An Idiot’s Guide To Business Growth
Ways Business Size Can Be Measured
The number of employees that the company pays to do their job.
Number of outlets that their product/ service is sold at.
Increased Sales / Number of Items sold.
Increased Market Share. To calculate this, you divide (number of items sold) out of (number of that kind of item sold totally, including other companies) and you multiply it by 100.
The value of capital employed could also show the size of the company.
The Many Ways In Which Businesses Grow
By internal growth, for example, a clothing store owner could open other stores in other cities. This growth is usually paid for by profits from the business. This type of growth is slow, but easier to manage. This is sometimes called organic growth. By external growth, involving taking over another business, or merging with another business. The three kinds of external growth are…
Conglomerate Merger/ Integration, when one business merges or takes over another business in a completely different industry. For example, a mobile network company merges with a chain clothing store.
Horizontal Merger/ Integration, when one business merges or takes over another business is the same industry, at the same stage of production. For example, a car manufacturer takes over another car manufacturer. Vertical Merger/ Integration, when one business merges or takes over another company in the same industry but at a different stage of production. There are two types of vertical integration.
Forward Vertical Integration is when a business merges or takes over another business which is at a later stage of production. For example, a gold mine merges or takes over a gold smelter. Backward Vertical Integration is when a firm integrates with another firm at an earlier stage of production. For example, a jewellery shop merges or takes over a gold smelter.
Advantages and Disadvantages of Each Type of Growth
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