Growth of Firms

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Notes from Cambridge IGCSE Economics Susan Grant Page 274
Tryphena Evborokhai
Mind Map by Tryphena Evborokhai, updated more than 1 year ago
Tryphena Evborokhai
Created by Tryphena Evborokhai almost 7 years ago
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Growth of Firms
  1. There are two ways in which a firm can increase in size
    1. Internal growth (Natural or Organic)
      1. Involves a firm increasing the market for its current products or diversifying into other products
        1. This could be franchising and increasing the size of existing plants or by opening new ones.
          1. Example: McDonalds opening more outlets throughout the world
            1. External growth allows a firm to increase its size more quickly than internal growth. With internal growth, however, there is more control over the size of the firm. There is a risk that external growth may take a firm past its optimum size.
      2. External growth
        1. This involves the firm joining with another firm/firms to form one firm through a merger or a takeover
          1. Such joining is known as integration.
            1. The three main types of integration are:
              1. Horizontal integration
                1. Vertical integration
                  1. Conglomerate integration
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