The document discusses different ways that businesses can grow, including internal growth through increased demand or new products, and external growth through mergers or takeovers. It defines different types of integration like horizontal, vertical, lateral, and conglomerate integration. It also discusses economies and diseconomies of scale, where economies of scale provide benefits like lower costs as businesses grow, while diseconomies of scale can cause issues like higher costs from problems with communication and efficiency as businesses become very large.

1. Business Growth

5.  Now Read the case study on Business Growth – Worksheet 1 and answer the questions

7. Horizontal Integration Horizontal Integration is when one company merges/takes over another company which produces SIMILAR GOODS and which is involved at the SAME STAGE of production. Example: A frozen food company (Birds Eye) merging with another frozen food company (Findus)

8. VERTICAL INTEGRATION Vertical Integration involves the joining together of firms at DIFFERENT STAGES of production. Example: A frozen food company taking over a farm (BACKWARDS VERTICAL INTEGRATION) or, a frozen food company taking over a supermarket (FORWAR VERTICAL INTEGRATION).

9. LATERAL INTEGRATION Lateral Integration is a merger between two business which produce SIMILAR products. Example: A book publisher might acquire a magazine/newspaper publisher, or even television and other media products.

10. CONGLOMERATE MERGER * A conglomerate merger takes place when one company merges with/takes over another which is in a completely different industry. Conglomerate mergers spread the risks more because the firm no longer relies upon sales of only one type of product. In other words, the business is not “putting all its eggs in one basket” - if there is a decrease in sales for one product, they are still selling other products. * (Also known as DIVERSIFICATION)

11. Frozen Food Company Frozen Food Company Frozen Food Company Farm Supermarket Freezer Manufacturer Backward Vertical Integration Horizontal Integration Forward Vertical Integration Lateral Integration

12.  Now Read the case study on Business Growth – Worksheet 2 and answer the questions

13. Economies and Diseconomies of Scale

15. Small firm Large firm Increasing Scale Risk-bearing Economies Labour & Managerial Economies Commercial Economies Financial Economies Technical Economies Disintegration Labour Ancillary Services Marketing Economies Infrastructure INTERNAL ECONOMIES EXTERNAL ECONOMIES

19. DISECONOMIES OF SCALE Economies of Scale mean that as a firm grows in size the cost of production per unit decreases. However it is generally accepted that this only happens in the short term. Over longer periods of time there are disadvantages of growing bigger and these tend to push the cost per unit up again. These are known as Diseconomies of Scale and can be Internal or External.