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.
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.
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.
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.
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.
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.
7
Q
What are other ways of achieving growth?
A
- Franchising
- Becoming a multinational
- Internal Growth, e.g. new staff, new products.