Growth p2 Flashcards
What is inorganic growth?
Involves two or more businesses joining together to form one much larger one
What are pros of inorganic growth?
- much faster growth than organic growth
- increase market presence in new/ old markets
- potential stronger credit
- could benefit from EOS
What are the cons of inorganic growth?
- upfront costs may be high
- could make business less flexible or diseconomies of scale
- conflict, loose control
What is organic growth and give some examples:
Involves growing by building on its strengths to gain more sales
- new customers
- new products
- new markets
- franchising
What are the pros of organic growth?
Pros- less risky
-cheaper
-retain more control
cons- pace might be too slow
- may get left behind in market because growing slow
- if fast pace market, organic not suitable
What is retrenchment?
Can allow a business to re focus on growing a core activity within its operations by removing employees
What is horizontal and vertical integration?
Horizontal= when a business merges with a company in the same industry
Vertical= firms at different stages of the production process merge together
