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  • TASK 3 - What is a timeline? - Choose ONE of these companies and see how many factors leading to growth you can find - poduce a timeline of growth for the company.
  • IKEA
  • LLoyds bank
  • Coca Cola

Joint venture - two or more businesses agree to work closely together on a particular project and create a separate business division to do so.

The reasons for joint ventures are:

  • costs and risks of a new business venture are shared - useful for costs of developing new products
  • different companies might have different strengths and experiences and they, therefor fit well together.
  • they might have their major markets in different countries

Risks of joint ventures:

  • styles of management and culture might be so different that the two teams do not blend well together
  • errors and mistakes might lead to one blaming the other
  • the business failure of one of the partners would put the whole project at risk

Strategic alliance - agreements between firms in which each agrees to commit resources to achieve an agreed set of objectives. There is no transfer of ownership.

These alliances can be made with a wide variety of stakeholders, for example:

  • with a university - finance provided by the business to allow a new specialist training course the will increase supply of staff to the firm
  • with a supplier - to join forces in order to design and produce components and materials that will be used in a new range of products
  • with a competitor - to reduce risks of entering markets that neither firm currently operates in

1.6 Growth and evolution

Lesson Title - Growth and Evolution of Business.

Lesson Objectives

  • Recap the merits of small versus large organizations
  • internal (organic) and external growth
  • external growth methods - mergers and acquisitions (M&As) and takeovers, joint ventures, strategic alliances

Homework

Carry on revising for

test tomorrow!!

Strategic Alliance

WHAT does this remind you of that you have studied in aother lesson and WHY?

Key CUEGIS Concepts - Ethics & Strategy

Some people have the erroneous idea that a small business cannot effectively compete against larger competitors. This concept is quite far from the truth. For example, if someone were to ask you, "What is the major source of job formations in American today?" what would you answer? If you said small business you would be right. How about this question: "What is the major source of newly formed individual wealth in a given country today?" Again, the small business is the answer. Why, then is there such misinformation about the strength, versatility and wealth of small business? The answer is that usually large corporations get the lion's share of publicity.

Source: e-commerce times

In light of this article, discuss the view that in the corporate world bigger is always better.

Joint Venture

Achieving Growth

Starter activity

Growth and innovation

Complete the Les Maisonettes past paper

question - you have 10 minutes and may

work together in pairs for it.

What is the connection between INNOVATION and growth - think about

  • HOW BUSINESSES GROW.
  • IDEAS
  • PEOPLE
  • RESOURCES

Mergers and Acquisitions (Takeovers)

-bringing together two or more firms.

Question - What is the difference between

a merger and an acquisition?

Theory of Knowledge

Facebook buys Instagram photo-sharing network for $1 billion

Instagram - the popular photo-sharing smartphone app is to be bought by Facebook who will pay $1 billion USD in cash and stock for the takeover.

October 2010 saw the launch of Instagram as a free iPhone app that allowed users to apply various filters to their photographs before they were uploaded. A version for the Android market followed later. The free app has been a great success and Instagram state that they have more than 30 million users, with 5 million pictures uploaded every day.

The chief executive of Facebook, Mark Zuckerberg, has promised that Instagram will continue to develop as a separate brand, meaning it will continue to allow users to post to rival social networking sites.

Mergers and Acquisitions

Updates: In September 2012 the purchase was completed but a fall in Facebook's share value after its IPO ($38 - $19) put the purchase value at ~ $700.

In Oct 2015 Facebook shares are worth ~97 USD and Instagram is valued at ~35 billion in Fortune magazine as of December 2014.

When one organization takes over another organization it is often said it is about the takeover organizations desire to have control and power over a market. Discuss in your class the human instinct to have power and control in business situations.

Growth can be achieved in a number of ways. The different forms of growth can be grouped into internal and external growth.

Internal growth - expansion of a business by means of opening new branches, shops or factories (also known as organic growth.

Over to YOU

External growth - business expansion achieved by means of merging with or taking over another business from either the same or a different industry.

Types of Integration

Merger - an agreement by shareholders and managers of two businesses to bring both firms together under a common board of directors with shareholders in both businesses owning shares in the newly merged business.

Takeover - when another company buys over 50% of the shares of another company and becomes a controlling owner - often referred to as acquisition.

Source: http://legacy.businesscasestudies.co.uk/company_images/111/278/12150068512.jpg

TASK 2 - Look Up: recent mergers and acquisition's in the news. You have 10 minutes to find one and prepare a 5 minute presentation for the class - 2 wil be picked!

External growth is often referred to as integration

as it involves bringing together two or more firms.

Types of integration:

Think about a persons life - how could we produce a

timeline for them - which factors would we need?

Takeover example:

  • Kraft and Cadbury

Merger Examples:

  • Disney + Pixar
  • Exxon + Mobil

Horizontal

Vertical

Conglomerate

Acquiring a rival company operating in the same industry. This will allow for instant additional market share, economies of scale and (hopefully) the creation of synergy. Synergy refers to the idea that in larger mergers gains are made. 1 + 1 = 3.

The need to control the supply chain process either forward (towards the customer) or backwards (to monitor and secure raw material supplies.

Merger or takeover of a business in a different industry or market. This eliminates the need to spend on costly R&D on developing a new brand.

Conglomerate - a large company that is made up of a number of different

unrelated businesses. Conglomerate companies tend to be large

multinational corporations with operations in multiple regions of the world.

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