methods of growth Flashcards
lateral
disadvantages
entering new market may effect core activities as resources are shared
may not have knowledge/ skill to successfully run other business
lateral
advantages
spreads risk
targets new markets increasing customers
experience/knowledge can be gained by acquired business
diversification
disadvantages
may not have knowledge
diversification
advantages
spreads risk
new customers may be attracted to the product
backwards vertical integration
disadvantages
entering new market may effect core activities as resources are shared
backwards vertical integration
advantages
guarantees the quality of input and supply of stock
cuts out the middle man
limits suppliers to competitors
forwards vertical integration
disadvantages
entering new market may effect core activities as resources are shared
organic growth
advantages
no loss of control as no outside involved
hiring staff = new ideas
less risky than takeover
organic growth
disadvantages
can be slow method
may be limited by size of market
restricted by finance available
horizontal integration
advantages
removes competitors from market
gains greater market share
horizontal integration
disadvantages
hostility and job loss may occur
changes could negatively impact customer loyalty
can be expensive to purchase another company
forward vertical integration
advantages
guarantees an outlet to sell products
cuts out the middle man
more control over pricing and product display
asset stripping
disadvantages
owner can gain bad name
often after hostile take over
de-merger
disadvantages
customer may leave or be put off
financial costs e.g. rebranding shop fronts
asset stripping
advantages
asset may be worth more individually than together
