TOPIC: Topic 1: Business Organization and Environment LESSON TITLE: Business Growth COMPETENCY FOCUS: Entrepreneurship (S4): To develop your entrepreneurial skills in preparing a realistic proposal for a new business start-up. You will understand the process a business will have to go through when starting up, including the underlying principles of starting a business.   [IB Learner Profile Development: Inquirer] Learning Objectives By the end of the lesson, you should be able to… LO1) To define the term ‘growth’ LO2) To explain using examples, the difference between internal and external growth LO3) To evaluate joint ventures, strategic alliances, mergers and takeovers as methods of achieving a firm’s growth objectives. SMSC: You will assess the organisational culture of businesses in terms of fundamental structure, purpose and strategy development. CRITICAL THINKING KEY: Knowledge Application Analysis Evaluation

Let’s Re-cap! How can businesses grow?

Business Growth Internal Growth External Growth Mergers Takeover

Business Growth Internal Growth (Organic Growth) can be done by: Opening new branches Opening new shops Opening new factories Building a bigger factory/production plant

Business Growth External Growth can be done by: Merging with another business (competitor perhaps?). Both businesses are now controlled by one Board of Directors. Takeover/acquisition of another business. A company buys over 50% of the shares and therefore becomes the controlling owner.

Other types of growth… Joint Venture Strategic Alliance Merger Takeover Franchising

Joint Ventures This is when 2 or more businesses agree to work closely together on a particular project and create a separate division to do so. Advantages: Costs and risks are shared Shared skills, strengths and knowledge More powerful to enter new markets (i.e. international markets) Disadvantages: Styles of management and culture do not blend well If one partner fails, the JV is at risk

Strategic Alliances An agreement between firms in which each agrees to commit resources to achieve an agreed set of objectives. [Therefore working in partnership with someone or another organisation for mutual benefit] Examples of alliances: With universities With suppliers With competitors

Franchising A business that uses the name, logo and trading systems of an existing successful business i.e. Subway, McDonalds. Involves a ‘Franchisee’ and a ‘Franchisor’.

Jessop’s Case Study What do we already know about Jessops? Complete your entry card!

Jessop’s Case Study Read the following case study: http://www.retail-week.com/sectors/electricals/jessops-bought-out-of-administration-by-dragons-den-star-peter-jones/5045577.article Code the text using the key! ? You don’t quite get that!  You understand this! I need to ask about this! This surprises you!

Jessop’s Case Study Research Task: Each student is given a method of external growth: -Joint Venture -Merger/Acquisition -Takeover -Strategic Alliances [Collate your research using Google Docs & feedback to the rest of the group]

At the end of the lesson… Don’t forget to complete your exit card before you leave!