Bk17 Business Growth Flashcards
What is horizontal integration
Integrating with a business in the same industry at the same stage of production
Benefits of horizontal integration
- Both companies still exist
- increases market share
- removes competition
Drawbacks of horizontal integration
- time consuming
- expensive
- may have to lay off staff
What is Vertical integration
Integrating with a separate business in the same industry at different stages of production
Benefits of vertical integration
- more resources
- secure a manufacturer
- economies of scale
Drawbacks of vertical integration
- expensive
- different cultures
- diseconomies of scale
What is conglomerate integration
Where two business in completely different industries join together e.g. Amazon and ring
Benefits of conglomerate integration
- widens customer base
- spreads risk
- greater range of ideas
Drawbacks of conglomerate integration
- different culture
- lack of knowledge
- high risk
What is a takeover
When a business acquires another business by owning the majority amount of shares
Benefits of a takeover
- more market share
- more skilled workers
- access to resources
Drawbacks of a takeover
- expensive
- can be refused by the CMA
- impact on reputation
What is a Demerger
Where a firms sells one or more of their businesses to a separate company e.g. PayPal and EBay
Impact of a demerger on consumers
- impacts prices
- needs are met better
- wider variety
Impacts of a demerger on firms
- reduces economies of scale
- lose source of income
- helps maintain shareholder interest
Impact of demerger on workers
- job security
- redundancy
- reduced conflicts
