Ways a firm can grow unit 3 edexcel

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  • Created on: 20-01-13 09:34
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WAYS A FIRM CAN GROW
Introduction to change
Alters the structure of a firm
Business aims and objectives
Creates opportunities & threats
Shouldn't be seen as bad BUT must be managed carefully to
ensure firm maintains or increases its competitiveness as a result
of change
Reasons for change
Meet objectives: increase market share/shareholders' worth
Respond to external forces: technology, political/legal/consumer
demand
Respond to internal forces: employee pressures/owners power
Organic (internal) Growth
When a firm expands its existing capacity or range of activities by
extending its premises/building new factories from own resources
rather than by integration with another firm
Can be time consuming but a relatively low risk strategy
Easier to control
Naturally increases sale levels
Slow but safe as it ensures no culture clashes that arise with
mergers &take overs
External growth: Mergers and take overs
Merger (agreed): 2 firms or more agree to come together under 1
board of directors
Take over (hostile) : 1 firm buys more of shareholding in another
firm= full management control
Vertical
When 1 firm takes over a business in the SAME industry but a
DIFFERENT stage of the production process

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Horizontal
When 1 firm takes over a business in the same industry in the
same stage of the production process
Conglomerate
Acquire substantial number of unrelated business
More diversified corporation…read more

Comments

davidsalter

This is a brief summary of how firms grow, internally and externally. It looks at the different type of integration.

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