9638147
Description
Mind Map by Tryphena Evborokhai, updated more than 1 year ago
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Created by Tryphena Evborokhai
about 7 years ago
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Growth of
Firms
- There are two ways in which a firm can increase in size
- Internal growth (Natural or Organic)
- Involves a firm increasing the market for its current products or
diversifying into other products
- This could be franchising and increasing the size of existing plants or by opening new ones.
- Example: McDonalds opening more outlets throughout the world
- 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.
- 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.
- Example: McDonalds opening more outlets throughout the world
- This could be franchising and increasing the size of existing plants or by opening new ones.
- Involves a firm increasing the market for its current products or
diversifying into other products
- External growth
- This involves the firm joining with another firm/firms to form one firm through a merger or a takeover
- Such joining is known as integration.
- The three main types of integration are:
- Horizontal integration
- Vertical
integration
- Conglomerate integration
- Horizontal integration
- The three main types of integration are:
- Such joining is known as integration.
- This involves the firm joining with another firm/firms to form one firm through a merger or a takeover
- Internal growth (Natural or Organic)
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