External Growth

• How is a takeover defined?

  One entity takes ownership of another
• What is a common outcome of mergers or takeovers?

  A bigger business is formed
• How does conglomerate integration reduce risk?

  By having businesses in different industries
• How is a merger typically viewed?

  As a friendly way of external growth
• How does increasing market share benefit a business?

  It reduces rivals and increases control over prices
• What is forwards vertical integration?

  Securing a physical or e-commerce outlet
• What are the seven important reasons for mergers or takeovers?

  1. Economies of scale
  2. Increase market share
  3. Secure a point-of-sale
  4. Secure supplies
  5. Reduce risk
  6. Acquire knowledge or intellectual property
  7. Acquire talent
• How does external growth compare to internal growth in terms of cost?

  External growth is usually more expensive
• What are the two forms of external growth?

  Mergers and takeovers
• What is horizontal integration?

  Joining with a firm in the same supply chain
• What is external growth sometimes called?

  Integration
• How is a merger defined?

  Consolidation of two entities
• Why do tech companies often pursue acquisitions?

  To acquire talent and skilled developers
• How is a takeover typically viewed?

  As an unfriendly or hostile way
• How does external growth compare to internal growth in terms of speed?

  External growth is often faster