Chapter 16 Business expansion 04/04/2019 Chapter 16 Business expansion This is the Title Slide © Edco 2012    It’s the Business R. DELANEY

Defensive reasons for expansion 04/04/2019 Defensive reasons for expansion ‘Protecting what we have’ Protecting supplies Protecting a route to market Cutting costs Bigger is stronger Spreading risk This is the Section Header Slide © Edco 2012    It’s the Business R. DELANEY

Psychological reasons for expansion 04/04/2019 Psychological reasons for expansion ‘It’s all in the mind’ Empire building Meeting a personal goal or challenge This is a 2 Content Slide © Edco 2012    It’s the Business R. DELANEY

Aggressive reasons for expansion 04/04/2019 Aggressive reasons for expansion ‘Attack is the best form of defence’ Eliminate competition New Products/technology Synergy © Edco 2012    It’s the Business R. DELANEY

Organic expansion paths 04/04/2019 Organic expansion paths Organic growth is achieved by increasing the size of the existing business. This can be done via new products or new markets. It is a slow but steady approach, which tends to build on the existing strengths of a business. Increase domestic sales Export Licensing Franchising New product development This is a comparison slide © Edco 2012    It’s the Business R. DELANEY

Inorganic expansion paths 04/04/2019 Inorganic expansion paths Inorganic growth is achieved through mergers, acquisitions and takeovers. It often involves branching out into new areas of business and is therefore more risky. This approach allows a firm to expand rapidly, but may require increased debt to finance it. Joint venture (strategic alliance) Merger Takeover (acquisition)   © Edco 2012    It’s the Business R. DELANEY

Sources of finance for business expansion 04/04/2019 Sources of finance for business expansion Equity finance Retained earnings Sale and leaseback Grants Venture capital Loans © Edco 2012    It’s the Business R. DELANEY

Factors affecting choice of finance 04/04/2019 Factors affecting choice of finance Reason for the finance Amount of finance required Costs (APR) Security/collateral Control © Edco 2012    It’s the Business R. DELANEY

Implications of expansion for a business 04/04/2019 Implications of expansion for a business Organisational structure Finance Staffing Product portfolio Profitability Consumers © Edco 2012    It’s the Business R. DELANEY

Restrictions on expansion of businesses 04/04/2019 Restrictions on expansion of businesses Irish Law: The Competition Authority EU Law: EU Competition Policy © Edco 2012    It’s the Business R. DELANEY