Ways to Achieve Growth Flashcards

1
Q

What are Takeovers?

A

A takeover involves one business (usually larger business)buying another (usually smaller) business.

This can often be hostile and comes as a result of the smaller business struggling financially and the larger business exploiting the situation.

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2
Q

What are advantages of Takeovers?

A
  • The buying business gains the market share and resources of the taken-over business.
  • Risk of failure can be spread.
  • Economies of scale can be achieved.
  • Competition is reduced, which will increase sales.
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3
Q

What are disadvantages of Takeovers?

A
  • Integration can to lead job losses in the taken-over business as the buying business wants its own management and employees.
  • If the buying business moves the headquarters or production to its home country/area, this can have a bad effect on the taken-over business’s local economy.
  • Integration can be bad for customers as less competition means higher prices.
  • A change of name can put off loyal customers of the taken-over business.
  • It can be expensive to acquire another business.
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4
Q

What are Mergers?

A

A merger involves two business agreeing to join forces and become one organisation.

This is often friendlier than a takeover and can result in new name and logo for the new, merged organisation.

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5
Q

What are advantages of mergers?

A
  • Market share and resoirces are shared, which can spread risk of failure and increase profits.
  • Economies of scale can be achieved.
  • Each business can bring different areas of expertise to the merger.
  • Unlike a takeover, jobs are more likely to be spared in bother businesses.
  • Can overcome barriers to entering a market, such as strong competition.
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6
Q

What are disadvantages of Mergers?

A
  • Customers may dislike the changes a merger may bring e.g. new logo, new name etc… as the familiarity of the previous business are lost.
  • Marketing campaigns to inform customers of changes can be expensive.
  • Can be bad for customers as less competition will mean higher prices.
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7
Q

What are other ways of achieving growth?

A
  • Franchising
  • Becoming a multinational
  • Internal Growth, e.g. new staff, new products.
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