3.2.2 Mergers and Takeovers - problems with rapid growth

Question 1

5 problems of rapid growth

A
C
C
D
S
Q

Answer 1

1) Coping with change:
- lots of changes have to be made-this is challenging e.g merges of cultures.
- resistance can occur if changes are forced to quickly without proper consultation

2) -Alienation of customers :
- Growing too fast means may lose touch with customers as too much focus is placed on growing instead of customer wants and needs
- Also customers maybe confused with merger

3) Loss of control :
Company might get too big to fast resulting in loss of control by the senior executives
- Bigger organisation=extra layers of management =longer communication channels-impacts chain of command negatively-As a result DEOS may creep in.

4) Staff turnover-this is due to heavy workloads
- have to hire new staff which is a costly process

5))Quality of product may drop due to focus on growth

6) Drain on resources.
- Initial purchase cost is high.
- If company grows too rapidly and begins to be aggressive on it acquisitions. It may stretch financial resources.