6. Integration & Growth Flashcards
1
Q
What is a reason for growth?
A
- To increase sales/profits
- To increase market share
- Increase security
- Economies of scale
2
Q
What is a reason not to grow?
A
- Not enough capital/resources
- Lack of skills/experience
- Personal selling
- Too much risk involved
- Too much work
3
Q
What are the three methods of growth?
A
- Mergers
- Takeovers
- Internal expansion
4
Q
What is a merger?
A
Where two or more businesses agree to merge/join together to gain more profits by reducing costs.
5
Q
What is a takeover?
A
When one business buys control over another (buying over 50% of shares)
6
Q
What is internal expansion?
A
Growth from within the business. For example, increasing production and buying new stores.
7
Q
What is organic growth?
A
Expanding from within the business (internal growth)
8
Q
What is inorganic Growth?
A
Expanding through merging with or taking over another business (external growth)
9
Q
One advantage of a merger:
A
- Economies of scale – bigger firms more efficient
- More profit enables more research and development.
- Struggling firms can benefit from new management.
10
Q
One advantage of a takeover:
A
-Can save struggling company.
11
Q
One advantage of internal expansion:
A
- Easy
- Very inexpensive.
