how can growth be measured
-sales turnover
-number of employees
-share capital
-market share
-number of outlets
why may a business want to grow
-econ of scale
-market share
-survival
-brand recognition
-profit
-marketing power
what problems may arise from growth
-diseconomies of scale
-poor communication
-lack of motivation
-loss of direction + coordination
-overtrading
what is inorganic growth
external growth
what is organic growth
internal growth, when a business expands its operations rather than merging/ taking over
what are the methods of inorganic growth
-takeover
-merger
what is a takeover
-when a business buys over 50% of another businesses shares
-friendly or hostile
what is a merger
when two businesses join to form a new company, integrating activities under one board of directors
what are the main reasons for inorganic growth
-cost synergies eg econ of scale
-growth
-diversification
-market power; reduce competition
what are the types of integration
horizontal
vertical
what is horizontal integration
where companies merge/ take over competitiors
what is vertical integration
-companies merge with their supplier or customer
-forward or backward
what is forward integration
-a business merging with a customer
-allows increased prices, and power over promotion + relationships w customers
what is backwards integration
-a business merging with a supplier
-allows business to acquire materials cheaply
what are the rewards of inorganic growth
-quick growth
-expertise from other business
-acquire brand, technology, patents
-econ of scale
-entry to market
-greater profit
what are the risks of inorganic growth
-aims of businesses may be different
-difficult to merge culture
-cost
-customers may be upset
-high failure rate
-problems from growth
whatre the methods of organic growth
-increasing production capacity vis capital/ technology
-launch new products
-new markets
-marketing to grow customer base
-franchising
pros of organic growth
-less risky
-maintain culture
-control rate of growth
-financed internally
-can plan for growth
-maintain management
-maintain ethics
cons of organic growth
-slower growth
-miss opportunities for growth
-takes time to adapt
-dependent on market growth
-harder to build market share
-funds may be limited
-franchises can be hard to manage effectively
what is a small business
a business employing fewer than 50 employees + has sales turnover of less than £6.5 million
how do small businesses survive in a competitive market
-USP + product differentiation
-flexibility in responding to customer needs
-customer service
-competing through e commerce
