Summary: (2.1) Size Of A Business And Business Growth
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1 (2.1) Size of a Business and Business Growth
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What financial aspect often causes mergers/takeovers to fail?
- Huge financial costs are a primary issue.
- Reliance on loan finance can lead to burdensome debt.
- Debt can negatively impact a company after the deal.
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Why might integrating systems be challenging in mergers/takeovers?
- Companies may have different technology systems.
- Integration can be expensive or impossible.
- Example: Integration issues at eBay & Skype.
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What is a merger and how does it differ from a takeover?
- Merger: Combination of two separate businesses into a new one.
- Takeover: One business takes control of another.
- Mergers create a new entity; takeovers do not.
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How does share price impact decisions in funding takeovers?
- Companies might raise funds through equity issues.
- This can negatively affect the share price.
- Such impacts are critical to company performance.
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What are some examples of cost savings in cost and revenue synergies?
- Eliminate duplicated functions and services
- Better deals from suppliers
- Higher productivity and efficiency from shared assets
- Economies of scale
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What are examples of merged businesses and takeovers?
- Merged Businesses:
- Dixons Carphone
- EE
- Takeovers:
- Microsoft & LinkedIn = Microsoft
- Merged Businesses:
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What cultural factor can affect mergers or takeovers?
- Clashing corporate cultures can cause issues.
- Failures may arise from conflicts among key personalities.
- Stakeholder value is often undermined by such clashes.
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What is synergy and in what context is it associated?
- Synergy is linked with external growth.
- It occurs when the whole exceeds individual parts.
- Related to takeovers, mergers, joint ventures, and strategic alliances.
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What strategies can lead to higher sales in cost and revenue synergies?
- Cross-selling to customers of both businesses
- Access to new distribution
- Brand extensions
- New geographic markets opened up
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What are methods of external growth in business?
- Types include:
- Merger
- Takeover
- Joint Venture
- Strategic Alliance
- Types include:
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