1. To understand the following different methods of external growth > Mergers & Acquisitions & Takeovers > Joint Ventures > Strategic Alliances > Franchising Learning Outcomes

2. Methods of Growth 2 Methods of growth Internal External Merger TakeoverAcquisition When a business buys part of another business When a business buys a smaller business Joining together of two similarly sized businesses When a firm grows without involving other businesses Where two businesses join to form another business

3. Growth and expansion External growth - integration 3

4. Growth Internal expanding original operations (existing ) sales External operations involving a takeover or merger.

5. External growth (Integration) 5 A hostile takeover occurs when the acquired company has no wish to integrate with the ‘aggressor’ Horizontal Lateral Vertical Forwards Vertical Backwards

6. External growth (Integration) Horizontal: Two businesses which make similar products at the same stage of the chain of production join together Lateral: A business buys a related business at the same level of production Forward vertical: A business buys another business which is further forward in the chain of production Backward vertical integration: A business buys another business which is further back in the chain of production Conglomerate merger: Where two businesses with no common interests merge to form a single company 6

7. Research Task Find real life examples of each method (google doc) Use the Internet to investigate a recent takeover or merger – The BBC Business website is a good place to start a search Questions – Why did the two parties integrate? – What are the expected gains? – What about losses? Who might lose out from the merger? – Do you think the merger would be a good thing ?