3.2 business growth

Question 1

Define a takeover

Answer 1

When one business acquires another along with its assets

Question 2

Define a merger

Answer 2

When two businesses come together in a joint venture for mutual benefit

Question 3

What is backward vertical integration

Answer 3

This is when a business takes over a supplier

Ads:
- can achieve resources more cheaply

Question 4

What is horizontal integration

Answer 4

Merging with a business at the same level of the supply chain

Ads:
- Can achieve economies of scale and share expertise

Question 5

What is fowards vertical integration

Answer 5

When a business takes over a customer such as a retailer

Ads:
- manufacturer can determine how products are promoted
- allows business to increase its price

Question 6

Ads and dis of inorganic growth

Answer 6

Ads:
- quicker growth
- Greater profitability if takeover/merger is successful

Dis:
- Financial strain, takeovers and mergers can be expensive
- There may be clashes over future ideas for the business

Question 7

ads and dis of organic growth

Answer 7

Ads:
- less risk
- controlled pace, a business can steadily increase the scale as and when they are ready
- Cheaper than external growth

Dis:
- Slow pace, may be too slow for some stakeholders who want rapid returns
-competition, may be at a disadvantage to other businesses who use external growth

Question 8

What are some reasons to stay small

Answer 8

Costs, have lower running costs

Personal service, small businesses find it easier to provide a personal service to customers

Flexibility, can make decisions more quickly and adapt to the competitive environment