Overcoming Business Growth Issues (Cambridge (CIE) O Level Business Studies)

Longer chains of command and wider spans of control for managers may lead to slower decision-making times and inefficiency

Use the latest communication technologies, such as instant video calls, to improve communication between managers and workers 

Decentralisation may help to delegate decision-making

As a business grows in size, it can experience diseconomies of scale such as poor co-ordination of resources

Operate as a series of smaller units which allows local or functional area managers to have more control

Increase delegation in order to empower workers and get jobs done more quickly

Expansion can be very expensive as it may involve developing a new product range or buying a new factory

• High costs in the short/medium term means the business may need additional finance to avoid cashflow problems

Grow slowly using profits rather than loans to fund gradual and less risky expansion

Manage cash flow carefully, making use of retained profits and short-term borrowing to counter cash flow shortfalls

A culture clash may occur if a merger or acquisition  takes place between two different firms due to different management styles

Ensure good communication so employees are less likely to be resistant to change

Take time to carefully negotiate and plan mergers/acquisitions to reduce 'teething problems'