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CMA Final · Entrepreneurship and Startup · Scalability, Scaling up and Stabilisation of Sustainable Business

A bootstrapped Pune-based food-tech startup finds that each additional order it serves adds almost no extra cost, because its software platform and central kitchen are already built and underused. Which characteristic of a scalable business does this best illustrate?

The situation illustrates that revenue can grow faster than the costs of serving it. Because the platform and kitchen already exist with spare capacity, each extra order adds little cost, so margins improve. This is the essence of scalability, as opposed to simple proportional growth.

  1. ARevenue can grow faster than the costs needed to serve that growthCorrect
  2. BCosts rise in the same proportion as revenue
  3. CGrowth depends mainly on adding more founders
  4. DProfit falls as customer numbers increase

Explanation

Scalability means a business can grow revenue substantially with a much smaller increase in cost. Spare capacity in the platform and kitchen means extra orders add little cost, so margins widen. Costs rising proportionately is the feature of mere growth, not scalability.

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