3.3 Business growth

Question 1

Organic growth

Answer 1

Expansion of a business by means of opening new branches, shops, or factories.

Question 2

External growth

Answer 2

Business expansions achieved by integrating with another business by either merger or takeover.

Question 3

Mergers

Answer 3

An agreement by owners and managers of two businesses to bring them into a new combined business.

Question 4

Takeovers

Answer 4

When a company buys more than 50% of the shares of another company and becomes its controlling owner.

Question 5

Horizontal integration

Answer 5

Integration with a business in the same industry at the same stage of production.

Question 6

Forward vertical integration

Answer 6

Vertical integration with a customer business.

Question 7

Backward vertical integration

Answer 7

Vertical integration with a supplier business.

Question 8

Conglomerate integration

Answer 8

Integration with the business in a different industry.

Question 9

Synergy

Answer 9

Literally means ‘the whole is greater than the sum’ - it is often assumed that a new business will be more successful than the original separate business.

Question 10

Strategic alliances

Answer 10

Agreement between two organizations to commit resources to achieve a specific objective while remaining independent.