Business Growth
Business Growth
Financing Growth
Financing Growth <ul><li>To grow a firm needs to be able to expand – plant, equipment, buildings, human resources, etc. </...
Internal Sources <ul><li>Private funds – personal savings </li></ul><ul><li>Profits – retained profit ploughed back into t...
External Sources <ul><li>Loans  – from banks  and financial institutions </li></ul><ul><li>Venture Capital  – specialist g...
Overtrading <ul><li>Sudden growth can mean  a sharp increase in demand – or be  the result of it! </li></ul><ul><li>The fi...
External Growth
Takeovers <ul><li>One firm buying/securing a controlling interest in another, the taken over firm may lose its identity  (...
Mergers <ul><li>The amalgamation of two or more firms </li></ul><ul><li>Each firm may retain some degree  of identity – e....
Conglomerate Growth <ul><li>Conglomerate Growth  – the acquisition of firms in different production areas from its core ma...
Internal Growth
Internal Growth <ul><li>Internal growth can come from: </li></ul><ul><ul><li>Innovation  – new product development, new pr...
Managing Growth
Managing Growth <ul><li>Businesses are human organisations – humans are difficult to manage! </li></ul><ul><li>Larger orga...
Business Growth
Business Growth
Financing Growth
Internal Sources <ul><li>Private funds </li></ul><ul><li>Profits </li></ul>
External Sources <ul><li>Loans </li></ul><ul><li>Venture Capital </li></ul><ul><li>Leasing </li></ul><ul><li>EU/Government...
External Growth
Takeovers <ul><li>Horizontal </li></ul><ul><li>Vertical </li></ul>
Mergers <ul><li>Horizontal </li></ul><ul><li>Vertical </li></ul>
Internal Growth
Managing Growth
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Business Growth

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Business Growth

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Business Growth

  1. 1. Business Growth
  2. 2. Business Growth
  3. 3. Financing Growth
  4. 4. Financing Growth <ul><li>To grow a firm needs to be able to expand – plant, equipment, buildings, human resources, etc. </li></ul><ul><li>To do this it needs to acquire finance </li></ul><ul><li>There are two basic sources: </li></ul>
  5. 5. Internal Sources <ul><li>Private funds – personal savings </li></ul><ul><li>Profits – retained profit ploughed back into the business. This assumes the business is successful </li></ul><ul><li>Internal sources tend to mean growth is slower </li></ul>Firms like Marks and Spencer have been around for many years, their growth has been primarily internal but has taken time. Copyright: Les Powell, http://www.sxc.hu
  6. 6. External Sources <ul><li>Loans – from banks and financial institutions </li></ul><ul><li>Venture Capital – specialist groups who provide capital – may take over ownership of the firm, build it up then sell it on at a profit in a few years </li></ul><ul><li>Leasing – allows a degree of flexibility in finance arrangements </li></ul><ul><li>EU/Government Grants </li></ul>
  7. 7. Overtrading <ul><li>Sudden growth can mean a sharp increase in demand – or be the result of it! </li></ul><ul><li>The firm may try to cater for this growth but not be able to meet demand </li></ul><ul><li>Investment may be made in new capacity which incurs extra cost but customers may not pay at the same rate leading to cash flow problems and possible insolvency </li></ul>
  8. 8. External Growth
  9. 9. Takeovers <ul><li>One firm buying/securing a controlling interest in another, the taken over firm may lose its identity (e.g. Morrisons takeover of Safeway will eventually lead to the disappearance of the name ‘Safeway’) </li></ul><ul><li>Horizontal – a business at the same stage of the production process </li></ul><ul><li>Vertical – a firm at different stages of the production process. </li></ul><ul><ul><li>Forwards – towards the market </li></ul></ul><ul><ul><li>Backwards – towards the source </li></ul></ul>
  10. 10. Mergers <ul><li>The amalgamation of two or more firms </li></ul><ul><li>Each firm may retain some degree of identity – e.g. Cadbury Schweppes, </li></ul><ul><ul><li>Horizontal mergers – at the same stage of the productive process </li></ul></ul><ul><ul><li>Vertical – at different stages of the productive process </li></ul></ul>
  11. 11. Conglomerate Growth <ul><li>Conglomerate Growth – the acquisition of firms in different production areas from its core market – Kingfisher own Comet, B&Q, Woolworths, MVC and Screwfix </li></ul>Many people may not have recognised Kingfisher plc as a ‘business’ but are likely to have heard of the branded businesses they own. Sponsorship of Dame Ellen MacArthur’s sailing exploits have helped raise the group’s profile. Title: Vendee Globe Challenge. Copyright: Getty Images, available from Education Image Gallery
  12. 12. Internal Growth
  13. 13. Internal Growth <ul><li>Internal growth can come from: </li></ul><ul><ul><li>Innovation – new product development, new processes, new systems, etc. which can improve the efficiency of the firm </li></ul></ul><ul><ul><li>Competitive Advantage – the means by which a firm is able to make itself stand out from its rivals – innovation could be one source of competitive advantage </li></ul></ul><ul><li>Others might include: </li></ul><ul><ul><li>After sales service </li></ul></ul><ul><ul><li>Quality </li></ul></ul><ul><ul><li>Price </li></ul></ul><ul><ul><li>Cost advantages </li></ul></ul><ul><ul><li>Brand image </li></ul></ul><ul><ul><li>Environmental consciousness </li></ul></ul>
  14. 14. Managing Growth
  15. 15. Managing Growth <ul><li>Businesses are human organisations – humans are difficult to manage! </li></ul><ul><li>Larger organisations may suffer from diseconomies of scale </li></ul><ul><li>Larger organisations may necessitate changing roles for the managers/leader/owners </li></ul><ul><li>There may be a divorce between ownership (the shareholders) and control (the Board) </li></ul>
  16. 16. Business Growth
  17. 17. Business Growth
  18. 18. Financing Growth
  19. 19. Internal Sources <ul><li>Private funds </li></ul><ul><li>Profits </li></ul>
  20. 20. External Sources <ul><li>Loans </li></ul><ul><li>Venture Capital </li></ul><ul><li>Leasing </li></ul><ul><li>EU/Government Grants </li></ul>
  21. 21. External Growth
  22. 22. Takeovers <ul><li>Horizontal </li></ul><ul><li>Vertical </li></ul>
  23. 23. Mergers <ul><li>Horizontal </li></ul><ul><li>Vertical </li></ul>
  24. 24. Internal Growth
  25. 25. Managing Growth
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