Business Growth Flashcards
What is organic growth also known as?
Internal growth
Growth from within the business e.g. new products/markets
What is inorganic growth known as?
External growth
Use of takeovers and mergers
What is horizontal integration?
Where two businesses in the same sector merge or take over
What is the primary sector?
Where the raw materials are produced
What is vertical integration?
A merger or takeover in different sectors
What is the secondary sector?
Where the products are produced
What is the tertiary sector?
Where the products are sold
What is forward and backwards vertical integration?
Forward is where a business in a higher sector is taken over and vice versa
What is a merger?
Where two separate businesses combine to make one
What is a takeover?
Where one business buys out another.
Diversification
Expanding into new markets with new products, the riskiest strategy
Economies of scale
Where unit costs fall as a result of producing more products at once
Why could a business use takeovers and mergers?
Technological change Need for scale to remain competitive Supply customers globally Less growth in mature economies Access to wider distribution Invest in emerging markets
Groups of motives for mergers and takeovers
Extend the business
Change competitive structure
Improve business capabilities
