Growth of companies Flashcards
What grow means?
when a company grows it can mean getting bigger/operating in new markets/operating in new places
What are the 2 types of growth?
-Internal (Organic) growth
-External growth
What are the types of internal (organic) growth?
-horizontal growth: the company does more business -> more market share, or expand outside the country
-Backward vertical growth: when the company grows the supply chain, pl. when car company starts to produce tires or a supermarket opens a farm, it decreases the costs and increases quality for the company
-forward vertical growth: not to often, if the company is a producer and also starts selling its products, pl. apple
-conglomeration: when a company creates a new company but in another type of business, and it has nothing to do with the main company
What do we call internal growth?
when the company grows with using the company’s own money / investors / loans / retained profit
What do we call external growth?
when the company grows with contacting another companies
What are the types of external growth?
-Merger ans acquisition (synergies)
->Horizontal growth: mergers
->backward vertical growth
->forward vertical growth: rare because suppliers are usually smaller than retailers
->conglomeration: buying other companies
-Joint venture: when 2 or more companies want to do business together, so they create a third company to do it, REASONS: less risky or the lask of expertise, the new company runs itself, own management, pl. budapest airport(usually all airports) -> 3 different companies who run the airport
-strategic alliance: a group of companies who help each other, REASON: you want to solve a problem and ask for help,
pl. Renault-Nissan-Mitsubishi alliance -> they support eachother with technology
pl. Star alliance (airlines) -> help each other with taking passengers
What are mergers and acquisitions?
-merger: when two companies become/create a new company
-one company: buys the the other, pl. disney bought marvel
