TYPES OF GROWTH Flashcards
what do startegic methods refer to
Refer to different startegies a business might pursue to reach its objectives
changing scale - a bs may increase its scale by …
and this is a
growing
common bs obj
state 4 reasons why growth is important
SHOWS PROGRESS :Good for managers in terms of own careers and in terms of showing sh why theyre valuable - can also provide a sense of achievement which relates to maslow self actualisation needs
Can create finanncial benefits such as higher revs and lower unit costs
Creates momentum which cna be important - e.g means new opps for employees which can help keep em focused and engaged. People can feel a aprt of something that works and thats growing rather than shrinking
Brings benefits such as more market power and lower costs due to bargaining power
what is organic growth
when bs grows through expanding its own operatios
give 2 examples of ways you can grow organically
increase sales of exisiting products
launches new products for its customers
external growth is
grwoth by joining with other bs through mergers and takeovers
takeovers aka
acquisitions
what is a teakeover
owners of company A gain a ownership of the majority of shares of company B and now control it
what are the two ways you can access a takeover
cash offer
paper offer
what is a cash offer
buying shares with money - when doing a takeover
what is a paper offer
Offering shares in their own business in return for shares in the target business
what is a merger
2 points
when one bs joins with another ,
owners of company b and a become joint owners of a new org
many big bs grow by adding on new bs through mergers and takeovers
t
give exampke of big bs that continue to grow through mergers and takeovers
google and intel have inbetween them bought more than 500 firms in past 5 years
what does exteral growth cause in terms of scale of the bs
immediate jump in the scla eof the bs
why does external growth lead to an immediate jump in the sclae of the bs
once deal is completed the old bs has a new business as part of it and is immediately bigger - meaning a sudden increase in its size
organic growth tends to be
slower
why does organic growth tend to be slower
the bs gradually increases the scale of its operations
true or false bs can grow organically very quickly
and give an example
true
tech world where one idea can rapidly gain sales i.e facebook and google who are relatively young
organic growth usually doesnt involve the same … that happens with external growth
sudden change in scale
external growth particularly will bring problems of coping with a quick increase in waht 2 things
coping with a quick increase in
the number of employees
and scale of operations
rapid growth of any form brings with it
managment challenges
external grow encounteers problems of bringing together otganisations that may have their own ways of (2)…..
their own ways of
doing things and their own priorities
External growth also encounters problems of bringing together organisations that may have their own ways of doing things and their own priorities
give a negative of this
Can lead to a culture clash
in terms of negatoves of external growth what is a culture clash
clashes due to different styles and priorities and different ways of doing things
what is a negative of a culture clash + example
can lead to poor performance
in a number of big mergers and takeovers such as MySpace and news corporation
what can lead to disagreeements that can prevent organisaions functioning effectivley
3 points
Different styles of management ,
priorities
different ways of rewarding snd motivating staff
what was the culture clash between my space and news corporation
Big croproate bs with strategic plans , committes and clear financial targets - news coroporation
met with an org that was less formal , more interested in creativity than financials and younger in outlook and approach my space
overal what 2 things does internal growth tend to be
slower
easier to manage
to summarise what 2 things does external growth tend to cause
sudden changes in scale
clashes in the way org operate
what are the potential benefits of growht
economies of scale
economies of scope
synergies
experience curve /effect
