3.2.1 Growth & 3.2.2 Mergers and takeovers GapFill

The first business objective of a start-up is to   live survive hold out outlast .  Beyond the first year the business will want to grow and   contract expand broaden widen to increase the amount of profit that it makes.  The objectives of growth depend on the product or service that the business offers and the industry in which it competes.

Many companies expand to gain   finances profits trades economies  of scale, which means as a business increases its size, and scale of operations, it can access further financial benefits. For example gaining discounts from suppliers for bulk buying will help to lower the average unit costs.

Some companies expand to increase their market   strength power force capacity  over their customers and suppliers. This ties in with Porter's 5 forces strategic theory. 

Businesses in very competitive markets may wish to grow and expand in order to increase their market  share stake part split . This leads to increased brand recognition and higher sales revenue. 

Some companies take a more strategic approach to growth and expansion and regard is as a way to increase   costs cash flowprofitability synergies  as a long-term objective. 

The main problem of growth in established businesses is that it can bring   economies diseconomies factoring outsourcing  of scale. As production and output increase there are problems with communication, co-operation and co-ordination, which means that the average unit cost per item starts to increase.

In new businesses the problem of growth can be   sharesovertrading undertrading stock market , essentially taking on more business than can be supported by the resources in the business.