Flashcards for:
Chapter 6, Part - 3

Conglomerate diversification is when a firm acquires or merges with a company in a completely different industry, such as Tata Group operating in consultancy, tea, chemicals, power, cars, and hotels.

A merger is a process where two companies combine to form a new entity. An example is Airtel merging with Robi in Bangladesh to become Robi Airtel.

A small family-owned coffee shop in London making profits and deciding to open branches in locations like Oxford Street, Leicester Square, Hyde Park Corner, and Stratford.

Backward vertical integration involves acquiring businesses at earlier stages of production, such as a garment factory taking over a textile factory. Advantages include ensuring quality, reliability, and timely supply of raw materials.

Horizontal growth is when a company grows within the same industry at the same production stage, such as one garment factory taking over another.

Advantages include spreading risk across different industries and transferring ideas and technology between sectors.

Synergy is the idea that the whole is greater than the sum of its parts. It is important as it can lead to better performance through combined resources and capabilities.

Benefits include reduced competition, economies of scale, and increased market share.

Strategic alliances and joint ventures are partnerships formed for a specific project or period without full mergers or takeovers. Examples include Apple's alliance with Intel and various movie production partnerships.

A takeover involves buying over 50% of another company's shares to gain control. An example is Facebook acquiring Instagram for $1 billion.

Strategic alliances or joint ventures offer flexibility, less risk, and the ability to collaborate on specific objectives without the complexities and full integration required in mergers.

Advantages include idea exchange, economies of scale, and cost savings. Challenges involve management difficulties, differing methodologies, and cultural clashes.

Internal growth involves using internal profits to expand the business, such as opening new branches. It is growth from within the business.

External growth involves mergers or takeovers with other businesses, while internal growth utilizes internal profits to expand from within.

Forward vertical integration involves expanding closer to the consumer, such as a garment factory taking over a retail outlet. Advantages include control over sales, direct consumer interaction, and independence from third-party retailers.