Expansion

### What is one primary goal of business expansion? - [x] To increase sales and market share - [ ] To decrease employee numbers - [ ] To reduce product variety - [ ] To increase prices only > **Explanation:** The primary goal of business expansion is to increase sales and market share, although it may have additional goals like enhancing competitiveness, improving financial performance, and accessing new customers. ### When is it typically considered safe for a company to expand? - [x] When it has consistent high profits and sufficient capital - [ ] During economic recessions - [ ] When its competitors are failing - [ ] When it experiences initial losses > **Explanation:** A company should generally consider expanding when it has consistent high profits and sufficient capital, indicating strong financial health and readiness for growth. ### What can be a result of improper planning for expansion? - [ ] Increased market share - [ ] Decreased competition - [x] Overextending financial resources - [ ] Enhanced brand loyalty > **Explanation:** Improper planning for expansion can lead to overextending financial resources, operational inefficiencies, and other significant risks that can harm the business. ### Which of the following is a form of geographic expansion? - [ ] Launching new packaging - [ ] Acquiring a competitor - [x] Opening a new store in a different city - [ ] Hiring additional staff > **Explanation:** Geographic expansion involves opening new stores or offices in different locations, whether domestically or internationally, to access new markets. ### What is a risk typically associated with expansion? - [ ] Increased product demand - [ ] Higher profit margins - [ ] Enhanced brand recognition - [x] Operational inefficiencies > **Explanation:** One of the risks of expansion is operational inefficiencies, which can arise from scaling complexities, increased workload, and mismanagement. ### How can a company finance its expansion efforts? - [x] By issuing new equity - [ ] By reducing customer service - [ ] By downsizing - [ ] By cutting employee benefits > **Explanation:** Companies can finance expansion efforts through several means, including issuing new equity, taking on loans or bonds, using retained earnings, or considering mergers and acquisitions. ### Which term describes cost advantages achieved by increasing the level of production? - [ ] Diversification - [x] Scale Economies - [ ] Vertical Integration - [ ] Globalization > **Explanation:** Scale economies refer to cost advantages that companies achieve due to an increase in the level of production, which typically leads to lower per-unit costs. ### Which strategy involves expanding operations into different production stages within the same industry? - [x] Vertical Integration - [ ] Horizontal Integration - [ ] Diversification - [ ] Globalization > **Explanation:** Vertical integration involves expanding a company’s operations into different stages of production or distribution within the same industry to increase control over the supply chain. ### How does rigorous market research benefit business expansion? - [ ] By cutting down the number of competitors - [ ] By increasing existing market size - [x] By identifying viable markets and understanding customer needs - [ ] By reducing financial risks completely > **Explanation:** Market research helps businesses identify viable markets, understand customer needs, assess competitive landscapes, and with determining the feasibility and strategic fit of expansion plans. ### Which term refers to investing in new products or markets to reduce risks? - [ ] Market Penetration - [ ] Vertical Integration - [ ] Scale Economies - [x] Diversification > **Explanation:** Diversification involves investing in new products or markets to spread risk and avoid dependence on a single market or product line.