Expanding a business

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  • Expansion
    • Benefits
      • Economies of Scale
      • Greater market power
      • Status
      • Profits
    • Internal (organic)
      • Cheap
      • Sell more of own products
      • Current products in new markets
      • Launch new product
    • Disadvantages
      • Loss of control
      • Decision making
      • Employees feel disconnected
    • External
      • Mergers
        • Vertical Backward
          • Join with suppliers
        • Vertical Forward
          • Join with distributors
        • Conglomerate
          • Join with firm in different production process (unrelated)
        • Horizontal
          • Joins with firm at same stage of same production process (T-Mobile & Orange)
    • Franchising
      • Business sells right to to another business to use its name and sell its products
      • Greater economies of scale
      • Increased sales
      • Risks
    • Stakeholders
      • Employees - job security  less involvement
      • Suppliers - more sales, demand lower prices
      • Community - jobs, pollution
      • Shareholders - profit
      • Strike
      • Boycott
      • Lobby governemnt

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