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Outline two reasons why a business might choose to expand - Leaving Cert Business - Question D - 2019
Question D
Outline two reasons why a business might choose to expand. I-Care Cutlery is considering expanding by means of a merger with a similar business based in the UK.
Worked Solution & Example Answer:Outline two reasons why a business might choose to expand - Leaving Cert Business - Question D - 2019
Step 1
Increased Sales
Answer
A primary reason for a business to expand is to increase sales. Expansion allows a business to reach new customers and markets, thereby boosting its sales revenue. For example, by introducing new products or entering different geographical markets, I-Care Cutlery can enhance its market presence and profitability.
Step 2
Economies of Scale
Answer
Another reason for expansion is to achieve economies of scale. As I-Care Cutlery grows, it can reduce costs per unit through increased production. This can occur due to savings on bulk purchases, lower transportation costs, and more efficient management of resources, leading to greater overall profitability.