Friday, 6 January 2012

Side effects of a business growing larger

  • Economies of scale, unit price of products lowers 
  • Dis-economies of scale, Unit price of products are raised
  • Market will look attractive for new businesses to enter so to avoid more competition, growing businesses may introduce Limit pricing to sway off newcomers entering the market.
  • Market share may increase
  • Competitors may become fierce on the new growing business
  • A high demand of new products may occur
  • A Private limited company may be forced to become public limited if it wishes to continue growth
  • Shares of the company will go up in value
  • Dividend payouts will increases
  • Objectives of the company may change
  • Diversification may be required for the company to do in order to continue growing.
  • Tax payout will increase as the company will be making more money
  • A bigger workforce will be required to deal with the new high demand of service and orders.

No comments:

Post a Comment