growth Flashcards
1
Q
internal growth - advantages
A
- less risk than external
- financed through funds
- builds on business existing strength
- grows sensibly
2
Q
internal growth - disadvantages
A
- takes a long time
- owners reinvest
- growth depends on market
- hard to build market share if a business is already a leader
3
Q
external growth - advantages
A
- faster growth
- increase market share/power
- economies of sales
- make use of businesses strengths
4
Q
external growth - disadvantages
A
- merger/takeover doesn’t always work
- bad tension in workforce
- cultures of business may be different
5
Q
forward vertical integration
A
when a business takes over another business - to control the direct distribution of products => eg. nescafé taking over a coffee shop
6
Q
backward vertical integration
A
when a business takes over its suppliers => eg. nescafé taking over its suppliers
7
Q
horizontal integration
A
takeover/ merging two businesses in the same industry => eg. nescafé and kenco
8
Q
conglomerate integration
A
a business joins another business in a completely different industry => eg. nescafé joining with Samsung
9
Q
franchisor - advantages
A
- reduce workload
- franchisee buys stock from franchisor => increase revenue
- receives royalties
- enables growth
10
Q
franchisor - disadvantages
A
- franchisor pays some costs => advertising, training, design
- less control => cause a bad rep?
- expanding diff locations => market research - expensive
11
Q
franchisee - advantages
A
- well-known name => automatic customers
- expert advice from franchisor
- exclusive area => no competitors
- training & advertising received
12
Q
franchisee - disadvantages
A
- pressure not to damage rep
- damaged rep from other franchisees
- pay royalties
- little freedom => under franchisor rules
