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Question 1

what is the lynch expansion matrix?

Answer 1

summarises growth options open to a business. considers options of external / internal development and home / abroad

Question 2

according to the lynch matrix, what are the options to internally develop in a home country?

Answer 2

internal domestic development

Question 3

according to the lynch matrix, what are the options to internally develop abroad?

Answer 3

exporting
overseas office
overseas manufacture
multinational operation
global operation

Question 4

according to the lynch matrix, what are the options to externally develop in a home country?

Answer 4

merger
acquisition
alliance
franchise / licence

Question 5

according to the lynch matrix, what are the options to externally develop abroad?

Answer 5

joint venture
merger
acquisition
alliance
franchise / licence

Question 6

state five advantages of acquisition.

Answer 6

• quicker
• get round barriers to entry
• one less competitor
• can hide ones identity in xenophobic foreign market
• synergies (2+2=5)

Question 7

state four disadvantages of acquisition.

Answer 7

• entry cost may be too high
• clash of cultures
• easier to control growth if organic
• reputation of target company?

Question 8

state the four types of synergies in acquisitions.

Answer 8

• marketing and sales synergies
• operating synergies
• financial synergies
• management synergies

Question 9

explain marketing and sales synergies.

Answer 9

having common sales team, wider product range for clients

Question 10

explain operating synergies.

Answer 10

gaining EoS, rationalisation, use of same distribution channels

Question 11

explain financial synergies.

Answer 11

sale of surplus assets, spread risk therefore cheaper capital to be obtained

Question 12

explain management synergies.

Answer 12

gaining the transfer of learning & increased opportunities.

Question 13

state the four options for joint development strategies.

Answer 13

• joint ventures
• strategic alliances
• licensing
• franchising

Question 14

what is a joint venture?

Answer 14

contractual agreement between companies usually by setting up another separate company

Question 15

what is a strategic alliance?

Answer 15

a long term agreement to share knowledge, technology or a business opportunity

Question 16

what is licencing?

Answer 16

the right to exploit an invention / resource in return for share of the profit

Question 17

what is franchising?

Answer 17

the right to exploit business brand in return for capital sum plus share of profits / rev

Question 18

state seven key issues in joint development strategies.

Answer 18

• sharing out risks and returns
• splitting of capital and operating costs
• possible conflicts over operatint decisions
• small firms may not have critical mass to go it alone
• quality problems
• level of support
• danger of other partner gaining info / tech that could later be used against them (trade secrets)

Question 19

state five advantages of franchising.

Answer 19

• lower risk for franchisee
• shared financing
• franchisee offers local knowledge
• rapid expansion for franchiser
• economies of scale

Question 20

state three disadvantages of franchising.

Answer 20

• conflicts over operating decisions
• control of quality up to the franchisee - may compromise brand image
• successful franchisees often break away & set up opposition

Question 21

what are the source of finance options for each growth stage?

Answer 21

start-up : personal finance, supplier credit, venture capital
small business : business loans, retained profits, development capital
growth to corporation : public equity, corporate bonds
mature corporation : all of above

Question 22

state five advantages of listing on a recognised stock exchange.

Answer 22

• access to large funding pool
• enhanced marketability of shares
• exit route for investors
• higher pblic profile
• easier to make acquisitions

Question 23

state four disadvantages of listing on a recognised stock exchange.

Answer 23

• high listing / regulation costs
• loss of control as shares fall into public hands
• increased media scrutiny
• large institutional investors to satisfy