Business Growth

Question 1

Give UK examples of organic growth

Answer 1

-Tesco (opening new stores)
-Sainsbury’s
-Marks and Spencer

Question 2

Give examples of backward vertical integration

Answer 2

Any big supermarket really
-Tesco
-M&S

Any car brand really
-Jaguar Land Rover
-Ford

Question 3

Give examples of forward vertical integration

Answer 3

Supermarkets as well buying retail outlets and physical stores
-Tesco
-Sainsbury’s
-M&S

Question 4

What are some examples of horizontal integration

Answer 4

-Orange and T-mobile
-Sainsbury’s and Argos
-02 and Three

Question 5

What are some examples of conglomerate integration

Answer 5

-Virgin group
-Tata and Jaguar
-Unilever
-Walt Disney Company

Question 6

What are some examples of mergers

Answer 6

1. Sainsbury’s and Asda Merger (Proposed)
   Overview: In 2019, Sainsbury’s and Asda announced plans to merge, aiming to create a retail giant with a combined market share of 31%.

Economic Implications:

Economies of Scale: The merger could lead to cost savings through bulk purchasing and reduced overheads.

Market Power: The combined entity would have significant market influence, potentially leading to lower prices for consumers.

Regulatory Scrutiny: The merger faced scrutiny from competition authorities due to concerns about reduced competition in the retail sector.
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2. BT and EE Merger
   Overview: In 2015, BT acquired EE, combining landline, broadband, and mobile services into a single entity.

Economic Implications:

Diversification: The merger allowed BT to offer a broader range of services, enhancing customer value.

Cost Savings: The combined company aimed to achieve significant cost savings through synergies.

Market Expansion: The merger expanded BT’s presence in the mobile market, increasing its competitiveness.

Question 7

What are some examples of demergers

Answer 7

1. eBay and PayPal Demerger
   Overview: In 2015, eBay spun off PayPal into a separate publicly traded company.

Economic Implications:

Focus on Core Business: eBay concentrated on its core e-commerce platform, while PayPal focused on digital payments.

Operational Efficiency: Both companies could streamline operations and pursue growth strategies independently.

Shareholder Value: The demerger allowed shareholders to hold shares in both companies, potentially increasing overall value.
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2. Whitbread and Costa Coffee Demerger
   Overview: In 2018, Whitbread sold Costa Coffee to Coca-Cola for £3.9 billion.

Economic Implications:

Strategic Focus: Whitbread focused on expanding its Premier Inn hotel chain, while Costa Coffee continued to grow under Coca-Cola’s ownership.

Capital Allocation: The sale provided Whitbread with capital to invest in its core business and reduce debt.

Market Expansion: Costa Coffee benefited from Coca-Cola’s global distribution network, accelerating its international growth.