UB - Growth Flashcards Preview

H Business Management > UB - Growth > Flashcards

Flashcards in UB - Growth Deck (22)
Loading flashcards...
1

What is organic growth?

When a business grows from its own internally generate resources

2

Advantages of organic growth (3)

Less risky than taking over other businesses
Can be financed through internal funds
Builds on a business’ strengths

3

Disadvantages of organic growth (2)

Growth may be dependent on the market
Slower method of growth - shareholders prefer fast methods

4

What is horizontal integration?

When 2 businesses producing the same product or service combine together

5

Advantages of horizontal integration (4)

Can help the business dominate the market
Can help the business become stronger and more resistant to takeovers
Business can now take advantage of economies of scale
Higher prices can be charged if competition is reduced

6

Disadvantages of horizontal integration (3)

The business can become too big and too difficult to manage
Communication and coordination can become an issue
Some staff may become redundant

7

What is forward vertical integration?

When a business takes over a business it’s customer

8

Forward vertical integration advantages(3)

Business can control marketing, supply and distribution of their product
Already existing place for them to sell their product
Increased profits

9

Disadvantages of forwards vertical integration (1)

Increased costs of business is unable to manage the new business effectively

10

What is backwards vertical integration?

When a business takes over its supplier

11

Advantages of backwards vertical integration (3)

More control of quality, price and availability of raw materials
Guaranteed supply and prices of raw materials
Allows the business to control the supply chain

12

Disadvantages of backwards vertical integration (1)

Higher costs if the business is unable to effectively manage the new business

13

What is conglomerate integration (diversification)?

When a businesses operating in different markets merge together or one takes over the other

14

Advantages of conglomerate integration (3)

Reduces chance of business failure as product portfolio is increased
Makes a larger more financially secure business
Breaking into new markets is easier

15

Disadvantages of conglomerate integration (2)

Requires significant financial and Human Resources

16

What is a merger?

When two businesses join together to make one on equal terms

17

Advantages of a merger (4)

Reduces risk of business failure and increases market share
Makes the business larger and more financially secure
Decreases competition in the market
Merged companies can share business experiences and ideas

18

Disadvantages of a merger (4)

Requires a significant amount of financial and Human Resources
Risk that the main business will be harmed
Conflict between objectives can occur

19

What is a takeover

When one large firm takes over another smaller firm so the smaller one is lost completely

20

Advantages of a takeover (4)

Reduces risk of business failure
Makes business larger and more financially secure
Increased brand awareness as the business expands
Eliminates competition

21

Disadvantages of takeover (4)

Requires significant financial and Human Resources
Risk of harming the main business
Business can become harder to control
More decision making and more risks

22

What is a de-merger?

When a business splits into two separate organisations