integration and franchises

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Growing as a business

internal growth: business selling more of its own product

external growth: by joining with another business

selling franchises: involves selling the rights to the businesses name and products to another business.

external growth

  • also called integration
  • when two or more firms join together and create a joint business.
  • in a merger, the shareholders of each individual firm become shareholders of the new bigger business.
  • Takeover or aquisition occurs when one firm takes control of another and buys it up.

Types of intergration

Horizontal integration

  • when one firm joins with another firm at the same stage of the same production process.

Vertical intergration

  • when one firm joins with another firm at a different stage of the same production process

Conglomerate intergration

  • when one firm joins with another firm at a different production process.

Advantages of intergration

  • Horizontal intergration can lead to economies of scale as more of the same kind of output is…

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