Skip to content

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

A Pune-based startup selling organic snacks sees monthly orders rise from 2,000 to 20,000 within a year, while its cost per order falls and its operations team grows only slightly. Which feature best shows that the business is scalable rather than merely growing?

A business is scalable when revenue can grow sharply while costs per unit fall, so margins improve with volume. In the snack startup, orders rose tenfold with little added staff, showing scalability. Growth that needs proportional cost or staff increases is merely growth.

  1. ARevenue increases and costs per unit decline, so margins improve as volume risesCorrect
  2. BRevenue increases in proportion to the number of staff hired
  3. CRevenue increases only because the promoter invests more personal funds
  4. DRevenue increases but costs rise at the same rate as sales

Explanation

Scalability means the business can handle much higher volume without a matching rise in costs, so unit economics improve. Growth where costs rise in step with revenue, or where staff must grow in proportion, is simple growth and not scalability.

Did you get it right without looking?

One question tells you little. A timed set on Scalability, Scaling up and Stabilisation of Sustainable Business shows your real accuracy, how long you take and where you lose marks.

Practise Scalability, Scaling up and Stabilisation of Sustainable BusinessFree diagnostic mock

More Scalability, Scaling up and Stabilisation of Sustainable Business questions