Business Growth

Internal growth is also known as

• Merger

• Sales maximisation

• Organic growth

• Inorganic growth

External growth is also known as

• Organic growth

• Inorganic growth

• Merger

• Sales maximisation

An example of Organic growth is

• Merger

• Launching new products

• Acquisition

• Takeover

The possible benefits of growing the business are

• Keeping control over decision making

• Larger potential profits

• Benefit from bulk buying discounts

• Security for the future of the business

A merger is

• Two business agreeing to becoming one new business

• One business buying shares in another business

• One business taking over control of another business

• Two businesses co operating with each other.

The disadvantages of Organic growth are

• There is little or no risk in growing slowly

• This is a very high risk strategy, opening lots of stores or taking on new staff is very risky

• Long period between investment and return on investment

• Growth may be limited and is dependent on reliability of sales forecasts

Advantages of a Merger might be

• Better deals because of increased order size, bulk-buying discounts etc.

• Increased revenue and market share. Increased size of the combined company increases market power and ability to set higher prices

• To gain resources. If one company has resources (e.g. technology) that another one wants then a merger may be the most cost effective way to get access to those resources

• Slow growth so can be easily managed

Disadvantages of Mergers could be

• Clash of Cultures. All businesses have a slightly different culture and they may not work well together

• Mergers lead to bigger more efficient business

• Possible communication problems. As the business gets bigger, or if there are now too many employees

• Unreliable partners. A good merger will depend on trust between the businesses

Which option best describes the term takeover?

• When two firms agree to join together to make one new business

• When a business finds a new market in another country

• When one business purchases another business

• When a business brings something new to the market

Which best describes growth by expanding overseas? When a business:

• Finds new customers to buy its products in its domestic market

• Purchases another business in its home country

• Finds a new market in another country

• Invests heavily in research and development