UB T4 Methods Of Growth Flashcards
Methods of growth
Internal/Organic growth
Growing without getting involved with any other businesses.
Launching new products/services Opening/expanding branches E-commerce Hiring more staff Increasing product capacity
Methods of growth
Diversification
When a business launches products across different markets
E.g. Samsung sells phones & washing machines
Methods of growth
Horizontal integration
When two businesses from the SAME sector of industry become one.
Methods of growth
Forward/backward vertical integration
Supplier
⬆️ Backward integration
Business
⬇️ Forward integration
Customer
Methods of growth
Lateral integration
When businesses merge from the SAME industry but provide DIFFERENT products.
E.g. Greggs and a wedding cake shop. Both food, different markets.
Methods of growth
Conglomerate integration
When businesses in DIFFERENT markets merge.
Ways to achieve growth
Takeovers and mergers
A take over is when one business buys another.
A merger is when two businesses agree to join forces and become one organisation.
Ways to achieve growth
Others
Franchising
Becoming a multinational
Internal growth
Ways of funding growth
Retained profits
These are profits made by a business that aren’t given to shareholders.
Ways of funding growth
Divestment
Selling of a part of the business.
Ways of funding growth
Deintegration
When a business sells of the supply chain that it owns.
Undoing vertical integration.
Ways of funding growth
Asset stripping
When a business takes over another with intent to sell off its assets I.e. factories & retail spaces.
Ways of funding growth
De-merger
When a single business splits into two or more separate components.
Ways of funding growth
Management buy-out/buy-in
Buy-out is when the management of a business buy the company they work for.
Buy-in is when the management of another business takes over the business.
Ways of funding growth
Outsourcing
When an organisation arranges for another organisation to carry out certain tasks for them.
