business growty Flashcards
what is organic growth
Concerned with the internal growth of the business for example by increasing its sales
What’s external growth?
The growth of a business by a takeover and Manager
What’s a merger?
We are two or more businesses agreed to join to become one business
What’s a takeover?
what a business takes a controlling interest in another business for example by buying more than 50% of the shares in it
Examples of organic growth
gaining new customers for example reducing its prices
developing new products for example increasing its own sales
Increasing market share for example increasing its own sales
increasing output, for example using resources more efficiently for example using new technology or training workers
advantages of organic growth
- Less risk than
external - financed
through internal
funds - business can
grow at more
sensible rate
disadvantage of organic growth
- slower form of
growth –
shareholders may
prefer this to be
quicker - growth can be limited
advantages of external growth
- Competition can
be reduced - market share
can be increased
very quickly
Disadvantage of external growth
very expensive
- managers may
lack experience to
deal with the
other business
What’s a backward vertical growth?
When a business merges with or takes over a business that supplies it was goods or services
what’s that diversification
When a business merges with or takes over another business with which has no connection
What’s horizontal growth?
A merger or takeover where two businesses are involved in a similar operation
