Business growth Flashcards
Private Sector defined
made up of firms that are privately owned
Public sector defined
Made up of state owned organisations, including those that run central and local government activities and some enterprises in public ownership
define Not for profit organisations
Organisations such as charities that operate on a non-profit- making basis
Define Organic growth
when a firm grows internally by reinvesting profits or borrowing from banks
Define Horizontal merger
a merger between two firms at the same stage of production in the same industry
Define horizontal integration
the result of a horizontal merger
Define Vertical merger
A merger between two firms in the same industry but at different stages if the production process
Define Backward integration
A process under which a firm merges with a firm that is involved in an earlier part of the production chain
Define forward Integration
A process under which a firm merges with a firm that is involved in a later part of the production chain.
Define Conglomerate Merger
a merger between two firms operating in different markets
An example of a horizontal merger
The takeover of Rover by BMW in 1994
An example of backward integration
when hotel chocolat acquired its own cocoa plantation in St Lucia
Positive of conglomerates
Conglomerates have a range of businesses which are therefore on different business cycles.
Define a transnational company
a firm that conducts its operations in a number of countries.
What is the principal-agency problem?
a problem arising from conflict between the objectives of the principals and those of the agents who take decisions on their behalf.
