Lesson 3.9.1

3.9.1 Assessing a change in scale Quiz: AQA Business, Unit 9

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 3.9.1, Assessing a change in scale: 20 multiple choice questions for the AQA Business (7132), Unit 9: Strategic methods: how to pursue strategies, written with Revision Ninja.

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The 20 questions

  1. What is organic growth?

    • Growth that comes from a government grant for expansion in a specific region of the country
    • Growth achieved by merging with or taking over another business that is already trading in the market
    • Growth created by licensing the brand to independent operators who pay a fee for the right to trade
    • Growth funded and achieved from a business's own internal resources, such as opening new outlets

  2. What is external growth?

    • Growth achieved through mergers, takeovers, joint ventures or franchising with other businesses
    • Growth achieved by reducing the number of products that a business offers to its customers each year
    • Growth from using only the firm's own retained profits to fund new stores and new product lines
    • Growth that results from an increase in the number of employees within a single department only

  3. What is backward vertical integration?

    • Acquiring a business in an unrelated industry to spread risk across different markets and products
    • Acquiring a competitor that operates at the same stage of production as the firm itself
    • Acquiring a business at a later stage of the supply chain, such as a retailer or distributor
    • Acquiring a business at an earlier stage of the supply chain, such as a supplier

  4. What is forward vertical integration?

    • Acquiring a business closer to the customer, such as a retailer or distributor
    • Acquiring a supplier of the raw materials that the firm uses to make its final products
    • Acquiring a rival that makes exactly the same product for the same customers in the market
    • Acquiring a business in a completely different sector to diversify the firm's activities across industries

  5. What is horizontal integration?

    • Acquiring a supplier of a key raw material that the business uses in its production processes each year
    • Acquiring a retailer that sells the firm's products to the final customers in the high street
    • Acquiring a business in an unrelated market to spread risk across different industries and products
    • Acquiring or merging with a business at the same stage of production, often a direct competitor

  6. What is conglomerate integration?

    • Joining with a retailer that sells the firm's products directly to consumers in a nearby region
    • Joining with a competitor that sells exactly the same products to the same customer groups
    • Joining with a supplier that provides the raw materials used to make the firm's final product
    • Joining with a business in an unrelated industry to diversify the firm's activities

  7. Which method of growth involves one business granting another the right to trade under its brand in exchange for a fee?

    • Franchising
    • Takeover
    • Joint venture
    • Merger

  8. What is the key difference between a merger and a takeover?

    • In a merger one firm acquires another without agreement, whereas in a takeover both firms agree to combine
    • In a merger two firms agree to combine, whereas in a takeover one firm acquires control of another
    • A merger always involves government approval, but a takeover never requires any approval at all
    • A merger always involves a foreign business, while a takeover always involves a domestic business

  9. Which is an example of technical economies of scale?

    • Sharing the marketing and distribution of several different products across a single business unit
    • Employing specialist managers who can run departments more efficiently than generalist managers
    • Using a larger machine that produces more output per unit of input than a smaller one
    • Buying materials in bulk to obtain lower unit prices from suppliers because of the size of orders

  10. Which is an example of purchasing economies of scale?

    • Hiring highly skilled managers who can plan and control the business more effectively than before
    • Sharing a single research team across several product lines to reduce the cost of research for each
    • Using a more efficient machine that produces each unit with a lower total amount of energy and labour
    • Negotiating lower prices from suppliers because a business buys large quantities of inputs

  11. What are economies of scope?

    • Cost savings from producing a range of related products using shared resources or processes
    • Cost savings from producing a very large volume of a single product in one factory with one process
    • Cost savings from buying inputs in bulk so that the supplier offers a lower price per unit of purchase
    • Cost savings from hiring specialist managers who can supervise every part of a large business at once

  12. What are diseconomies of scale?

    • Rising average costs as a business grows too large, for example through communication problems and bureaucracy
    • Falling average costs as a business grows, because each unit of output requires fewer inputs as volume rises
    • Lower prices for inputs that a business gains because it buys in larger quantities from suppliers each year
    • Lower costs that a business gains by sharing marketing and distribution across several product lines

  13. What is synergy in the context of growth?

    • A situation in which a business reduces its output because demand has fallen to a low level in its market
    • A situation in which two businesses produce identical goods and therefore share all of their costs equally
    • A situation in which the owners of a business take their profits out of the firm and invest them elsewhere
    • A situation in which the combined business is worth more than the sum of its separate parts

  14. What is overtrading?

    • Growing sales so quickly that working capital cannot support the expansion, leading to cash shortages
    • Holding excessive cash balances that are not invested in the business or paid out to shareholders
    • Trading in excess of the legal limit on sales volume that the government sets for each sector each year
    • Trading with too many suppliers at the same time, which reduces the bargaining power of the business

  15. A firm's average cost falls from 50 pounds a unit to 40 pounds a unit as output doubles from 10,000 to 20,000 units. Which concept does this best illustrate?

    • Economies of scale
    • Overtrading
    • Retrenchment
    • Diseconomies of scale

  16. A business's sales rise sharply, but its cash balance falls and it struggles to pay suppliers. What is the most likely cause?

    • Diseconomies of scale, because the business has become too efficient in its use of capital in each year
    • Retrenchment, because the business has decided to reduce its size and close some of its operations
    • Horizontal integration, because the business has merged with a rival and now carries higher debts overall
    • Overtrading, as working capital is being absorbed faster than the business can fund it

  17. Evaluate the risks of growth through acquisition.

    • Acquisition carries no risks because the acquired firm's staff and systems always fit perfectly into the new group
    • Acquisition always produces synergy immediately, so the risks of integration are not a concern for managers
    • Integration can be difficult, cultural clashes may arise, and the expected synergies may not be achieved
    • Acquisition is only risky for the acquired firm, because the buyer always gains full control with no difficulty

  18. Retrenchment means:

    • Reducing the size or scope of a business, for example by closing outlets or selling off divisions
    • Increasing the number of products sold to existing customers through a new advertising campaign
    • Expanding into new overseas markets through a joint venture with a local partner
    • Merging with a supplier to secure the supply of key raw materials for future production

  19. Why might a franchisor expand through franchising rather than opening its own outlets?

    • Franchising avoids the need for any fees, because the brand is licensed free of charge to every operator
    • Franchising removes all brand risk, because franchisees take no responsibility for the standards of their outlets
    • Rapid expansion is possible with less capital, because franchisees fund the outlets and pay fees for the brand
    • Franchising means the franchisor owns every outlet directly and so controls all of its daily operations

  20. A firm's total costs rise from 400,000 to 500,000 pounds as output rises from 10,000 to 15,000 units. What happens to average cost per unit?

    • It stays at 40 pounds per unit because costs and output rose together
    • It falls from 40 pounds to about 33.33 pounds per unit
    • It rises to 500,000 pounds per unit as total costs are divided by a smaller number
    • It rises from 40 pounds to 50 pounds per unit

All AQA Business quizzes