1. Chapter 3.2 Business Growth and Expansion

2. Growth Through Reinvestment
Income statement- sales, expenses, and profits

3. Growth Through Reinvestment
Total sales – expenses = Net income
Net (like a fisherman)- if it is in your net it is what you keep.
Cash flow- sum of net income + non-cash charges (depreciation). This is the total amount of new funds to the business.
After looking at the books, profits will be reinvested to people or equipment.

4. Growth through Mergers
Loss of identity with mergers
Reasons for mergers
For faster growth
Eliminate a rival
Become more efficient
Change its image
Acquire new product line

5. Types of Mergers Horizontal- same companies
Vertical- different steps in the manufacturing process.

6. Conglomerates and Multinationals
Conglomerate- 4 or more different businesses, each making different products.
Diversification
Multinationals- Offices in many countries

7. Other Organizations
Section 3

8. Community and Civic Organizations
Nonprofit- Church, School, Hospital, Welfare, etc.
All profits go back into business or community.
Leaders are paid salaries.

9. Community and Civic Organizations
Cooperatives- Works for its members
Credit Union, Insurance, Teacher Unions
Consumer cooperatives- Buy in bulk
Service Cooperatives- provides services such as insurance or banking
Producer cooperative- Promotes their products, such as food.

10. Labor Unions
Workers formed to represent its members’ interests in various employment matters.
Collective bargaining- employment conditions are negotiated on behalf of all workers
AFL-CIO, American Federation of Teachers

11. Professional Associations
Work like Labor unions, without the collective bargaining.
AMA, The Bar Association
Handle liscensing
Police their members

12. Business Association
Chamber of Commerce- Helps member business in community.
Lobbying for favorable business decisions.
Promotes local business
BBB-Better Business Bureau

13. Government
Direct- Government provides a good or service that conflicts with private industry
TVA-Tenn Valley Authority
FDIC
USPS
Police, fire, school, roads, courts, libraries, parks

14. Government cont Indirect- acts as umpire Public utilities
Cable Television
Ma Bell-telephone service
Social Security, veterans benefits, student loans, unemployment compensation.