Reasons to Expand an Enterprise
Businesses usually sell multiple products or services, and they alter the collection of goods and services provided over time. Several factors motivate changes in this composition and can result in decisions either to expand an enterprise by increasing the range of goods and services offered or to contract the enterprise by suspending production and sale of some goods and services. In this section, we will list some key motivations for expanding the range of an enterprise. Bear in mind that when these motivations are absent or reversed, the same considerations can lead to decisions to contract the range of the enterprise.
- Earlier, in chapter 4, we discussed the concepts of economies of scale (cost per unit decreases ...
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