opening a branch,office or factory in another location
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advantages of organic growth
Less risky than merging or taking over a business
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another advantage of organic growth
do not need to borrow loans or sell shares to pay for it
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disadvantage of inorganic growth
market share may fall
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another disadvantage of inorganic growth
too slow for some owners
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inorganic growth examples
merging or takeover
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Backward vertical integration.
Occurs where a company merges with, or takes-over, another company which is closer to the source of the raw material (e.g. a car manufacturer taking-over a supplier of car components).
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diversification
between steel company and food retailer
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Horizontal intergration
his occurs when two firms in the same industry join together who produce the same product and are at the same stage of the production process (e.g. the Nestle takeover of Rowntree).
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Forward vertical integration
Occurs where a company merges with, or takes-over, another company which is closer to the retail stage (i.e. nearer to the consumer). An example of this would be a car manufacturer taking-over a range of car showrooms.
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Market share
The proportion of total market share sold by one business
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Reason for expanding a business
Increases market share if sales of business grow faster than total sales than market share will incfrease
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Reason for expanding a business
To increase sales- this should lead to any increase in profit
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Reasons for not expanding
to keep controll
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Reasons for not expanding
to offer personal service for customers
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Reasons for not expanding
to avoid too much risk
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Reasons for not expanding
Avoid workload
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Other cards in this set
Card 2
Front
expanding business through the internet
Back
Another type of organic growth
Card 3
Front
opening a branch,office or factory in another location
Back
Card 4
Front
Less risky than merging or taking over a business
Back
Card 5
Front
do not need to borrow loans or sell shares to pay for it
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