1.6 Business Growth Flashcards
Purpose of growth (5p)
Increase profit and publicity
Larger share of the market
Eliminate competitors
Attract shareholders
Establish global presence
How do you know a business is surviving? (5p)
Profit
Positive reviews
Recruiting regularly
Constantly sold out
Variety of products
Types of growth
Internal/organic growth
External/ inorganic growth
Internal growth
When the business only uses the recourses it has to grow a business
Methods of internal growth
-Increasing existing production capacity through investment in new capital and technology
-Development and launching of new products
-Growing a customer base
-Finding new markets
Difference between pace of internal and external growth
Internal is usually slower as it takes a lot of time and money for it to happen
External growth
Working with or buying other businesses
Types of external growth
Takeover
Merger
Joint venture
Takeover
-When a business is bought/acquired
- This can be hostile or friendly
Merger
-When two businesses join to become one new business
- Usually, under a new name and can often involve job loss
Joint venture
-When two businesses decide to work together as it It benefits both business
- However, they remaining two separate firms
Merger benefits
- Savings
- Increased market shares
- Ready made customers
- Reduced competition
Merger drawbacks
- Staff redundancy
- Consumers have less choice
Takeover benefits
-Save the business if it is failing
- Business already has customers
- Quick
- Employees keep their job
Takeover drawbacks (4p)
- can be expensive
- take on the businesses debt
- Stakeholders don’t like new owner (if hostile)
- culture clashes
