Please enable JavaScript.
Coggle requires JavaScript to display documents.
Ch 22 Business Expansion (Part 1) - Coggle Diagram
Ch 22 Business Expansion (Part 1)
Reasons for Business Expansion
1. Psychological
Challenge
Ambition
2. Defensive
Reducing Costs (Economies of Scale)
Diversification
Protecting Supplies
Protecting Channels of Distribution
3. Offensive
Increasing Profits
Asset Stripping
Acquire New Products
Eliminating Competition
Methods of Business Expansion
1. Organic (Internal) Growth
Growing Sales
*Advantages of Existing Product
Lower Costs
Product Knowledge
*Disadvantages of Existing Product
Finance
Slow Sales
Advantages of Developing New Product
High Profits
Consumers
Disadvantages of Developing New Product
Cost
High Failure Rates
Licensing
Advantages
Low Cost
Continuous Income
Disadvantages
Quality Control
Loss of Control
Franchising
Advantages for Franchisor
Low Capital Costs
Rapid Expansion
Franchise Cancellation
Economies of Scale
Disadvantages for Franchisor
Control
Business Reputation
Franchise Training
Regular Monitoring
Advantages for Franchisee
Franchise Support
Advertising
Less Risk
Disadvantages for Franchisee
Cost
Revenue
Rules
2. Inorganic (External) Growth
1. Strategic Alliance/Joint Venture
Advantages
Success
New Markets
Disadvantages
Slow Decision-making
Disagreements
2. Merger
Advantages
Economies of Scale
New Products
Increased Profits
Disadvantages
Redundancies
Conflict
Decision-making
3. Takeover/Acquisition
Advantages
Spreads Risk
Economies of Scale
New Products
Disadvantages
Expensive
Staff Redundancies
Industrial Relations
How is Business Expansion Financed
1. Equity Capital
Private Limited Companies
Public Limited Companies
Partnerships
Sole Trader
2. Retained Earnings
3. Grant
Local Enterprise Offices (LEOs)
Enterprise Ireland
IDA Ireland
European Union
4. Debt Capital
5. Sale and Leaseback
6. Venture Capital