Question

Kavita started a boutique named ‘Stylo queens’. She replaced old sewing machines with new one’s during the pandemic to manufacture masks and PPE kits. Gradually her boutique became popular and seeing the swelled up demand for her products she further installed extra machines to cater to the growing demand of the increasing customers. From the profits earned, she decided to further expand the business by starting a new business of cushion covers and bed sheets.

1. Identify the type of expansion mentioned above.
2. What is the net result of such an expansion?
3. Explain the expansion discussed above.

Answer 1

1. The type of expansion mentioned is internal expansion.
2. The net result of internal expansion is the increase in business activities and broadening the present capital structure.
3. Internal expansion is a slow and time-consuming process which is a result of a gradual increase in the activities of the enterprise.