Definitions
Occurs when a business grows by collaborating with, buying or merging with another firm.
What is meant by External growth?
They receive royalty paynments.
what is a benefit for a franchisor?
Lack of clear focus in goals of business.
What is a disadvantage of a conglomerate merger and acquisition?
Apple buying motion capture company Faceshift.
What is an example of Forward vertical integration?
A business has growth potential but lacks sufficient funds for internal growth?
What is a reason business becomes takeover target?
An acquisition is unwanted by the company being acquired
What is meant by a Hostile Takeover?
Supplies obtained from established and quality-checked supplies.
What is a benefit for a franchisee?
There may be a cultural clash as people will need to adopt to the desired corporate culture of the newly formed business.
What is a disadvantage of mergers and acquisitions?
Disney merging its experience with 2D animation with the art production expertise of Pixar
What is an example of Horizontal integration?
Feasibility study, Partnership assessment, Contract negotiation and Implementation
A high risk growth strategy that involves a business selling new products in new markets.
What is meant by Diversification?
A business can secure an outlet for the firm’s product, which entails excluding products of competitors.
What is an advantage of forward vertical integration?
A lack of clear focus could be evident since the business is involved with more than one industry
What is a disadvantage of a conglomerate integration?
What is an example of Franchising?
A business that uses the name, logo and trading systems of an existing successful business
What is a franchise?
An external growth strategy that occurs when a business amalgamated with a firm operating in the same stage of production.
What is meant by Horizontal Integration?
Firms typically enjoy greater sales, but neither loses its legal existence or its identity.
What is an advantage of Joint ventures?
It takes time and effort to build the right relationships and partnering with another business can be challenging.
What is a disadvantage of joint ventures?
eBay and PayPal merged together.
What is an example fo Conglomerate integration?
Consumers may not like lack of competition in retail outlet due to withdrawal of competitor products.
What is an impact on a stakeholderfor Forward vertical integration?
Agreements between firms in which each agrees to commit resources to achieve an agreed set of objectives while remaining independent organizations.
What is meant by Strategic Alliance?
Form can benefit from increased likelihood of economies of scale
What is an advantage of Horizontal Integration?
Cannot start their own initiative to try newideas as they have to follow a set of regulations.
What is a drawback for a franchisee?
Uber Spotify - People with premium Spotify accounts will be able to listen to their own music in cars booked through Uber
What is an example of Strategic Alliance?
Greater Market share
What is an reason for external growth?