- Profit
- Risk Bearing
- Market Share
- New opportunities
- Managerial ambitions
- Economies of Scale
- Satisfiscing - After achieving minimum acceptable profit for shareholders the firm pursues another objective.
Growth can be either horizontal (same stage of production), vertical (different stage of production) or conglomerate (different sector). Both vertical and horizontal growth can be forwards or backwards.
Methods of growth:
- Takeover - a firm takes control of another can be hostile or friendly
- Merger - when two firms decide to share stakes in a company as they join together
- Internal growth - from the inside of the company, can be in the form of an entrepreneur
- External growth - from a merger of a takeover
- joint venture - when two companies agree to work together in order to create a product
Why do companies stay small?
- Barriers such as price, legal or marketing
- Lack of resources
- Lack of ambition
- Diseconomies of scale
Why do firms break up?
- Government intervention
- Diseconomies of scale
- Over extended
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