How Do Businesses Grow? Standard Grade Business Management

Internal Growth Occurs when a business grows through Increase in sales Increase in numbers employed Opening new branches Introducing new product lines Increasing production Increasing profit

Integration Integration involves the creation of one business out of two or more previously separate businesses. Mergers, amalgamations and takeovers are examples of integration

Horizontal Integration Each business produces the same or similar product, and is at the same stage of production

Forward Vertical Integration These businesses are in the same industry, but at different stages of production. The organisation at the the beginning of the chain (forestry company), takes over the furniture factory, which in turn takes over the furniture store. This is called forward integration because the takeover starts from the beginning of the chain. It is called vertical integration because different stages of production are being taken over.

Backward Vertical Integration The last business in the chain (Furniture Store) takes over the stage before (Furniture Factory) which in turn takes over the first stage of production (Forest Company)

Diversification Some businesses diversify into completely different products. These businesses are known as conglomerates. The companies produce very different products and services i.e. Unilever Businesses can diversify by merging with or taking over other businesses. They can also diversify by going into production of other products and services by themselves (internal diversification)

Invention and Innovation Invention means developing new ideas and making discoveries. It can also mean being prepared to implement them. Innovation is taking existing ideas and improving them eg Dyson with the vacuum cleaner To grow, most businesses must keep ahead/up to date with competitors. This means being aware of new inventions, discoveries and procedures

Research and Development Makes it possible for a business to improve its products, make an ‘image’ on the public and create new products. It may also help in finding better ways of producing present products.

Product Led and Market Led Some businesses can be Product Led which means they design and make a product and they try and convince customers to buy it. e.g. drugs company like Glaxo. Others are Market Led which is when the business finds out what consumers want before making the final product. They do this by using market research. e.g. Cadbury Fuse

Task Go to Pupil library Go to student resources Go to S3/4 Go to BIT Got to Standard Grade Business Management Powerpoint revision folder Find the Marketing Mix Task – save this into your folder and work through the task