Organisational Structure

Question 1

What is growth ?

Answer 1

Growth is the increase in the size and status of business

Question 2

Why do business want to grow ?

Answer 2

• As they can make more capital and maximise production
• If there is a demand for more from the business in products
• Expansion of the business and brand and popularity and recognition
• To increase its market share
• Become better

Question 3

Explain the two main types of growth ? (Organic and inorganic)

Answer 3

Organic is when a company grows as a business by themselves and without help.

Inorganic - when a company grows their business using other companies that help them

Question 4

What is the differences between a merger and a takeover.

Answer 4

A merger is when two companies come together to form one business.
And a takeover is when a smaller companies sells their company to a bigger business who then uses the companies ideas and products.

Question 5

Analyse the positives and negatives of merging and takeover.

Answer 5

Merger :
+ generation of ideas, bigger brand recognition, fast growth
- loss of some capital, may have less power, loss of original idea
Takeover :
+ instant profits, fast growth , combined ideas, less competition
- loss of profits, loss of power, more workload

Question 6

Evaluate the positives and negatives of inorganic and organic growth

Answer 6

Inorganic:
+ faster growth, reduce competition, generation of ideas, use resources effectively
-expensive, difficult to keep image, less control
Organic:
+ save money, better image, less risk,
- slower, less recognition, less ideas

Question 7

Explain the 4 types of integration

Answer 7

Backward vertical : when companies buy the companies that the supplies originate from. Eg farms
Forward vertical : buying property of other businesses eg stores
Horizontal : buying a similar business.
Diversification : when a company buys into an unrelated business markets eg virgin

Question 8

Analyse why franchising is a good method of growth

Answer 8

Franchising :

Pre made business, easy to run, guaranteed profit, guaranteed customers, instant brand recognition,

Question 9

How are stakeholders affected by growth and how do they react

Answer 9

Stakeholders are affected in many ways as their are different types of stakeholders eg
Project manager. - pay rise, more money
Project team. -more products, more customers to sell to
Functional managements -allowed to have more pay, more customers
Sponsors. - profit, increased brand recognition
Customers. - more store, accessibility,