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13 Micro > 3.1.2 Business Growth > Flashcards

3.1.2 Business Growth Flashcards

1
Q

What are the 4 kinds of business growth?

A
  • organic growth
  • forward and backward vertical integration
  • horizontal integration
  • conglomerate integration
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2
Q

What is organic growth?

A
  • business expanding its operations internally
  • relies on own resources
  • increases sales and revenue gradually over time
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3
Q

How can organic growth occur?

A
  • expanding into new markets
  • introducing new products or services
  • increasing market share
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4
Q

What is vertical integration?

A
  • company expanding its operations either forwards or backwards in the supply chain
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5
Q

What are examples of forward integration?

A
  • acquiring distribution channels
  • acquiring retailers
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6
Q

What are examples of backward integrations

A
  • acquiring suppliers
  • acquiring producers
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7
Q

What is horizontal integration?

A

When a company acquires or merges with competitors or businesses in the same industry

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8
Q

What is conglomerate integration?

A

When a company diversifies its operation by acquiring businesses in unrelated industries

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9
Q

Why would a firm do conglomerate integration?

A
  • spread risk
  • take advantage of opportunities in different markets
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10
Q

Advantages of organic growth

A
  • sustainable and controlled expansion
  • lower financial risk as it relies on internal resources
  • builds on existing strengths and expertise
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11
Q

Disadvantages of organic growth

A
  • slower growth compared to other strategies
  • limited in terms of rapid market capture
  • requires time and patience to see substantial results
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12
Q

Advantages of vertical integration

A
  • increased control over the supply chain
  • cost efficiencies through elimination of middlemen
  • better coordination and quality control
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13
Q

Disadvantages of vertical integration

A
  • high upfront costs for acquisitions
  • potential for increased risk if the integrated supply faces challenges
  • regulatory scrutiny and antitrust concerns
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14
Q

Advantages of horizontal integration

A
  • rapid market share expansion
  • elimination of competitors
  • potential for economies of scale
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15
Q

Disadvantages of horizontal integration

A
  • integration challenges (cultural differences etc)
  • regulatory hurdles and antitrust concerns
  • may divert management’s attention from core operation
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16
Q

Advantages of conglomerate integration

A
  • diversification of risk across different industries
  • capitalising on unrelated opportunities
  • potential for higher returns in diverse markets
17
Q

Disadvantages of conglomerate integration

A
  • complexity in managing unrelated businesses
  • limited interactions between diverse operations
  • difficulty in achieving economies of scale (why?)
18
Q

Disadvantages of conglomerate integration

A
  • complexity in managing unrelated businesses
  • limited interactions between diverse operations
  • difficulty in achieving economies of scale (why?)
19
Q

How can the size of the market constrain business growth

A

If the market is small or saturated, it may be challenging to achieve substantial growth

20
Q

How can access to finance constrain business growth

A

Limited availability of capital and credit can hinder expansion plans

21
Q

How can owner objectives hinder business growth

A

The goals and risk tolerance of business owners or shareholders can impact growth decisions

22
Q

How can regulation constrain business growth

A

Regulatory compliance costs and restrictions can affect a business’s ability to expand

23
Q

How can competition constrain business growth

A

Intense competition can make it challenging to gain market share and grow.
Established competitors can also limit pricing power and market access

24
Q

How can technology constrain business growth

A

A lack of cutting-edge technology can hinder growth potential

25
Q

How can resource availability constrain business growth

A

Limitations in terms of resources can constrain a company’s ability to meet increased demand or expand into new markets

26
Q

How can economic conditions constrain business growth

A

Economic downturns, inflation and currency fluctuations can impact a company’s ability to grow profitably

27
Q

How can global factors constrain business growth

A

International expansion may be constrained by political instability, trade barriers and cultural differences

28
Q

How can environmental and social factors constrain business growth

A

Increased attention to sustainability and social responsibility can influence growth and investment decisions

13 Micro (8 decks)

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