Methods of Expansion


Expansion - Making the company bigger or more extensive in order to serve more customers

Merger - When two companies join together to become one big company. This can be done by making an agreement with the company and buying into it to have access to part of the company

Takeover - When one business takes over another to expand the original business, eliminate competition or to simply own another company e.g. Kraft took over cadburys

Organic Growth - When a company grows naturally without interference, this will take a lot of time and with luck you will have more customers, meaning more profit and the opportunity to expand

Franchising - Owning a business with managers responsibilities and a business that is already popular, meaning better profit and a high level of customers. However, there will be a bigger boss that is in charge of all the businesses to become one big franchise. e.g. Subway is a franchise

Pros and Cons

Merger/Takeover PROS- Better service, more customers, sharing ideas, larger profit (combining incomes) more money to spend on marketing

Merger/Takeover CONS - Many changes, could loose lots of employees, business image changes e.g. Cadbury's takeover by Kraft

Franchising PROS - Company increases in popularity, more profit, most customers served

Franchising CONS - Expensive and time consuming to get a licence, some contracts can last for a long time - such as MacDonald's that lasts for 20 years

Organic Growth PROS - Increased popularity, no loss of jobs, no risk of new companies taking over, more profit, more customers

There are no cons to organic growth, as it is entirely natural