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Business expansion - Coggle Diagram

- - - - Example - Supermac’s expanded all over Ireland
      - Advantages
        Little capital required - the original owner of the business does not need a lot of finance to expand.
        Economies of scale - the bigger the franchisor’s business becomes through franchising.
        Less supervision required - the franchisor will be able to expand his business without getting involved.
        Dedicated franchisees - the franchisor can relax in the knowledge that the person operating the franchise will be totally motivated to make it work.
      - disadvantages
        Risk to reputation - the reputation of the business and the goodwill that the franchisor has built can be harmed or even ruined.
        loss of control - the franchisor loses control over the day-to-day management of each franchise.
    - - How to increase sales
        
        Rebrand the product
        
        The franchise can expand the product to people
        
        Find new features to add to a product.
  - - - Example: Swatch and Mercedes-Benz worked together to create the “Smart” car.
      - Advantages
        Cost-effective expansion: an alliance is a good way to expand as the businesses involved split the costs of the venture.
        More successful expansion: the parties to the alliance can brainstorm ideas with each other to come up the the best possible business venture.
        New markets: an alliance csn open up new markets to both businesses.
      - Disadvantages
        Disagrements: the two parties to the alliance may have a disagreement if one feels that they are not getting as much out of it as the other.
        Corporate secrets may be lost: strategic alliances require a business to share its resources and often its knowledge and skills as well
    - - Example: the French airline Air France and the Dutch Airline KLM merged to form Air France-KLM
      - Advantages
        economies of scale: the bigger a business grows the lower its cost becomes.
        Quick access to new ideas and products: a merger can save a business a lot of time developing new ideas and products.
        increased profits: a merger allows the two businesses to cut out all duplication because the business does not need two of everything.
        Synergy: synergy is where the whole is greater than the sum of its parts.
      - Disadvantages
        Conflict: when the businesses were separate entities each would have had its own practices and policies.
        Reduces employee motivation: in the short term employees in the merged business may become worried about the security of their jobs.
    - - Hostile example - Ryanair launched a hostile takeover takeover bid for Aer Lingus.
        Friendly example - meta (facebook) bought WhatsApps for $19 billion
      - Advantages
        Economies of scale: a bigger business buys more supplies and therefore gets a bigger discount.
        Increased profits: the new business does not need two of everything.
        Quick access to new ideas and products: when one business buys another, it immediately acquires that business's ideas
      - Disadvantages
        Capital required: buying another business can cost a lot of money.
        industrial relations problems: a turnover often results in rationalisation and job losses as the business csn cut out all duplication.