2.1.1 Business Growth Flashcards
Organic Growth
Internal Growth
What can be done for organic growth
Opening New Stores
Expanding Overseas
Changing Marketing Mix to interest new customers
Introduce new products
Use new technology
Advantages of Organic Growth
Sustainable, Usually paid with retained profits, can adjust for bigger size as it develops
Disadvantages of organic Growth
Slower growth meaning competitors could get a competitive advantage whilse you wait for the capital needed, too many branches opened at once can cause cashflow issues
Inorganic Growth
External Growth
What can be done for inorganic growth
Merger
Takeover
Takeover
One business takes over another business
Merger
When two business combine to form one organisation
Advantages of inorganic growth
Almost immediate growth, reduce competition within a market by purchasing competitors, increased market share
Disadvantages of inorganic growth
Lots of capital needed, conflict between new and old business, duplication of roles can lead to higher costs, redundancies might be needed
Horizontal integration
Merging or taking over a business at the same stage of the supply chain
Forward vertical integration
Business taking control of another business at a later stage of the supply chain
Backward Vertical Integration
Business taking control of an other business in an earlier stage of the supply chain
Conglomerate integration
Businesses in unrelated markets merge or takeover, spreading the businesses risk over a wider range of products and services
