PKN manufactures glass. Contributing to sustainable development is important to the business. PKN has factories in 30 countries. It has 27000 employees. The Managing Director knows PKN has benefited from globalisation. She plans to expand the business using external growth. Retained profit is one source of finance a business could use to fund expansion. Some of PKN's directors are concerned about possible diseconomies of scale as the business grows. Identify two methods of external growth a business might use. Method 1: Method 2: .......................................................................................................................................

Business

IGCSE&ALevel

CAIE

Exam No：0450_s25_qp_11 Year：2025 Question No：4(a)

Answer:

Award 1 mark for each method (max 2).
Points might include:
- Horizontal integration
- Forward integration
- Backward integration
- Conglomerate/diversification
- Joint venture

Other appropriate responses should be credited.

Knowledge points:

1.3.1.1. Characteristics of successful entrepreneurs

1.3.1.2. Contents of a business plan and how business plans assist entrepreneurs

1.3.1.3. Why and how governments support business start-ups, e.g. grants, training schemes

1.3.2.1. Methods of measuring business size, e.g. number of people employed, value of output, capital employed (profit is not a method of measuring business size)

1.3.2.2. Limitations of methods of measuring business size

1.3.3.1. Why the owners of a business may want to expand the business

1.3.3.2. Different ways in which businesses can grow, e.g. internal/external

1.3.3.3. Problems linked to business growth and how these might be overcome

1.3.3.4. Why some businesses remain small

1.3.4.1. Causes of business failure, e.g. lack of management skills, changes in the business environment, liquidity problems

Answer:

Knowledge points:

Solution:

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