DIFFERENT WAYS IN WHICH BUSINESSES CAN GROW

• INTERNAL GROWTH- Occurs when a business expands its existing operations. For example, a restaurant owner could open other restaurants in other towns – this growth is often paid for by profits from the existing business. This type of growth is often quite slow but easier to manage than external growth.
• EXTERNAL GROWTH- Is when a business takes over or merges with another business. It is often called integration as one business is integrated into another, involving a takeover or a merger with another business.
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  THREE EXAMPLES OF EXTERNAL GROWTH- HORIZONTAL MERGER OR HORIZONTAL INTEGRATION – when one firm merges with or takes over another one in the same industry at the same stage of production.
• THREE EXAMPLES OF EXTERNAL GROWTH-VERTICAL MERGER OR VERTICAL INTEGRATION– when one business merges with or takes over another one in the same industry but at a different stage of production. Vertical integration can be forward – when a business integrates with another business which is at a later stage of production (closer to the consumer) – or backward – when a business integrates with another business at an earlier stage of production (closer to the raw material supplies, in the case of a manufacturing business).
• THREE EXAMPLES OF EXTERNAL GROWTH-CONGLOMERATE MERGER OR CONGLOMERATE INTEGRATION– when one business merges with or takes over a business in a completely different industry. This is also known as diversification.