External growth and internal growth

Question 1

What is external growth and what are examples

Answer 1

It’s growth created from outside the business
mergers and takeovers

Question 2

Why would you want to do a merger or takeover?

Answer 2

-EOS
-increase market share
-increase knowledge and talent
-reduced risk

Question 3

What is internal growth (organic)?

Answer 3

Growing within a business

Question 4

What are the pros and cons of internal growth?

Answer 4

-slower, only appropriate if the market is not growing quickly
-cheaper, maintain control, less strain on resources as growth is gradual

Question 5

What are pros and cons to external?

Answer 5

Quicker, gain EOS, gain talent and resources, increase market share
Expensive, cultural clash

Question 6

What are two ways of internal growth?

Answer 6

New products
New markets

Question 7

What are pros and cons to new products?

Answer 7

Pros- increase product range, increase sales, comp advantage

Cons- research and development is expensive and time consuming, no guarantee of success

Question 8

What are pros and cons of new markets?

Answer 8

Pros- increase sales, new customers

Cons- if international exchange rates affect it, depends on the product life cycle