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Size of Business Ch 3 - Coggle Diagram

- - - - When two separate businesses combine into a new legal entity
      - When google and android merged
    - - When a company buys out another
      - Exxon taking over Mobil
    - - The growth of a company using external resources and capabilities rather than from internal business activity
      - A brand merges with another brand to make an even bigger brand
    - - Two businesses merging, however those businesses partake in things that are completely different from the other
      - Like how Yamaha has pianos but also motorcycles, because they merged
    - - When a business merges with a mother business from a different production stage
      - backwards and forwards vertical integration
    - - When a business joins with another business at the stage of the supply chain
      - An ice cream shop merges with another ice cream shop and becomes an even bigger ice cream shop
    - - When a business merges or takeover a business further up in the supply chain
      - A vehicle manufacturer buys a car retailing business
    - - When a business merges or takeover a business lower down in the supply chain
      - A vehicle manufacturer purchases a vehicle parts manufacturer
  - - - May bring bad publicity and redundancy
      - Costumer opposition
      - Monopoly
    - - Consumers have less choice (may have to pay more)
      - Less job security
      - Suppliers have to offer lower prices
      - Shareholder's impact depends on whether profits rise or not
      - Local community job losses
    - - Economies of scale (potential)
      - Concentrating output on one site instead of two
      - Eliminates one competitor
      - Increased power over suppliers (low prices)
  - - - Control of promotion and pricing
      - Secure outlet for business (may exclude competitor's product)
    - - Consumers react negatively
      - Business lack experience in this sector
    - - Greater job security
      - Varied career opportunities
      - Consumer resents lack of competition
      - Shareholder's impact depends on whether profits rise
  - - - Control of quality, price and delivery times
      - Encourages joint research and development to improve quality of supplies
      - Business control supplies of materials to competitors
    - - Business lacks experience managing this sector
      - Fully satisfied with the guaranteed costumer (doesn't try)
    - - More career opportunities
      - Improved quality and more innovative products (consumer)
      - Control of supplies may limit choice for consumers
      - Profits may rise and benefit shareholders
  - - - Diversifies business
      - Spreads risk (could enter fast growing market)
    - - Lag of management experience in different sectors
      - Lack of focus and direction (because of spread)
    - - Workers have more career opportunities
      - More job security
      - Profits could rise and benefit shareholders
  - - - Problems
        
        More fixed and working capital needed ASAP
        
        Can result in negative cash flow and increased long term borrowing and interest
        
        Takeovers can cost a lot (stretches the businesses' money)
      - Solutions
        
        Raise money from selling shares
        
        Offer shares not cash to pay for takeover
        
        Use internal sources of finance
    - - Problems
        
        Existing management unable to cope with the double in size overnight
        
        Culture clash
        
        Lack of coordination
      - Solutions
        
        Desentralization policy
        
        New management culture
        
        New management system, structure and policies