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business expansion (external/inorganic (horizontal growth (advantages…

- - - - rival eliminated
      - benefits from economies of scale
      - higher market share
      - improved profits
    - - can be difficult to manage
      - potential diseconomies of scale
  - - - secured place to sell goods
      - can advertise their products
      - can get direct feedback from customers
    - - may not have experience in that industry such as dealing with customers
  - - - spreads risk over more than one industry so if one sees a fall in demand, the business may be expanding in another industry
      - reduces risk of failure
      - less vulnerable
      - ensures sales if one market isn't popular
    - - business may not have expertise in other industry
      - lots of market research required
      - business may not be associated with new industry
      - can be risky
  - - - secured supplied
      - can ensure quality (unique selling point)
      - lowers price of product
      - benefits from economies of scale
    - - may not have expertise
      - could suffer from diseconomies of scale
- - - - cheaper than opening new stores
      - overhead costs are much lower e.g. rent, gas, electricity
      - can provide goods 24/7
      - helps cash flow, more efficient
    - - may be an increase in customer service complaints
      - existing customers may be reluctant to shop on the internet
      - state of security questioned relating to web sales (more vulnerable to fraudulent activity)
      - expensive to set up and maintain a professional website
  - - - growth in sales
      - new customers, new target market
      - can keep control of the business and grow at a suitable rate
      - less risky
    - - bank loan investments can add significantly to costs
      - rivals may have grown more quickly
      - increased workload
  - - - franchisees highly motivated as it's their own store
      - franchisee pays all costs
      - franchisee managed the store
      - fast expansion
      - receives lots of money for doing nothing
    - - cannot or may have difficulty controlling the franchisees
      - one bad franchisee can affect the entire brand image
      - doesn't get all profits from franchisee
      - time consuming to train franchisees
  - - - attracting a wider market
      - don't have to train staff
    - - quality may not be up to standards
      - no expertise in that field
      - could produce goods cheaper themselves