IGCSE, A Level Business Student Forum

[KN]: One problem is that the business might face financial problems as a result of expansion.
[APP]: For example, if a small coffee shop expands into many new branches the owner might run out of cash due to overtrading.
[AN]: Thus, this would lead to cashflow problems and business could not get stable in any way as banks would also refuse to grant the business loan as they fear they would not be able to payback the loan which would lead to business going in loss which ruins the brand image leading the business to fail.

[KN] A problem of expansion without proper measures leads to communication difficulties.
[APP] For instance, if a clothing company opens new franchises/branches in different cities it can becomes harder to coordinate and share information clearly on time.
[AN] This can lead to delays in decision making which leads to misunderstandings between departments which leads to inconsistent work processes hence productivity may fall which can increase costs which lower profit margines.