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External growth - Coggle Diagram
External growth
Conglomerate
Diversification
Rapid growth
Transfers knowledge
More likely to fail
Asset stripping
No connection with the product/market
Unreliable
Private equity buyout
Forward vertical
integration
Next stage in production process
Customers
Influences markets
Greater control
Closer to end use
Guarantees outlets
Best ways cash and carries buying cooperative pharmacies
Horizontal integration
Synergy
More profitable together
Reduces competition and costs
Economies of scale
Greater market power
mobile companies
EE bought T-Mobile
Same industry
Increases profits
Same stage in the production process
Take over
Acquisition
Agreed or hostile
Voting rights
Public limited companies
Vulnerable
Over 50% of shares
Backward
vertical integration
Same industry
Take over a supplier
Previous stage in production
Chain of distribution
Market development
Secure supplies
Reduce costs
Control over quality
power over suppliers
Tesco's buying bookers
Merger
Shared ownership
Combining two companies
Clash of corporate culture