summary File 1.3.5

Read and make notes on pages 47 to 52 of your coursebook and continue your notes on why some businesses grow and others remain small. Make sure you include the different ways in which businesses grow including internal and external growth.

Table 3.5 on page 50 is a great summary of the advantages and disadvantages of internal and external growth.

Figure 3.13 on page 51 is a great summary of the different ways businesses might grow.

Apply

Complete Activity 3.4 on page 50 of your coursebook.

Log in to Cambridge Go via your digital coursebook to watch Video 3 on the Orange and T-Mobile merger.

WATCH – Video 3 (Cambridge Go)

Think about the two questions from the end of the video.

Consolidate

Look at Case Study on page 48. What type of growth is Yao Secret planning to use? What are the advantages and disadvantages of this method? Which other way could they expand?

Add all the key terms - internal growth, external growth, horizontal integration and vertical integration to your glossary.

Finally, complete rows five and six in the check your progress box on page 55 of your coursebook.