Higher BM - Methods of Growth

An example of Internal/Organic growth is a takeover.

• True

• False

What is a takeover?

• Taking over a supplier

• When 1 larger business buys a smaller business.

• Taking over a customer.

Horizontal integration is when a business takes over its supplier.

• True

• False

Forward vertical integration is when a business takes over its customer.

• True

• False

Conglomerate integration occurs when businesses in the same market join together.

• True

• False

A benefit of business growth is economies of ???

(a)  

Advantages of organic growth:

• No loss of control as outsiders are not involved

• Less risky than a takeover

• Removes a competitor from the market

• Cuts out the middle man leading to increased profits

Disadvantages of organic growth:

• slow method of growth

• Restricted by the amount of finance available

• Hostility and job losses may occur

• Entering into new markets may affect core activities

Advantages of Horizontal Integration:

• economies of scale

• Removes a competitor from the market

• Guarantees an outlet to sell products

• Cuts out the middle man leading to increased profits

Disadvantages of Horizontal Integration:

• Hostility and job losses may occur

• Can be expensive to purchase another company

• Entering into new markets may affect core activities

• slow method of growth