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Benefits of External Growth . Faster way to grow and evolve E .g . if a chain of supermarkets merges with another chain, then this is much quicker than having to buy or rent new land to open more outlets. . quick way to reduce competition in a market
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Faster way to grow and evolve E.g. if a chain of supermarkets merges with another chain, then this is much quicker than having to buy or rent new land to open more outlets.
quick way to reduce competition in a market • E.g. taking over a rival, a firm is able to eliminate a competitor • allow the new larger firm to have greater market power
can bring out greater market share with its associated benefits • can generate new skills, experiences, and customers Working with other businesses and sharing of good practices and ideas.
Can help a firm to evolve • Spreading risks across several distinct markets • firms can benefit from risk-bearing economies of scale
Definition • A strategic alliance is similar to a joint venture in that two or more business seek to form a mutually beneficial affiliation by cooperating in a business venture.
Advantages • Share the cost of product development, operations and marketing. 2. Gain synergy from the different strengths of the members and the pooling of their resources • E.g. the partners can benefit from each other’s expertise and financial support.
3. Gain more creditability and brand awareness 4. By working on a larger scale, the members of alliance can all gain from economies of scale such as purchasing and marketing economies.