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Paper 2
Business Growth
Both
Growth decisions should balance speed with control.
Key Facts
- Organic growth is slower but lower risk.
- External growth can create integration issues.
- Economies of scale improve competitiveness.
Topics Covered
Methods of Growth
What you need to know
- •Organic growth uses internal resources.
- •External growth uses mergers or takeovers.
Exam Tips
- Compare speed, risk, and control.
Integration
What you need to know
- •Horizontal integration is with competitors.
- •Vertical integration is with suppliers or distributors.
Exam Tips
- Link integration to cost or market power.
Economies of Scale
What you need to know
- •Bulk buying reduces average costs.
- •Specialisation improves efficiency.
Exam Tips
- Explain how growth can reduce unit costs.
Key Terms
organic growth
Growth achieved internally.
merger
Two businesses join to become one.
economies of scale
Lower average costs as output increases.
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Common Exam Questions
Explain two benefits of economies of scale.
4 markseasyPaper 2
Model Answer
Bulk buying lowers costs and specialisation boosts efficiency.
What examiners want to see
- ✓Two benefits
- ✓Explanation
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