Inorganic growth
Teacher recommended
?- Created by: Jess Knights
- Created on: 15-03-13 09:47
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- Inorganic growth
- Vertical backward e.g building firm takes over brickworks
- Offers reliable supply of materials
- Vertical forward - towards customer e.g farmer buys food shop
- Offers reliable outlet for products.
- Diversification - joining two businesses in different industries
- Spreads risk and one business can make up the loss of another
- Horizontal integration: joining two businesses in the same industry and stage of production
- Benefits: Increase in market share
- Reduces competition
- Take advantage of economies of scale
- Disadvantages
- Expensive to take over another business. Loans and shares usually needed.
- Vertical and diversification can cause management problems as a lack of experience.
- Problems managing and controlling a larger business
- Vertical backward e.g building firm takes over brickworks
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