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3.1 - Business Growth - Coggle Diagram

- - - - Most firms (90%) are private and have to make money to survive. There are 5 forms of private firms
        
        LTD (public company with shareholders)
        
        PLC (puts shares on the stock market)
        
        pt (small private companies usually between 2 and 20 workers)
        
        MNC (multinational companies)
        
        Sole trader
      - Public owned companies are companies such as RBS (who the government bought almost all the shares to prevent it from going under) and HS2
        
        Schools and the NHS are government-owned but are non-profit. Their aim to breakeven and help the public rather than make money. Charities are also examples of non-profits
        
        Despite these companies being state owned, they mostly still aim to make money. These firm can survive without making money however, because they are state owned.
- - - - This lowers the risk of the investment and is often easier to mange
      - The firm may not take on new ideas and could run the risk of becoming too specialized
      - This could involve hiring new workers, buying capital, ect...
    - - It can be quicker and if the company being bought is successful it may be less risky
      - It runs risk of financial trouble and could become too hardtop control
      - Also a risk it could be vetoed by the CMA
      - Vertical Integration
        
        There are two types of integration. Firms will often avoid integration however, because of managerial complexity.
        
        Forwards integration - is where you buy a firm or company that's is closer to the consumer. For examples like a brewery buying a pub or Cadburys buying shops
        
        guarantee that consumer see the firm's product at is best
        
        They may not supply their competitions product so the consumer will have to but theirs.
        
        Better for market research and could adapt quicker to it
        
        The firm may not offer enough range or choice for consumers on its own
        
        The firm may not have marketing or sales expertise
        
        Backwards integration - is where you buy a firm or company that's is further from the consumer.
        
        control over raw material supply is guaranteed
        
        They can prevent other firms from using that supply
        
        They can charge other firms a higher price
        
        It may not be necessary to buy
        
        The buying firm may not have existing knowledge of production
        
        The buying firm may not be as adaptable to changes in consumer demand. Eg; buying a sugar farm after a consumer shift to artificial sweeteners
      - Horizontal Integration
        
        This is firm will buy another firm at the same stage of production as them. For examples like Cadburys buying Galaxy or a brewery buying another brewery.
        
        EOS
        
        increased market share
        
        decreased competition
        
        remove risk of being taken over by another firm
        
        Risk being too diverse
        
        buyout could be very expensive
        
        some workers may lose jobs if both firms have someone at the same position
        
        some workers may have to travel further
        
        some assets may be sold
  - - - This could lead to asset stripping, where a firm buys a whole company for a specific section then sells the rest of the firm off
      - Spreads risk, firms can cross subsidise in an expanding market
        
        Different products do well at differents parts of the business cycle
        
        Brands become better recognized
      - lack of expertise in other markets
        
        Brands may become diluted and lose brand loyalty
  - - - Economy - a bad economy will restrict growth
      - Size of the market - eg, restricted market for A level textbooks
      - Finance - not enough money to grow
      - ownership objectives - a owner may be happy working earing what he earning so wouldn't want to expand.
      - Government restriction - the government like to have lots of small firms with perfect competition, therefore, the CMA vetoes mergers all the time amongst other things
- - - - Workers - some loss of jobs but increased job security for those who were kept on
      - Consumers - increased competition usually leads to lower prices and better products. But some parts of the service may be limited
      - Business - allows the firm to focus on its core business while also raising money and potentially removing a sector making a loss