Business Growth and Expansion

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Presentation transcript:

Business Growth and Expansion

Growth through Reinvestment Company reinvests profit back into company Main way for small businesses to grow Can reinvest profits into another franchise

Growth through mergers One company gives up its legal identity to another Reasons for merging Faster growth – Wells Fargo and Wachovia Improved efficiency – Fiat and Chrysler Need to acquire new product lines – AMD and ATI Catch up or eliminate rival – Home Depot and Yardbirds or Coca-Cola and Inca Cola Remake identity – Cingular and AT&T

Types of Mergers Horizontal Merger – two firms make the same type of product Home Depot and Yardbirds Vertical Merger – Firms in different steps of manufacturing or marketing process Ford buys a steel company

Four types of monopolies Geographic – Ex. Small town with only one gas station. Technological – Patents and copyrights Natural – To be profitable, must be able to serve large number of customers – utilities. Governmental – post office and Amtrak, business licenses

Business Expansion cont. Conglomerate – firm that operates in at least 4 different industries Multinational – firm with manufacturing or service operations in different countries Alliances – companies don’t merge but help each other. Ex. McDonald’s and Coca-Cola or Starbucks and Pepsico

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