Growth Flashcards
What is external growth ?
it’s the growth of a business by takeover or merger
What is merger?
two or more firms join to create a new business
what is takeover (acquisition)?
one business buys another business.
In case of a limited company this means buying more than 50% of shares
Advantages of External growth
New Customers New Sales
quicker
increases MARKET SHARE
eliminates COMPETITION
more ideas through combining the team
Disadvantages of external growth
expensive
increase costs , employees may become de motivated , comms is more difficult bc it’s big , slower decisions
What is the primary sector?
The businesses that produce raw materials for other businesses to use
What is the secondary sector?
The businesses that use the raw materials to manufacture products
What is the tertiary sector?
Concerned with providing a service - shops , cinemas , trains, hairdressers
What is horizontal growth ?
a business joins a business at the same stage of the production process
What is backwards vertical growth?
A business joins with its suppliers / previous stage of production
What is forward vertical growth?
A business joins with its distributors / the next stage of production
What is Diversification?
A business joins a business in a different market
Define Marketing
finding the needs of customers and then meeting the needs
