what is business growth
Business growth is the point at which a business needs to expand and
seeks options to generate more profits
what are the objectives of growth
- achieve EOS
- gain MS
- increased market power
- increased profitability
what are the different types of economies of scale
risk baring
financial
marketing
technological
managerial
purchasing
what are the issues of growth
- DEOS
- internal communication
- overtrading
what is DEOS
the costs are rising faster than output
what is overtrading
firm accepts more orders than it can deal with
what is a merger
A merger is a legal deal to bring two businesses together under one
board of directors
what is a takeover
This is a legal deal where one larger business purchases a smaller one
tactical reasons for a takeover or merger
Attempt to ensure increased
market share
Access to technology, staff or
intellectual property
strategic reasons fir takeover or merger
Access to new markets
Improved distribution networks
Improved brand awareness
what is horizontal integration
Businesses operating in the same sector (e.g. tertiary) merge or
takeover another business in the same sector
what is vertical integration
Vertical integration is when one business in one sector takes over or mergers with a business in another sector or part of the supply chain
what is organic growth
Organic growth is the process of business growth which comes from
internally within the business. This is the opposite of mergers and
takeovers where growth comes from sources external to the
business.
what is inorganic growth
Inorganic growth means that a business has grown by:
A merger
A takeover (also known as an acquisition)
A joint venture
how can a business grow organically
Increasing the product range
Opening more branches
Taking on more staff
Increasing production
Renting larger premises
advantages of organic growth
Cheaper than merging
Retains the company culture
Higher production levels means
economies of scale and lower
average costs
More influence comes with more
market share, can start setting
prices for the industry
disadvantages of organic growth
Long period between investment
and return on investment
Growth may be limited and is
dependent on reliability of sales
forecasts
New markets and countries can be
dangerous to enter into without
buying a business already
operating in that country
what is a small business
The usual definition of small and medium sized enterprises (SMEs) is
any business with fewer than 250 employees.
what are the differentiation strategies of a small business
Creates value; highlights quality or
durability of the product
Non-price competition; a
differentiation strategy will focus on
other ways of attracting customers
such as taste and style
Brand loyalty; a differentiation
strategy can gain customer loyalty
No perceived substitute; a
differentiation strategy that focuses
on quality and design may give the
impression that there are no suitable
substitutes in the marketplace
how do small businesses use customer service
due to them being small they can gain a good connection with consumers
