Types of Growth

A list of all the different growth methods for business's including: Definitons, Advantages and Disadvantages to both firms and employee's

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Harry Bindloss
Type Of Merger Definition Advantages to firms Disadvantages to firms Advantages to employees or Disadvantages to emp
other stakeholders or other stakeholders
Horizontal Merger Firms joining at the same stage of the Increased market share, Risks ­ `too many eggs in one Some opportunities for Loss of jobs for those du
production process economies of scale, reduced basket'; Risks ­ unknown costs; promotion; increased prestige work, or unable to move
competition Weakening or `dilution' of of firm new headquarters
brand.
Horizontal Demerger Firms splitting at the same point of Reduced exposure to what Might be seen as a sign of Less risk in the company might Some loss of jobs as par
the production process might be a risky market, weakness; Share price might mean increased job security business are pared down
removal of diseconomies of fall
scale
Backwards Vertical A firm merges with a firm closer to Assured supplies in timing and Lack of expertise, Widening expertise and Initial costs may damage
Merger the suppliers in a production process quality; reduced costs of supply over-exposure to end-product opportunities for promotion; profitability and therefo
in one market increased market presence and price in the short run
profitability might increase
share price in the long run
Forwards Vertical Merger A firm merges with a firm closer to Greater access to customers, Lack of expertise, Widening expertise and Initial costs may damage
the market or consumers in a removal of competing suppliers, over-exposure to end-product opportunities for promotion; profitability and therefo
production process better information about the in one market increased market presence and price in the short run
final consumer, prevents the profitability might increase
`hold up' problem when share price in the long run
suppliers refuse to supply in
order to achieve their own
goals
Vertical Demerger Firms splitting at a different point in Avoids negative attention from Cost savings are lost, loss of Narrows expertise and Can focus on core produ
the production process competition authorities, investment in goodwill, opportunities for promotion scope for specialisation
decreases exposure to risk in branding and human capital increased returns to
market investment

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Harry Bindloss
Diversification/ When firms that are involved in Spreads the risk, widens brand Dilution of brand especially if Increased job security and Firm might become unw
Conglomeration unrelated business area's merge awareness new lines are failing companies opportunities to become
occupationally mobile…read more

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