Inorganic growth

• Inorganic group

  External growth occurs when a business expands by joining with another business. It is also known as inorganic growth. Two common methods of external growth are: - A merger - A takeover
• A merger is when two or more businesses join together to form a new but larger firm.
• A takeover is when an existing firm expands by buying more than half of the shares in another business.
• Why might a business want to grow through external growth? Advantages: - Quick method of growth which means it is good for businesses that want to expand quickly, - They also lead to cost cutting so they can help a business reduce some of their costs. - They can benefit from new skills from the other business - Increased market share
• Why might a business not want to use external growth methods? Drawbacks - Less than half of all takeovers and mergers are successful. - Mergers and takeovers can create bad feeling, especially if the firm didn’t agree to being taken over.