1.6 Business Growth

Question 1

What is organic growth?

Answer 1

When the business grows internally e.g. by increasing sales

Question 2

What is inorganic growth?

Answer 2

The growth of a business by takeover or merger

Question 3

How can a business grow organically/internally?

Answer 3

•By Increasing market share
•By developing new products

Question 4

How can a business increase market share to help grow internally/organically?

Answer 4

A business might attract new customers by adversting and special officers e.g. special offers

Question 5

How can a business grow by developing new products?

Answer 5

A business might expand it’s range of products and aim to sell these new products to existing customers and attract new ones.

Question 6

How can a business grow organically by opening new markets?

Answer 6

A business might try and attract completely different target audience e.g. by expanding into new foreign countries

Question 7

How can a business externally/inorganicly grow?

Answer 7

•horizontal takeover
•backward vertical takeover
•forward vertical takeover
•diversification

Question 8

How can a business grow externally/inorganicly from horizontal takeover?

Answer 8

•This means merging /taking over a company in the same line of business as you e.g Cadbury takes over Galaxy
•this means there would be one less competitor in the market (less need to compete to gain customers)
•economies of scale = might be able to get discounts from suppliers for buying in bulk (larger amounts) meaning there would be a lower cost per unit.

Question 9

How can a business grow externally/inorganically through backward vertical takeover?

Answer 9

•This means taking over or merging with a company that can supply you with goods e.g. Tesco takes over cadburry
•This means the business can take control over supply chains and ensure good quality, prices and lead times (prompt delivery)

Question 10

How can a business grow externally/inorganically from forward vertical takeover?

Answer 10

•This means to takeover/merge with a company that you can sell your goods to e.g. Cadburry takes over Tesco
•This leaves the business with a guaranteed market for sales

Question 11

How can a business grow exteranlly/inorganiclly through diversification?

Answer 11

•this means taking over or merging with a company that is in a completely unrelated industry e.g. Cadburry takes over a fashion brand
•This spreads risk so if one market fails (e.g. people no longer want chocolate) then the business has another area to fall back on