Growth

Question 1

what is integration?

Answer 1

when two businesses become one

Question 2

what are the two type of integration called?

Answer 2

takeover and merger

Question 3

what is a takeover?

Answer 3

when one large business buys a smaller one

Question 4

name two advantages of a takeover?

Answer 4

• larger business gains market share

* competition is reduced meaning increased sales

Question 5

name two disadvantages of a takeover?

Answer 5

• bad for customers as less competition means higher prices

* change of name can put off loyal customers

Question 6

what is a merger?

Answer 6

when two business join forces

Question 7

name two advantages of a merger?

Answer 7

• market share is shared

* business bring different areas of expertise

Question 8

name two disadvantages of a merger?

Answer 8

• customers may dislike new changes like logo and name

* less competition means higher prices for customers

Question 9

what is horizontal integration?

Answer 9

when two businesses from the same sector become one

Question 10

name two advantages of horizontal integration?

Answer 10

• new larger business can dominate market

* due to reduced competition the new larger business can raise prices

Question 11

name two disadvantages of horizontal integration?

Answer 11

• quality may suffer due to lack of competition

* customers man need to pay higher prices for the same goods

Question 12

what is forward vertical integration?

Answer 12

when business takes over or merges with a business in a larger sector of industry

Question 13

name two advantages of forward vertical integration?

Answer 13

• the business can control supply of their products and could decide to not supply to competition
• can increase profits by ‘cutting out the middle man’

Question 14

what is backward vertical integration?

Answer 14

when business takes over or mergers with a business n an earlier sector of industry

Question 15

name two advantages of backward vertical integration?

Answer 15

• guaranteed and timely supply of stock

* quality of supplies can be strictly controlled

Question 16

name two disadvantages of forward and backward vertical integration?

Answer 16

• company may be incapable of managing new activities efficiently meaning higher costs
• focusing on new activities can adversely affect care activities

Question 17

what is conglomerate integration?

Answer 17

businesses in different markets join together

Question 18

name two advantages of conglomerate integration?

Answer 18

• the business can spread risk

* the business is larger therefore more financially secure

Question 19

name two disadvantages conglomerate integration?

Answer 19

• one business may take on with another business in the market that they know nothing about which may cause failure
• business may become too large and inefficient to manage

Question 20

what is outsourcing?

Answer 20

when organisations arranges for another organisation to carry out certain activities fro them

Question 21

name two advantages of outsourcing?

Answer 21

• the business is able to use the service when it is required, so saving costs on staff and machinery
• less labour and equipment is required so save costs

Question 22

name two disadvantages of outsourcing?

Answer 22

• business has less control over work so quality may fall

* communication between the business needs to be very clear to make sure exact specifications are met

Question 23

what is a de-merger?

Answer 23

when single business splits into tow or more separate components

Question 24

name two advantages of a de-merger?

Answer 24

• each new component has the best chance to operate efficiently
• each new component can concentrate on its own core activities and grow as a result

Question 25

name two disadvantages of a de-merger?

Answer 25

•customers may be put off by the de-merger and abandon the business
altogether
•the financial costs are very high