Growth

• Vertical Integration 


  Backward

  • moving closer to supplier or sources of raw materials
  • more control of supply chain and reduced dependency on external suppliers e.g apple buying chip business
  • porters 5 forces - supplier power up

  Forward

  • Moving closer to the end consumer of its product
  • more control over outlets/ retailers and distribution networks e.g chips buying apple
  • porters 5 forces - buyer power down
• Horizontal integration


  Merging or acquiring with other companies that operate in the same market

  • increase market share so less rivals
  • achieve economies of scale
  • e.g apple acquires Samsung
  • increasing customer and infrastructure
  • P5F reduce rivalry and reduce threat of new entrant
• Organic Growth- Internal Growth

  +cheaper

  -slower

  E.g new products , increasing output, new markets and locations, more sales, more employees
• Problems Arising with Growth

  • new products- more r&d needed - more expensive - long time scale - dynamic nature - changing to customer needs and changing tech - with no guarantee of success - risky
  • new markets - depends on phase of product life cycle - decline - less effective bur if international market depends on SPICED and is there tariffs in place etc
  • Diseconomics of scale, internal communication problems and overtrading
• Mergers and Takeover- inorganic

  +faster

  -more money

  why do it?

  • get EOS- reduce AC , horizontal intergration
  • increased MS- less rivals, price control
  • secure point of sale e.g globally and secure supplies
  • reduce risk, diversifiction
  • acquire knowledge and talent