Business growth Flashcards
What is external expansion?
External expansion is growth achieved by acquiring another firm
What are the advantages of external expansion?
Speed of growth, reduced competition, diversified risk
What is forwards vertical integration?
a firm combining with another firm further down the supply chain, closer to the consumer
What are the advantages of mergers?
Economies of scale , dynamic efficiency/ r&d, diversification
What are the disadvantages of mergers?
communication problems / potential diseconomies of scale, lack of focus on core business, lost jobs
What is internal business expansion?
Firms growing on their own , ie ( franchising, opening new stores, ecommerce)
What are the advantages of internal expansion?
business control and ownership/ better brand value
What are the disadvantages of business growth?
Diseconomies of scale. structural problems, slower overall growth
What is Horizontal integration?
when a company acquires or merges with another company in the same industry that is operating at the same level in the value chain.
