US giant FedEx has agreed a deal to acquire their loss-making rival TNT Express for 4.4bn. The Ansoff Matrix is a great tool to map out a companys options and to use as starting point to compare growth Reach the audience you really want to apply for your teaching vacancy by posting directly to our website and related social media audiences. Let's examine each quadrant of the Matrix in more detail. Organic Business Growth. Jim is a well-known Business writer and presenter as well as being one of the UK's leading educational technology entrepreneurs. History of Humanistic Psychology. TNT made revenues of $7.3bn in 2014 with around two-thirds generated in Europe; a fraction of the $47bn turnover of FedEx. A brief overview of the methods Boston House, The businesses are both well known to consumers but of a different scale. Much cheaper & more effective than TES or the Guardian. Organic growth focuses on producing more products, services, and space for business success. To help with this revision quiz we also recommend you take a look at these revision videos below: Jim co-founded tutor2u alongside his twin brother Geoff! ; Carl Rogers (1946) publishes Significant aspects of client A fall in labour Remote learning solution for Lockdown 2021: Ready-to-use tutor2u Online Courses Boston Spa, Vertical integration. A popular method of business growth for large companies involves purchasing other, smaller companies involved in the same area of the market. Boston House, Much cheaper & more effective than TES or the Guardian. Remote learning solution for Lockdown 2021: Ready-to-use tutor2u Online Courses This short topic revision video explains how a merger works and illustrates the concept with some recent examples. The following videos will explore each method of growth in further detail. The relative merits of organic (internal) versus external growth - is explored in this revision video.#alevelbusiness #aqabusiness #edexcelbusiness This video covers the basic differences between internal (organic) and external growth. Maslow (1943) developed a hierarchical theory of human motivation. Methods of business growth and their impact: internal (organic) growth: new products (innovation, research and development), new markets (through changing the marketing mix or taking advantage of technology and/or expanding overseas) external (inorganic) growth It happens when a business expands its own operations rather than relying on takeovers and mergers. Responsible capitalism: Greggs has been doing it for decades, Horizontal integration: Viagogo buys rival StubHub in $4bn deal, What the company of the future might look like. This A Level Business revision quiz tests knowledge and understanding of external methods of growth. He has over twenty years experience as Head of Economics at leading schools. How economic recovery may be K-shaped, Why Long-Haul Low-Cost Airlines Go Bankrupt, Covid-19: why travel will never be the same. Types of growth to include vertical (backward and forward), horizontal and conglomerate integration. Methods of growth Business growth has potential benefits and drawbacks. Acquiring Other Businesses. Organic business growth is the most basic but most effective means of growth for a business. Access internal economies of scale (perhaps by combining production capacity) Secure better distribution channels / control of supplies. All students completing their Edexcel A-Level Business qualification in summer2021. A merger is a method of external growth involving the creation of a new business into which two or more other businesses are integrated. What is the Ansoff Matrix? Measures of Economic Growth - GDP, GDP/Capita, GNI, Green GDP. The main advantages of vertical integration are: Geoff Riley FRSA has been teaching Economics for over thirty years. British Gas and VW unveil three-year electric vehicle deal, Sustainability: People still want plastic bottles, says Coca-Cola. Inorganic growth is business growth that arises from acquisitions or opening new stores rather than an increase in the company's current business. Here, you focus on expanding The type of production a business uses largely depends on the scale of the production with which it is involved. productivity is a major determinant of economic growth and of inflation. TUI & First Choice), Mondelez and Douwe Egberts (two coffee processing businesses), FedEx agreeing a larger with TNT Express (April 2015), It increases the size of the business and encourages internal, One larger merged firm may need fewer workers, managers and premises than two a process known as, Mergers often justified by the existence of, Film distributors owning cinemas and digital streaming platforms, Brewers operating pubs (forward vertical) or buying hop farms (backward vertical), Crude oil exploration all the way through to refined product sale, Drinks manufacturers buying bottling plants, Google - a software business - buying Motorola, a phone maker, Technology companies growing vertically through hardware, software and services, Control of the supply chain this helps to reduce costs and improve the quality of inputs into the production process, Improved access to key raw materials perhaps at the expense of rivals who must then pay more, Removing suppliers, and crucial information from competitors which helps to make a market less contestable. The supply chain is the process by which production and distribution gets products to the customer. a method of reducing competition; ability to gain market share; an excellent way of gaining new skills, experience and ultimately customers; However, external growth tends to be an expensive method of growth and can radically change the nature and culture of a business. Methods of growth to include mergers, takeovers, ventures, franchising. TNT delivers over a million consignments each day and it has invested heavily in expanding it's European road network which now connects over 40 countries through 19 road hubs and over 550 delivery depots. In sum, growing a company can be done in many different ways. The most used ways are internal growth or external growth through acquisitions and alliances. The History of Humanistic Psychology. Jim co-founded tutor2u Learn more , Businesses can grow organically (internally) or externally through a process of merger / acquisition. For FedEx the merger offers a chance to build a much larger European presence and compete more effectively with businesses such as UPS. Organic: Growth from within the business e.g. Types of growth to include vertical (backward and forward), horizontal and conglomerate integration. Some owners are reluctant to take the risk of growing the business and opt to stay small. Vertical integration occurs when firms at different stages of the production Vertical Integration involves acquiring a business in the same industry but at different stages of the supply chain. The Ansoff Matrix, also called the Product/Market Expansion Grid, is a tool used by firms to analyze and plan their strategies for growth Sustainable Growth Rate The sustainable growth rate is the rate of growth that a company can expect to see in the long term. A business can grow in size through: Internal (organic) growth - the business grows by hiring more staff and equipment to increase its output. Mergers and Takeovers Takeover: Where one business acquires a controlling interest in another business = a change of ownership Merger: a combination of two previously separate businesses into a new business Diversification: expanding into new markets with new products the riskiest growth Market penetration, in the lower left quadrant, is. The Corporate Ansoff Matrix. Lights dimmed in cinemas - a temporary or structural challenge? Central to this debate is the ability of governments to put in place policies that deliver stronger economic growth This A Level Business revision quiz tests knowledge and understanding of external methods of growth. Most notably, endogenous growth economists believe that improvements in productivity can be tied directly to faster innovation and greater investments in human capital. Business economics: Can Uber ever be profitable? There are many potential advantages: Faster speed of access to new product or market areas. Methods of expansion. LS23 6AD, Tel: +44 0844 800 0085 There are three methods of external growth The four merger and takeover methods. Does FlyBe have a future as a viable business? Remote learning solution for Lockdown 2021: Ready-to-use tutor2u Online Courses Learn more West Yorkshire, An example would be between two car manufacturers or drinks suppliers. FedEx and TNT Express expect the deal to be completed by mid 2016 providing it gets clearance from the EU competition authorities. This allows This gives Business A access to growth through ownership of a new business in either the same or a different area of the market. Often referred to as G, the sustainable growth Reach the audience you really want to apply for your teaching vacancy by posting directly to our website and related social media audiences. Slow growth, high unemployment and widening inequalities have placed Inclusive Growth at the heart of the policy debate in many parts of the world. Businesses who are focusing on organic growth They focus upon the effects of providing better training methods It highlights some examples of how businesses have pursued a growth strategy in emerging markets and also how developed economies have seen investment coming in the opposite direction. All students completing their A-Level Economics qualification in2021. Increased market share / increased market power. Boston Spa, Category He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas. the safest of the four options.. GCSE Business Studies revision covering Methods of Production. Growth and Retrenchment FedEx and TNT Express - Horizontal Integration. 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Tutor2u - Production, Productivity and Costs 1. LS23 6AD, Tel: +44 0844 800 0085 Economic Development Meaning and Measurement - 2021 Revision Update, Contestable Markets - 2021 Revision Update, Sustainable Growth - 2021 Revision Update, Edexcel A-Level Economics Study Companion for Theme 1, AQA A-Level Economics Study Companion - Microeconomics, Advertise your teaching jobs with tutor2u, Increasing existing production capacity through investment in new capital & technology, Finding new markets for example by exporting into emerging countries, Growing a customer base through marketing, Faster speed of access to new product or market areas, Increased market share / increased market power, Access internal economies of scale (perhaps by combining production capacity), Secure better distribution channels / control of supplies, Acquire intangible assets (brands, patents, trademarks), Overcome barriers to entry to target new markets, Defend a business against a takeover threat, To take advantage of deregulation in an industry / market, UK High Street chemist Alliance Boots bought up by US pharmacy giant Walgreens, Two tour operators (e.g. Fax: +44 01937 842110, Were proud to sponsor TABS Cricket Club, Harrogate Town AFC and the Wetherby Junior Cricket League as part of our commitment to invest in the local community, Company Reg no: 04489574 | VAT reg no 816865400, Copyright 2018 |Privacy & cookies|Terms of use, Usefulness of Data to Assess a Potential Takeover | AQA Q1.5, Paper 2 2018, Overcoming the Problems of Rapid Growth | AQA Q6, Paper 3 2018, Business Models & Theories "In Your Pocket" Activity, Types of Business Growth (Quizlet Activity), External Growth: Takeovers and Mergers "Concentration" Activity, AQA A Level Models & Theories - MCQ Practice, Business Growth Strategy - Horizontal and Vertical Integration, External Growth as Hasbro Expands its Toy Brand Portfolio to add Peppa Pig, Netflix and Learn Hasan Minhajs Analysis of Amazon, Ashley adds Sofa.com to his business portfolio, Sainsbury's and Asda merger comes under scrutiny, Sainsbury's suppliers and Porter's Five Forces, Homebase - A Botched Takeover Highlights the Risks of External Growth Strategies, Just Eat and Hungry House - Takeover Cleared, Introducing 'Context Shorts' for AQA and Edexcel A Level Business, Apple's New Joint Venture in China Helps Overcome Tighter Legislation, 10 Things We Learned About the UK Gym Market Straight from the CEO, 3.4 Decision making to improve operational performance - Impossible 5 Revision Activity, 3.3 Decision making to improve marketing performance - Impossible 5 Revision Activity, Business Finance (BTEC National Business Unit 3): Connection Wall Activity, Personal Finance (BTEC National Business Unit 3): Connection Wall Activity, 3.2 Managers, Leadership and Decision Making: Connection Wall Activity, 1.1 Enterprise & Entrepreneurship - 3-2-1 Challenge (Knowledge Retrieval Activity), BTEC National Business Unit 3 Personal Finance - Impossible5 Revision Activity, 3.1 What is Business - Impossible5 Revision Activity, 1.1 Meeting Customer Needs - 3-2-1 Challenge (Knowledge Retrieval Activity), 1.1 Meeting Customer Needs - 60 Second Challenge (Knowledge Retrieval Activity), AQA A Level Business Theories & Models Revision Cards, Advertise your teaching jobs with tutor2u. Methods of growth to include mergers, takeovers, ventures, franchising. Production, Productivity and Supply Costs 2. Discover what drives economic growth and a few of the methods used by leaders and economists to increase economic activity in an economy. Job Production, Batch West Yorkshire, 214 High Street, Learn more . new products; expansion into new markets External: Growth from takeovers & mergers Mergers and Takeovers Takeover: Where one business acquires a controlling interest in another business = a change of ownership Merger: a combination of two previously separate businesses into a new business Diversification: expanding into new markets with new products the riskiest growth strategy Organic and External Growth 214 High Street, 3.9.2 Assessing innovation . Organic growth is also known as internal growth.