External (inorganic) growth - Advs/Dis's

• External (inorganic) growth


  Business growth that is achieved through acquiring or merging with another business
• Advantages of external growth

  • Competition can be reduced
  • Market share can be increased very quickly overnight
• Disadvantages of external growth

  • It can be expensive to takeover/merge with another business
  • Managers may lack the experience to deal with the other businesses
• Public limited company (PLC)


  A company where shares are sold to the public on the stock market
• Advantages of being a PLC

  • The business has the ability to raise additional finance through share capital
  • Shareholders have limited liability
  • Increased negotiation opportunities with suppliers due to economies of scale
• Disadvantages of being a PLC

  • It is expensive to set up, requiring a minimum of £50,000
  • There are more complex accounting and reporting requirements
  • There is a greater risk of a hostile takeover by a rival company