Organisational Structure ( People in business) Flashcards
What is growth
The increase in the size & status of the business
Why do businesses want to grow
- ECONOMIES OF SCALE (buying in bulk)
- To expand the company and reach more people
- Gain popularity
- There is a demand for the product or service
- Increase market share
- To maximise profits
Inorganic
Takeover someone else OR merge with someone else
Organic
Built the business by themselves
4 types of integration
1) Backwards vertical
2) Horizontal (similar)
3) Forward vertical
4) Diversification
Monopoly power
Disadvantage of a Merger
monopoly is a business entity that has significant market power, which can lead to higher costs
Advantages of a Merger
Economies of scale bigger
More profit enable more research and development
Struggling firms can benefit from new management
Disadvantages of a Merger
Increased market share leads to higher prices for consumers because of monopoly power
Larger firms may experience Diseconomies of scale internally is lack of communication, which van be inefficient
Advantages of takeover
Increase in sales and sales or revenue
Go into new businesses and markets
Increase market share
Decrease competition
Disadvantages of takeover
Conflict with new management
Could be job cuts
Cultural clashes can cause employees to be less efficient