3.2.3 Types of Growth

• What is organic growth in business terms?

  Internal expansion
• Organic growth allows businesses to maintain control over their development.
• Organic growth leads to rapid scaling of a business.

  False
• What is inorganic growth in business terms?

  Expansion through acquisitions
• Match the type of inorganic growth with its definition:

  Mergers ↔️ Two companies combine

  Acquisitions ↔️ One company buys another

  Takeovers ↔️ Acquiring majority ownership
• What is horizontal integration in business growth?

  Merging with competitors
• Horizontal integration can reduce consumer choice.
• What is vertical integration in business growth?

  Merging with suppliers
• Vertical integration lowers transaction costs within the supply chain.
• Steps in vertical integration (from supplier to customer):

  1️⃣ Acquire suppliers

  2️⃣ Manage manufacturing

  3️⃣ Control distribution
• Organic growth involves internal expansion using a company's existing resources
• What is a drawback of organic growth?

  Slow pace
• Organic growth allows businesses to maintain control over their development.
• Inorganic growth involves expansion through mergers, acquisitions, and takeovers
• What is a benefit of mergers in inorganic growth?

  Market share increase
• Horizontal integration aims to increase market share and achieve economies of scale
• What is a drawback of horizontal integration?

  High initial cost
• Economies of scale are a benefit of horizontal integration.
• Vertical integration ensures reduced dependence and improved efficiency
• What is a drawback of vertical integration?

  High initial investment
• A drawback of conglomerate integration is a lack of synergy
• What does the Ansoff matrix help businesses identify?

  Growth opportunities
• Match the growth strategy with its market and product combination:

  Market Penetration ↔️ Existing market, existing product

  Market Development ↔️ New market, existing product

  Product Development ↔️ Existing market, new product

  Diversification ↔️ New market, new product
• Franchising is a growth strategy where a company allows another party to operate under its brand
• What is a benefit of franchising for the franchisor?

  Lower capital outlay
• Dependence on franchisee performance is a drawback of franchising.
• What is the definition of franchising as a business growth strategy?

  Allows operation under brand
• One drawback of franchising is the loss of control over franchisee operations
• What is a potential risk associated with franchising regarding brand reputation?

  Franchisee damaging reputation
• Franchising differs from mergers and acquisitions as it grants permission to operate under the franchisor's brand
• What is the definition of organic growth as a business strategy?

  Internal expansion using resources
• A merger involves two companies combining to increase market share
• Organic growth is sustainable but may be limited in scaling.
• What is a potential drawback of acquisitions as a growth strategy?

  High cost, potential debt
• Match the growth strategy with its drawback:

  Organic Growth ↔️ Slow pace, limited scaling

  Mergers ↔️ Cultural clashes, complex integration

  Acquisitions ↔️ High cost, potential debt

  Takeovers ↔️ Hostile takeover challenges, expensive
• Organic growth involves internal expansion using existing resources
• Mergers can lead to cultural clashes during integration.
• Acquisitions provide quick expansion but may result in high debt
• What is a takeover in business growth strategies?

  Acquiring majority ownership
• Organic growth allows businesses to maintain control