3.1.2 Business growth

What is internal (organic) growth?

Firms growing from within by investing in more capital goods, borrowing money, or reinvesting profits back into the business.

What is external growth (integration)?

Growth achieved outside the firm when one business combines with another via a merger or a takeover.

What is a merger?

A friendly deal where two businesses join together for mutual benefit.

What is a takeover?

A forced, often hostile deal where one firm buys a controlling share of another business.

What is horizontal integration?

When firms in the same industry at the same stage of production combine to form a bigger business.

What is forward vertical integration (FVI)?

Buying into a later stage of production (closer to the consumer) within the same industry.

What is backward vertical integration (BVI)?

Buying into an earlier stage of production (closer to raw materials) within the same industry.

What is conglomerate integration?

When two firms in completely unrelated industries merge (e.g., a supermarket chain buying a funeral care business).