growth

Signs of Success

• Increasing Profit

New Competitors attracted to the industry (to share in that success)

• Expansion (Premises, product range, market, work force)

Positive Customer Reviews

Word of mouth recognition

• Increased Publicity

Losses/ Failing Profit

Poor cash flow (lack of working capital lIquidity 155es

Loss of customers (poor quality, lack of variety, poor customer service, low stock)

• Unfavourable customer reviews

• High numbers of employees leaving the Business (High labour turnover)

Methods of Internal/Organic Growth

• Reinvest Profits/ Ploughing back Profits

• Expand Product Range

Increase sales activity e.g., seek new international markets

External Growth

1.Takeover

2. Merger/Amalgamation

3. Franchising

Takeover- when one business buys over the control of another Business-can be friendly or hostile.

Merger/ amalgamation- marriage between two businesses. All assets are joined together

Savings - due to less duplication of assets or running costs

Fewer admin staff and senior management will be required

Business Operating on a larger scale so benefits from Economies of Scale Increased market share and sales

• Increased market share and sales

• Eliminates competition / synergy (2+2=5)

Disadvantages

• Staff redundancies- impact on staff morale

• Consumers may have less choice

Reduced competition (impact on efficiency for a Business.)