For growth, businesses should know when and how to introduce change, usually by acquiring business operating over and beyond the borders. That is, at that point where they reach maturity, meaning that they have tackled all the possibilities of growth and there exists no more opportunities where they are currently based.
The two major ways in which a company can grow are:-
• Organic growth
• Inorganic growth
Organic growth comprises of increasing new sales and new customers for the existing business to improve in terms of profit. The company grows within itself and improves its existing affairs, as opposed to inorganic growth which involves expanding the business from outside into other regions or countries. In organic growth, a company can be through a merger where two firms join by agreement or via takeover where one company buys at least 51% of the shares of another company. Therefore, the company with the majority of the shares has control of the business and chooses which activities to keep.
Under inorganic growth, integration happens in two ways;
• Horizontal integration is a situation where two firms operating in the same business sector or does the same business enters into an agreement in equal statue, as this will give them an advantage of a large customer base and also enables them to have economies of scale. The economies of scale arises due to cost sharing for example, managerial services, deliveries are made at the same time etcetera.
• Vertical integration where a company joins businesses when they are at different stages of production. The purpose of the integration could be to supply them with goods or buy goods from them. This way, the company has a huge control over the process of production.
The acquisition of...
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... force that is ready to go and settle down in those countries. The other issue could be the currency differences, which is an advantage and a disadvantage at the same time. The Pound is quiet strong against the dollar, and this will mean having a higher liquidity. The legal and administrative differences may not sound as a problem as developed countries always carry out their deals in a straightforward manner. The skills level also may differ given that the countries do not use the same syllabus to teach in schools, therefore, the company should only be hopeful that the country they are going to venture into has equal skills standards if not higher. In any case, they can always send some expatriates to go do the job.
Works Cited
The Times 100. Davis. Growing a company by international acquisition.. http://www.thetimes100.co.uk/downloads/dsgplc/dsgplc_13_full.pdf
Breaking into new markets helps the company grow and brings in new customers, which leads to higher profit margins.
Horizontal integration brings organizations under one organization, and system. Vertical integration brings together all or part of a production procedure under one management, the fundamental principle of vertical integration is supplying a set of health care services to satisfy the needs of individuals in a specific group.
Vertical integration is when an organisation own companies on two or more levels of the buying chain. Examples of this can be found within “The Big 4,” all of them own an airline, travel agent and a tour operator. The companies have until recently used different names for their travel agency, airlines and tour operators, but now they are power branding their companies so that customers can see whom they are booking with. An example of this is TUI UK, which has rebranded its companies using the Thomson name.
Horizontal integration consists of expanding a service through buying the competence or joining them to create a stronger company that provides the same service. Vertical integration is when a company creates or manages its own providers or created or manages the distribution services. When we think, how a healthcare facility works, we can easily imagine the concept of a human body, going from head to the toes. In the same ways, healthcare facilities need a network of providers in almost every healthcare service. The way that organization deals with providers and distributors to assure the outcome of a service or a produce for a population, it is called integration and integrated organization is also called Integrated Delivery Systems (IDS).
BHP Billiton is a globalized company that was formed in 2001 through a merger between Broken Hill Proprietary (BH P) and Billiton. BHP is one of the world’s largest producers of aluminum, cooper, iron, ore, silver uranium and other minerals alike. BHP also has interests in petroleum. BHP is the worlds largest mining and resource company with about 100,000 staff in more than 25 different countries. The companies headquarter resides in Melbourne, Australia and is listed on both the ASE (Australian securities exchange) and on the London Stock exchange.
Marks and Spenser alternative for the substantive growth can take the following strategies, horizontal integration, related diversification, vertical integration and unrelated diversification.
For my term paper, I am proposing to research the successful merger between SBC Communications and Ameritech Corporation that is now commonly known as AT&T. Subsidiaries of SBC included those of Southwestern Bell, Pacific Bell, Nevada Bell and Cellular One acting as a global leader in the telecommunications industry competing with Ameritech over millions of access lines and a growing wireless customer subscription base across the US as well as several other countries. The United States filed a civil antitrust case in 1999 to enjoin the transaction under which SBC would acquire Ameritech believed to be in violation of a horizontal merger. Economist Roger D. Blair defines a horizontal merger as occurring “whenever two firms that compete with each other in the same market are brought together under common control. For a merger to be deemed horizontal, the firms must have been rivals prior to their combination.” Rightfully so, this case caught the attention of consumers once numbers revealed a possible monopolizing impact. The combination would be known as the second-largest merger in corporate history at the time
Firms can grow internally or externally. However, not all firms have adequate resources and capabilities and thus look for partners. Studies showed that more than two-third companies depended on external growth (Hewitt 2005).
According to a North American dictionary entry vertical integration is defined as “merging of companies in supply chain: the merging of companies that are in the chain of companies handling a single item from raw material production to retail sale” (“Vertical Integration,” 2009). Though the definition of vertical integration is quite simple the concept is much more complicated than one may think. There are four strategic factors that must be established by business leaders before the implementation of vertical integration can take place that must be well-thought-out in order to achieve any level of success. The factors that influence vertical integration are economic, market, operational, and strategic.
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Vertical integration is where a company becomes their own supplier or distributor through acquisition. Seprod uses the strategy by their acquisition of Belvedere Estate in 2006 so as to expand its dairy farm pastures to increase their supply of milk output from the dairy farming. They also use vertical integration in their subsidiary Industrial Sales Limited. This is done by making them the main distributer and marketer of their
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There are several external growth methods that entrepreneurs may choose for growing their business which are ‘a merger with’ or ‘acquisition of’ other companies.