3.2.2 mergers and take over.

Question 1

what is organic growth?

Answer 1

organic growth is what happens when a business increases sales and output and are not relying on an outside source.

Question 2

what is inorganic growth?

Answer 2

growth that is created through mergers and takeover.

Question 3

define integration?

Answer 3

the bringing together or more firms.

Question 4

define merger?

Answer 4

when two or more firms agree to become integrated to form under a joint ownership.

Question 5

define a take over?

Answer 5

One firm gains control over another and becomes the owner by gaining at least 51% of shares.

Question 6

what are the two different types of takeovers and explain the difference?

Answer 6

there are hostile where a company forcefully gains the majority of shares and are not invited over.
while a friendly one is when a company is struggling and invited the other firm.

Question 7

what are the advantages of a merger?

Answer 7

1) increased revenue
2) increased market share
3) acquiring unique capabilities

Question 8

advantages of international mergers

Answer 8

1) access to new trading blocs
2) easy to expand market size
3) access to western markets

Question 9

what are problems faced with rapid growth?

Answer 9

• financial strain
• moral may decay between workers
• staff turnover
• may outgrow current maximum output.

Question 10

what are some problems with mergers?

Answer 10

• unreliable partners
• communication problem
• culture clash
• lack of understanding with local market.

Question 11

what are some tactical reasons with mergers?

Answer 11

• ensures an increase in market share
• access to more staff
• access to intellectual properties

Question 12

what are some strategic reasons for mergers/ takeover?

Answer 12

• access to a new market
• improved distribution network
• improved brands

Question 13

what are some financial risks of mergers and takeovers?

Answer 13

• original purchase costs
• redundancies of new staff
• cost of failure

Question 14

what are some financial rewards?

Answer 14

• increased revenue

- economies of scale

Question 15

what is horizontal integration?

Answer 15

Horizontal integration is when a firm takes over another firm in the same stage of production.

Question 16

what is backward vertical integration?

Answer 16

where a firm takes over a supplier.

Question 17

what is forward vertical integration?

Answer 17

forward integration is when where a firm takes over a consumer

Question 18

what is conglomerate integration

Answer 18

where a firm takes over a completely unrelated business.