A2 - Business - Internal causes of change

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  • Created by: jkav
  • Created on: 03-02-16 16:29
Internal growth
Expansion of a business by means of opening new branches, shops of factories (also known as organic growth).
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External growth
Business expansion achieved by means of merging with or taking over another business, from either the same or a different industry.
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Merger
An agreement by shareholders and managers of two businesses to bring both firms together under a common board of directors with shareholders in both businesses owning shares in the newly merged business.
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Takeover
When a company buys over 50 per cent of the shares of another company and becomes the controlling owner of it. It is often referred to as 'acquisition'.
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Horizontal integration
Merging with or taking over another business in the same industry at the same stage of production.
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Vertical integration
Merging with or taking over another business in the same industry but at a different stage of production.
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Backward vertical integration
Merger with a supplier business.
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Forward vertical integration
Merger with a customer business
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Conglomerate intergration
Merging with or taking over another business in a different industry.
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Synergy
Literally means that 'the whole is greater than the sum of parts', so in integration it is often assumed that the new, larger business will be more successful than the two, formerly separate, businesses were.
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Retrenchment
The reduction of business costs in order to become more financially stable, increase profits and to move out of loss-making areas of operation.
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Management buy-out (MB-O)
A form of ownership change where a company's existing managers acquire a significant part or all of the business.
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Private equity ownership
When wealthy investors buys out a business which is usually under performing and take it over with the intention of transforming its management and performance.
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Other cards in this set

Card 2

Front

Business expansion achieved by means of merging with or taking over another business, from either the same or a different industry.

Back

External growth

Card 3

Front

An agreement by shareholders and managers of two businesses to bring both firms together under a common board of directors with shareholders in both businesses owning shares in the newly merged business.

Back

Preview of the back of card 3

Card 4

Front

When a company buys over 50 per cent of the shares of another company and becomes the controlling owner of it. It is often referred to as 'acquisition'.

Back

Preview of the back of card 4

Card 5

Front

Merging with or taking over another business in the same industry at the same stage of production.

Back

Preview of the back of card 5
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