miss duddigan-business growth Flashcards
what are mergers
where two bu/sinesses join togetehr to form one business
what is a takeover
where one business takes shares of another business
main motive for takeovers and mergers is money
should be more profitable
methods of inorganic growth examples
takeovers
mergers
inorganic growth also a tactical decision as may get technology/resources from the other business
what is horizontal integration
where business combines with another business in same industry at same time in prodcution process
what is vertical integration
when on ebusiness combines with another rbusiness in same industry but at differnet stage of production process
what is organic growth
growth of business within
business expands, doesnt involve any other businesses
advantages of organic growth
less risky as only expanding what business is good at
less diruptive emaning works efficiency, productivity remains high
disadvnatges of organic growth
can take long time to grow business
might miss out on opportunities for arger growth
disavategs of iorganic growth
mergers-business may have different objectives and cultures to other business
may lead tp clashes/disagreements
staff will need time to learn new procedures, amy lead to poor customer service
some staff will be need to be made redudant as cant have too many staff
reasons why a businesss may demerge
demerge-split of large business into two smaller ones
business will become hrder to mange as its bigger maing may be easier as smaller business
what does payback measure
how long it takes to get your money back
calucation for payback period
amount invested divided by annual net cash flow
average rate of return
compares net return with investment
how do you calcuate average rate of return
average net return divided y investment times 100
what is profit
financial gain between revenue and cost
