Question
Explain five strategies that a small firm could adopt to expand so as to enjoy economies of scale.
Answer
- Diversification/variety of products in order to increase market share.
- Rationalize operations so as to concentrate on more efficient units/cut down waste.
- Buying/acquiring other similar businesses to widen the scope of activities.
- Secure credit or loan to expand its capital base - Arrange for franchising - by acquiring rights to produce/sell goods under the name of another company.
- Expand the market thus increase volume of sales.
- Adopting appropriate technology to increase quality/quantity of goods.
- Ploughing back profits to finance its operations.
- Forming of cartels with similar businesses.
- Rationalize operations so as to concentrate on more efficient units/cut down waste.
- Buying/acquiring other similar businesses to widen the scope of activities.
- Secure credit or loan to expand its capital base - Arrange for franchising - by acquiring rights to produce/sell goods under the name of another company.
- Expand the market thus increase volume of sales.
- Adopting appropriate technology to increase quality/quantity of goods.
- Ploughing back profits to finance its operations.
- Forming of cartels with similar businesses.
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