theme 3: section 12- business growth

Question 1

what is organic growth

Answer 1

• when a business grows from within
• doesnt involve ny other businesses
• business can come up with strategies to sell or make new products, expand into new markets, open more stores etc in order to grow organically
• able to finance growth
• slower and more gradual than inorganic growth mening it is easier for the business to adapt to growth

Question 2

what is inorganic growth

Answer 2

• megers and takeoers
• mergers= when 2 businesses join together to form one business.
• takeovers=
• main motive for mergers and takeovers is financial reward
• inorganic growth could also be part of a strategic or tactical decision
• can be horizontal or vertical

Question 3

what is horizontal integration

Answer 3

happens when a business combines with another business in the same industry at the same stage of the production process
- reduces competition in the market

Question 4

what is vertical integration

Answer 4

occurs when a business combines with another business in the same industry but at a different stage of the production process

Question 5

problems with growth

Answer 5

• can suffer from diseconomies of scale- unit costs increase as the scale of production increases
• quick inorganic growth can be a risky strategy as rapid growth can lead to financial risks