For growth, businesses should know when and how to introduce change, usually by acquiring business operating over and beyond the borders. That is, at that point where they reach maturity, meaning that they have tackled all the possibilities of growth and there exists no more opportunities where they are currently based.
The two major ways in which a company can grow are:-
• Organic growth
• Inorganic growth
Organic growth comprises of increasing new sales and new customers for the existing business to improve in terms of profit. The company grows within itself and improves its existing affairs, as opposed to inorganic growth which involves expanding the business from outside into other regions or countries. In organic growth, a company
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Its position in the market made integration easy in terms of established networks and customer relationships. By taking over Brendsen Davis Service Group was able to exercise its authority fully by reducing the overall cost of running the business, for example, closing down shops in areas where Brendsen had more than two outlets in the same region, strengthening the management of the two companies, taking care of the fixed costs (the costs that remain unchanged over time), for example, repaying the debts hence cutting out on the interest rates, permanent salary of the closed firms, bills on electricity rent etcetera.
Aspects of the European Union markets that have particularly encouraged horizontal growth of the Davis Service Group includes the fact that the EU has 27 countries under its name, that means, a ready market of over 500million customers who are ready to consume the goods and services proposed to them. That coupled with free flow of goods and services, a fact that has been supported by the infrastructure, the development of the fast trains, low cost airlines etc, as this means that people, goods and services can travel across Europe more easily and faster. The development of internet has also ensured the fast and effective means of communication, top that up with the skilled labour force. In Europe, education standards are very high, the manner in which students are
During these times of change business may have to change its orgainsation, operation and its nature to deal with the challenges of each stage in the business life cycle. For business to be successful they must constantly develop and change strategies to deal with the growth of the business or the life of the business may be cut short.
Integration could also benefit business competitiveness in that it is an extremely fast way for a business to grow. In many industries the ‘first mover advantage’ is crucial to any business that wants to capitalise on other areas of the industry that have not yet been exploited. If one firm manages to utilise the first mover advantage other firms may be left behind and so may struggle to compete in a certain area. However if a firm was to buy out competition then they would have less of a problem trying to establish themselves in the area. Asda recently took over Netto for a figure of £778mil. The move saw Asda instantly take over the 193 Netto stores across the UK many of which are small high street shops compared to the typical supermarket stores that Asda currently operates. The move will allow Asda to compete with other high street stores such as Tesco express and Sainsbury’s division of small high street stores. Without the takeover Asda would have found it incredibly difficult to establish themselves in this area of the industry. However Asda now have bought into an number of stores that will be situated across the UK and will be able to compete with the likes of Tesco and Sainsbury’s. The takeover has also gained Asda a further 0.7% share in the market
Firms must consider many strategies when attempting to realize growth. Depending upon the stage of
Let us consider China for our example. China is the largest market in Asia and as such, it is an object of great interest for expanding companies. Many companies have already taken advantage of the opportunities afforded by dealing with China and many more will surely
* For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.
There are factors that can perhaps affect organic growth. If a business is aiming for rapid expansion it may not find organic growth worthwhile. Rapid expansion could mean that a company is looking to get into the market with a view of making big profits. This would require an injection of outside finance to support rapid growth. On the contrary to organic growth is inorganic growth. Inorganic growth is much more
Giving the opportunity to work internationally can be an exciting, adventurous, and a wonderful experience. Experiencing another culture while progressing in your career is a major move. There are many incentives that can come with this move. Favorable tax laws are one of the biggest draws for expats who are seeking sanctuary abroad, and from this measure it is hard to beat Belize. The English-speaking Central American country has no personal or corporate local income taxes and has no foreign currency controls. Working in Belize has its many perks, the language just so happen to be one of them. Being an expat working internationally, learning another language can be very stressful. In this country, that wouldn’t be a factor. China on the other hand would be a little more challenging, but also a great experience.
When a company grows it achieves economies of scale, it increases its market shares and thus wipes out competition. A company starts making more profits and can use these in constructive ways such as employing specialist workers and improving the variety and quality of products, by delving more into research and development. These are only some of the
Some of the opportunities from global perspectives would be vertical growth, such as constant improvement, close financial monitoring, reducing costs, differentiating, or horizontal growth as territorial expansion, occupying new potential niches.
There are always business risk when it comes to expanding a company, especially from an international standpoint. There are many strategic risk that needs to be evaluated in order to expand the company successfully. Examining the possible risk of foreign currency exposure, basic functions of international banking/financial market, support of long term financing of operations, and assessment of opportunities that can be implemented within the company. There are risk on three dimensions of international finance, economic trends of the country, impact of globalization and monetary system. All of these situations will be discussed in this paper.
With an organic growth, as the words itself could state, the company grows in a
Therefore, the aspect of the EU markets that have encouraged the horizontal growth of the Davis Service Group is the aspects that allow UK businesses to expand into other EU countries’ markets and join other companies in the same level of production. This process was made possible because of the EU treaty on a joint economic policy which in effect allow the UK Companies to transact business in the EU market and also have access to the skilled labor force if the company chooses to locate its factories and office in the
When the Davis Service Group took over Berendsen, Berendsen was not performing financially as well as it could. Profitability was below that achieved by Sunlight. The Davis Service Group already had proven management systems in providing textile services.
With the effect of the Single European Act on 1st July 1987, the emergence of European Union (EU) as a common market has essentially been created. The benefits of this act are substantial to European firms, economies, and workers. It eliminates conflicting national regulations and trade barriers, as well as offering firms opportunity to sell their goods to all other EU members (Griffin & Pustay 2005).
Organic growth is where a company grows by increasing its turnover/sales revenues. (It can also be defined as growth of a company by building on its existing knowledge or resources). With an increased revenue the company can easily make profits, it then ploughs back the profits into the business enabling it to grow. To increase turnover/sales revenue the company can do so through increasing its customers (find new customers to add to existing ones) or developing new products. For instance, Sunlight and Berendsen growth is attributed more to organic growth whereby they have been able to increase their customers in existing locations and new EU operational areas.