3.9.1 Assesing a change in scale (2)

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  • Methods of growth
    • 3.9.1 Assesing a change in scale (2)
      • Types of intergration
        • Vertical
          • Occurs when a business joins with another buisness at a different stage of the same production process.
        • Congiomerate
          • Occurs when one business joins together with another business in a different production process.
      • Retrenchment occurs when a business reduces the scale of its operations.
      • Impact of growth  on the functional areas of the business
        • Finance - Capital may be needed to finance the growth, cash flow problems may occur
        • Human resources - Provide opportunitiesin the long-term, can place a burden on staff in the short-term
        • Operations - Improve capacity utilistaion in short-term but may need to invest in more capital in the future
        • Marketing - Require more investment
      • Impact of retrenchment  on the functional areas of the business
        • Finance - High costs in short-term
        • Human resources - Redundancies or redployment
        • Marketing - More consistency
        • Operations - Will be reduced, improving efficiency
    • Takeover
      • A business gains control over another business and gains ownership of it.
    • Merger
      • Owners of two or more businesses become owners of a new shared organisation.
    • Venture
      • Businesses share their information and resources on some projects, but each retaining their own identity.
    • Franchise
      • Occurs when one business sells the right to another business to use its name and sell its goods or service in return for a fee.
  • Horizontal
    • Types of intergration
      • Vertical
        • Occurs when a business joins with another buisness at a different stage of the same production process.
      • Congiomerate
        • Occurs when one business joins together with another business in a different production process.
    • Occurs when one business joins together with another business at the same stage of the same production process.

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