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Business Growth and Expansion. Growth through Reinvestment Company reinvests profit back into company Main way for small businesses to grow Can reinvest.

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Presentation on theme: "Business Growth and Expansion. Growth through Reinvestment Company reinvests profit back into company Main way for small businesses to grow Can reinvest."— Presentation transcript:

1 Business Growth and Expansion

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

3 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 Recent examples:  Comcast & Time Warner Cable: $69.8 billion: Feb 2014  Facebook & WhatsApp: $19.4 billion: Feb 2014

4 Types of Mergers Horizontal Merger – two firms make the same type of product  Holcim & Lafarge- concrete and cement $46.8 billion: April 2014 Vertical Merger – Firms in different steps of manufacturing or marketing process  Actavis & Forest Laboratories $25.3 billion: Feb 2014

5 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 Present day monopolies:  PG&E

6 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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