How Do Businesses Grow? Virgin Group

The obvious reason for horizontal expansion is the benefit of cost reduction. As the firm increases its scale of operation it generally experiences a reduction in long-run average costs. After the merger the company can rationalise its operation which leads to instant reduction in overheads. But it’s important not to become to big that leads to diseconomies of scale. Another reason for the reduction in costs is due to the benefit attributed to the learning curve. The learning curve was responsible for the reason why European plan manufacturers could not compete with Boeings’ production efficiency in the 1950s. A firm producing 100 units a day learn faster then a firm producing 10 units a day. A company can also improve its efficiency by merging with a company that already has benefited from the learning curve. The question is how easy the knowledge can be transferred?

Horizontal refers to the idea of one firm joining with another at the same stage of the same production process. It also allows for greater market share; achieves economies of scale; and an opportunity to enter a different market segment. An example of this would be Ford’s takeover of Volvo - both being car manufacturers.

Growing through integration is concerned with mergers and takeovers of businesses. There are a number of different ways of integrating: Horizontal (same industry, same stage of production), backward vertical (same industry towards a supplier), forward vertical (same industry towards the customer) and Conglomerate (different industries).

Businesses grow through their products/ services every time they put a product on the market more and more people will find out about the product. For example Tesco have been using growth strategies as they are expanding with their services, such as Tesco Money, you can now have a credit card with Tesco which people who may don’t

1. Horizontal Mergers: Horizontal mergers happen when a company merges or takes over another company that offers the same or similar product lines and services to the final consumers, which means that it is in the same industry and at the same stage of production. Companies, in this case, are usually direct competitors. For example, if a company producing cell phones merges with another company in the industry that produces cell phones, this would be termed as horizontal merger. The benefit of this kind of merger is that it eliminates competition, which helps the company to increase its market share, revenues and profits.

Horizontal integration is better for larger companies rather than small firms, as the companies goodwill is at stake when getting into acquisition & merger. It sounds beneficial for economies of scale. It increases its power and business in market sector. It is used in business which are trying to invest in foreign markets.

Horizontal mergers take place between companies in the same industry. These companies are rivals who sell the same goods or services. When a merger takes place, a rival is eliminated and potential for gains become higher. A vertical merger is one in which a firm or company combines with a supplier or distributor. For example, if a car making firm is receiving chassis from two suppliers and decides to acquire them, it is a vertical merger. On the other hand conglomerate mergers are those between firms that

The growth strategy of the organization I work for is a methodical process that drives the future structure at all levels. The approach involves maintaining the integration capacity of the mill's operational output to support and supply our converting facilities, in addition to external customers. Change is always occurring; we had a significant change to our organization when we acquired Boise Inc., our company size almost doubled. The transition process took approximately two years to integrate the new operations.

The learning and growth perspective uses the organization’s resources to adapt to the changing wants and needs of customers. The organizations must ask itself whether it can continue to improve and create value for its customers (Kinney and Raiborn 2013, 11). An organization’s ability to innovate and improve their products or services directly affects its value. An organization can create economic growth by developing new products and services, improving existing products and services, and developing more efficient operations (Kaplan and Norton January/February 1992, 75).

Horizontal merger is a combination of two or more corporate firms dealing in same lines of business activity. For example: Merger of business in technology, financial institutions like banks, automobile manufacturing companies etc.

A horizontal merger is a merger between companies which operate in the same business field and they share the same product lines as well as markets. The obvious result of this deal is the expansion in market share, reduction in fixed costs and increase the efficiency of distribution channel and logistics. Usually, horizontal mergers are common in the industries where competition is intensive and the potential gains of market share are

In this term of our discussion we’re talking about business environment. It’s like an overview of the whole business environment. Simply environment of a business means the external forces including the business decisions. They can be forces of economic, social, political and technological factors.

There are various ways to grow a company. However, two major ways in which a company can grow is through inorganic and organic growth.

Describe two major ways in which a company can grow. Give examples to illustrate the two ways of growing.

Nowadays every company faces the need for strategic growth in the fast moving business world where every organisation has to be flexible and needs to adapt to changeable environment. A lot of organisations fail to growth successfully. What are the main reasons for inefficient strategic growth? In order to answer this question, it is essential to understand what the methods of strategic growth are in general and how the company can choose the most suitable.