Further aspects of the growth of firms

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  • Further aspects of the growth of firms
    • Grow to achieve business objectives
    • Neo-classical theory
      • Assumes Pr. max main objective
    • Managerial theories
      • Aims such as status etc. Short-termism
    • Divorce between ownership and control
      • Managerial objectives may not be good for firm
      • Shareholders might want dif things
        • Example of the principal-agent problem
    • Don't confuse why they grow with how they grow
      • Externally
        • Mergers or takeovers
      • Organically
        • More value/volume
      • Types of growth
        • Horizontal
        • Vertical
          • Economies of scale
            • Horizontal
        • Lateral
          • Diseconomies more likely
  • Do not confuse growth with financing
    • Further aspects of the growth of firms
      • Grow to achieve business objectives
      • Neo-classical theory
        • Assumes Pr. max main objective
      • Managerial theories
        • Aims such as status etc. Short-termism
      • Divorce between ownership and control
        • Managerial objectives may not be good for firm
        • Shareholders might want dif things
          • Example of the principal-agent problem
      • Don't confuse why they grow with how they grow
        • Externally
          • Mergers or takeovers
        • Organically
          • More value/volume
        • Types of growth
          • Vertical
            • Economies of scale
            • Lateral
              • Diseconomies more likely
      • Internal
        • Ploughed back profit
    • External
      • Do not confuse growth with financing
        • Internal
          • Ploughed back profit
      • Loans
      • Shares
    • Leaves firm vulnerable to hostile takeover
      • Sometimes not always
      • Shares

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