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Enterprise Growth Strategies — Entrepreneurship STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEntrepreneurshipEnterprise Growth Strategies5 Marks
Question
Discuss growth sustaining activities giving appropriate examples.
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Answer

Following are the growth sustaining activities:
  1. Franchising: In franchising the rights of selling a product or service are transferred to another enterprise. This saves time as the parent company has its own marketing strategy, fixed requirement of infrastructure, written rule and regulations. The franchisee need not require expenditure on promotion, advertisement, layout, etc as it is the responsibility of the franchiser, e.g. McDonalds had expanded itself by offering franchisee.
  2. Manufacturing more than one product: Under it, the enterprise grows by producing a new product. This new product can be a complementary good or any related product or a non-related product, e.g. Videocon started with the production of electronic goods. But now it is producing various other consumer goods like mixer-grinder, etc. thus this type of diversification helps in the growth of the enterprise.
  3. Upgradation: An enterprise can upgrade itself by adopting new technique, process etc. This not only increases efficiency of the enterprise but also reduces the cost of production. Also it helps in reducing the per unit price of the commodity which provides a competitive edge to the enterprise. Thus this type of upgradation or modernization helps in the growth of the enterprise.
  4. Increasing Turnover: An enterprise can increase its turnover for growth. For raising its turnover it may have to modernize or expand or both. With the increase in volume of production the growth takes place though such rise in production is also associated with increase in number of employees, demand for raw materials etc.

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