business growth

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  • business growth
    • business growth
      • organic growth - where a firm increases there output
        • advantages
          • intergration is high risk, time consuming an high risk
        • disadvantages
          • sometimes another firm has a market/ assest unable to gain through organic growth
          • too slow to maximise salaries
          • hard for firm to get new ideas
      • horizontal intergration - firms in the same industry at same stage of production
        • advantages - helps reduce comp, inceases market share, specilasie and rationalise, grow in a amrket where it has expertise
      • forward and backward vertical  intergration
        • forward - firm is moving towards the consumer of a good
        • bacward - merger takes firm back to supplier of a good
          • vertical - same industry but different stages in the production process
        • advantages - increases potential for profit, less risk, low costs
        • disadvantages - firms may have no expertise in industry they took over
    • size and types of firms
      • reasons firms grow
        • experience economies of scale - decrease costs of production, sell more goods and make more revenue
        • hold greater market share - influence prices and restrict the ability of other firms to enter the market - monoposy power
        • more security - build up assests and cash, can sell larger range of goods in more markets
      • principle agent problem
        • owners want to short run profit maximise but directors and managers will want to maximise own benefit
        • seperation of ownership and control - fims owned by shareholders, senior mangers do day to day running, shareholders vote in directors
      • private vs public
        • private - owned and run by indviduals or groups
        • publuc - owned or controlled by local of central government
      • proft vs not-for profit
        • not for proft - maximise social welfare
    • demergers
      • reasons
        • value of seperate parts of company if worth more than compant combied
        • avoid competiton authorities


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