1a) Explain the methods a business might adopt to achieve GROWTH.

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Growth refers to the expansion of a business in size.
Business growth can be achieved in a number of ways and these forms of growth can lead to different
effects on stakeholder groups such as workers, customers, competitors and the community. Growth can
be classified into two; internal growth and external growth. Internal growth can be referred to as Organic
growth and external as Inorganic growth.
INTERNAL GROWTH (Organic): This is the expansion of a business through opening of new branches or
subsidiaries e.g. if TM Pick n Pay opens new outlets in Nyakatsapa and Murambinda, this will be internal
growth. This growth can be quite slow with perhaps only a few branches opening each year. However, it
can avoid problems of excessively fast growth which can lead to shortages of working capital.
EXTERNAL GROWTH (Inorganic): It is the expansion achieved by means of merging with or taking over
another business, from either the same or different industry. With a TAKEOVER, a business will buy more
than 50% of the shares of another company. There are two types of takeover and these are hostile and
mild takeover. Hostile takeover is when the new business takes over management and employs new
staff altogether. Mild takeover is when only a few or no changes are made and original owners often
remain in charge of the company. A MERGER is 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 combined business. Mergers exist in three forms; conglomerate,
horizontal and vertical integration. Conglomerate integration is integration with a business in a different
industry. Horizontal integration is when two firms in the same industry and at the same stage of
production combine. Vertical integration can be forward or backward. Forward vertical integration is
when an existing firm merges with a customer of the business e.g. Unilever and Spar. The business will
now be able to control the promotion and pricing of its products. Backward vertical integration involves
the merging of a firm and its supplier e.g. Ferrari combining with Ferodo which makes car brake parts.
Ferrari will now be able to control quality and delivery of brake parts from Ferodo.