Growth Strategies

Question 1

Organic growth

Answer 1

Advantages

• flexibility
• cheap
• less risk
• motivational

Disadvantages

• slow
• lack skill
• strategic capability

Question 2

Merger / acquisition

Answer 2

Advantages

• quick
• cost of goodwill
• synergies
• economies of scale
• access to resources
• overcomes barriers to entry

Disadvantages

• Expensive
• finding a partner
• integrating businesses eg culture, systems
• staff motivation

Question 3

Joint development

Answer 3

Advantages

• sharing all costs
• sharing all risks
• sharing knowledge
• consortia avoids regulation of takeovers

Disadvantages

• sharing profits
• give away knowledge
• exit route

Question 4

Franchise

Answer 4

Advantages

• little investment risk
• regular income stream
• quick
• economies of scale

Disadvantages

• control
• protecting standards / brand
• breakaway group