Critically Evaluate the Main Potential Advantages and Disadvantages of Horizontal Expansion for a Company.

Their main focus for revenue growth will be expanding revenue opportunities and this also includes making the customer value stronger and better. The company’s financial goal is to expand in locations within three years and still being profitable consistently. With growth the company will have more employees hired on and this means training for the new employees. The factors of their competition must be considered as well when they expand in location. The company must know where they stand in the market compared to their competitors and with innovative and new technologies the company will be successful and profitable.

According to the researchers the increased value results from an opportunity to utilize a specialized resources which arises solely as a result of the merger (Jensens & Ruback, 1983; Bradle, Desai and Kim , 1983). For creating operational and financial synergies managers believe that two enterprises will be worth more if merged than if operates as two separate entities. Thus, the two companies, A and B:

Firms must consider many strategies when attempting to realize growth. Depending upon the stage of

Novartis, a large multinational pharmaceutical company, recently diversified by buying Alcon, in a £24.8bn deal. Alcon is a producer of eye care products such as contact lenses. Google has diversified by investing £124m in a wind power business. To what extent is diversification the best strategy to achieve profitable growth? Justify your answer with reference to Novartis, Google and/ or other organisations that you know. (40 marks)

Becoming a larger more efficient company with a strengthening competitive position opens up the opportunity for more mergers and acquisitions of competitors, suppliers and/or customers.

The long-term strategies of a firm can be negatively affected if it is pursuing a diversification strategy. Rather than improving upon the factors that led to its competitive advantage, management focuses on running a diversified company, which could result in the company losing its core business advantage and severely hampering the future success of the firm. Opportunities in Going Public

A new entrant would find itself negotiating with suppliers who possess a lot of pricing power to compensate for the risk of reallocating production used by existing customers or investing in additional capacity. These increased costs would adversely affect profit margins, which would weaken the entrant’s ROI. Of course, a new entrant could vertically integrate all the components but this would require a substantial capital investment that would have an appreciable risk of failure if sufficient market share couldn’t be taken.

Being able to acquire a new market may bring those new customers to their current market.

In today’s highly competitive market, the continuous changes that are occurring in the social, politic and economic environment create serious challenges in the corporate world. Corporations cannot afford to do business as usual if they want to remain in the game and be successful. In order to achieve their goals and objectives, they need to evolve, adapt, learn and apply different new strategies that will help them secure long-run success and performance. Among those strategies, we are going to discuss ten of them and their advantages in connection with corporation’s goals and objectives.

Each of the approaches for expansion – IPO, Acquisition, or Merger – also has weaknesses. An IPO can be expensive and may require 15-25% of the money raised to cover the costs of raising capital in this way. An IPO also requires a tremendous amount of reporting to meet the requirements of the SEC, both for the initial offering and for the future publicly traded company, which not only requires the time and effort of staff members but may also give valuable information to the company’s competitors. All this reporting then creates legal liability for errors and omissions in the prospectus, which adds a further layer of complication. In the end, the former owners lose some control over the business and must share future wealth with the new shareholders. Mergers

o It costs less money to run a wider span of control because a business does not need to employ as many managers

A company with a business diversification consistently grew its profit by developing a diversified expansion plan beyond its core boundary compares to a new initiative. Repeatability allows a company to learn the mistakes made and support the systematic growth of the business a complex process. (Zook and Allen, 2003)

Analyzing the trends and consumer behavior indicates that horizontal expansion will be necessary to capture the full and growing target market. Horizontal expansion can be

Ford decided to expand internationally to increase sales, spread production sites, and to increase their research and development. The company believed that economies of scale and supplier flexibility would improve cost efficiency and supplier efficiency. Ford felt that these factors

2.  Beneficial economies of scale.  If you will be larger, will you truly be better?  Some larger companies cannot respond as quickly to market changes due to their size and the challenge coordinating new directions to employees.  Economies of scale are not always beneficial, so make sure you can quantify that having more of one direction is what you want.