Cause of Change!. Growth / Retrenchment!. Syllabus requirements Internal Causes of Change. Change in organisational size New owners/leaders Poor business performance. Changes in organisation size may come about due to mergers, takeovers, organic growth and retrenchment.
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Growth / Retrenchment!
What do businesses
gain from growth?
All Internal growth!
Buyer – ITV plc | price - £175million
Buyer – First Choice | price - £120million http://www.manchestereveningnews.co.uk/news/business/s/231/231640_first_choice_snaps_up_120m_lateroomscom.html
Buyer – WM Morrisons| price - £3bn
Buyer – Tata| price - £5.8bn
So who/what is Tata?
= Horizontal integration
= Backward vertical integration
Why do some firms
prefer external to internal
Quicker to achieve EoS
– managerial, financial & production
Achieves greater concentration ratio/ reduces competition
Rationalisation reduces costs
Watch these 2 video clips
In each case identify the objectives of the mergers, the advantages and any potential disadvantages
TUI merge with First Choice
Porsche and VW to merge
Identify the different reasons for and approaches to these takeovers
Why might the Government intervene to disallow a takeover?
Corus accepts takeover bid
High Court clears P&O’s takeover
Little Chef “takeover” talks
Label one side horizontal, the other vertical
(with arrow up = forward or down = backward)