1.7 Expanding a business

• Business expansion refers to the process of a business increasing its size
• Organic growth requires relatively lower capital
• Organic growth has a lower level of risk
• External growth is slower than organic growth in achieving expansion.

  False
• External growth is achieved through acquisition or mergers
• Organic growth requires a higher level of capital investment compared to external growth.

  False
• The financial risk associated with external growth is higher
• What is the primary source of financing for organic growth?

  Retained earnings or loans
• Which growth method offers faster expansion but requires greater upfront investment?

  External growth
• Business expansion refers to the process of increasing a business's size
• What is the method of expansion that utilizes existing resources and capabilities?

  Organic growth
• External growth requires higher capital investment compared to organic growth.


  True
• Examples of organic growth include increasing marketing efforts, developing new products
• External growth leads to faster expansion compared to organic
• The capital investment for organic growth is relatively lower
• Match the growth type with its capital investment requirement:

  Organic Growth ↔️ Lower capital investment

  External Growth ↔️ Higher capital investment
• When expanding, businesses must assess key market considerations such as demand, competition, regulations, and infrastructure
• In organic growth, training focuses on upskilling existing employees
• External growth involves restructuring the supply chain to integrate acquired suppliers and distributors
• External growth requires a higher investment
• Organic growth may involve expanding into new geographic
• Match the growth method with its capital investment level:

  Organic Growth ↔️ Lower

  External Growth ↔️ Higher
• Organic growth can be achieved by increasing marketing efforts or developing new products.


  True
• External growth typically requires significant external financing
• What type of capital investment is required for external growth compared to organic growth?

  Higher investment required
• Match the factor with the growth method it relates to:

  Capital Investment ↔️ Lower for organic growth ||| Higher for external growth

  Financing Needs ↔️ Funded by retained earnings for organic growth ||| Requires external financing for external growth
• External growth involves lower financial risk compared to organic growth.

  False
• Why is assessing market considerations crucial for business expansion?

  To determine viability and risks
• What are two examples of organic growth strategies for a business?

  New marketing or products
• What is the main advantage of external growth in terms of expansion speed?

  Faster expansion
• Organic growth utilizes existing resources and capabilities
• External growth can lead to quicker growth but requires higher capital investment.

  True
• Businesses have greater control over growth with the organic method
• Organic growth provides more sustainable long-term profits than external growth.


  True
• Effective HR management is critical when a business expands to support growth.

  True
• Organic growth requires a gradual increase in production capacity to meet growing demand.

  True
• Organic growth involves acquiring other businesses to expand operations.

  False
• Match the growth method with its characteristic:

  Organic Growth ↔️ Utilizes existing resources

  External Growth ↔️ Achieves growth through acquisition
• Arrange the features of organic and external growth based on capital investment required.

  1️⃣ Organic Growth: Relatively lower capital investment

  2️⃣ External Growth: Higher capital investment
• External growth requires higher capital