Exercise Your Knowledge

3) Which of the following is NOT a benefit of business growth for firms?

a) Increased market share, leading to higher revenues and investor confidence.Feedback: Incorrect! When a firm experiences growth, it can gain a larger share of the market, which in turn increases revenues and boosts investor confidence.

b) Influence over market prices, similar to a monopolist, resulting in higher sales revenue and profits.Feedback: Incorrect! As a company's market share increases, it gains the opportunity to influence market prices, similar to a monopolist. By setting slightly higher prices, the company can generate more sales revenue and increase its profits.

c) Expansion of the customer base, driving increased sales and facilitating word-of-mouth promotion.Feedback: Incorrect! When a company grows, it expands its market access and customer base, which leads to increased sales, revenue, and profits. A larger customer base also facilitates word-of-mouth promotion, further expanding the customer base and contributing to financial performance.

d) Reduction of external risks, improved economic performance, and preparedness for technological changes.Feedback: Correct! While growth may indirectly contribute to reduced external risks and improved economic performance, it is not explicitly stated as a benefit in the given text.

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