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Unit 2 Revision Notes
Business Studies




Ben Smith

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Expansion




BY EITHER MERGING OR TAKING OVER WITH ANOTHER BUSINESS

Ways to do so:


Merge with supplier to reduce costs and quality of required materials

Merge with competitor to reduce competition, more economies of scale & bigger market share

Merging with customer: gives firm access to customer and makes it…

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METHODS
DEFINITION: Growing the business outside of what you already have: by MERGER OR TAKEOVER

DEFINITION: Growing the business you have got through own activities, growing inside the business.

EXTERNAL EXPANSION
INTERNAL EXPANSION

(ORGANIC GROWTH)


ORBenefits: internal

Firm expands by doing what it is already good at

Drawbacks: internal

Takes…

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Mergers are difficult, management style clashes, bad feeling redundancies, some hostile

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