Escolar Documentos
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of Globalization
Growth and Evolution
Economies and diseconomies of scale
examples are:
o Communication breakdowns can arise
o Decision making slows down as more people become
involved , causing inefficiency and lost market opportunities
o Motivation of workers falls and productivity drops causing
costs to rise
So the question many business owners ask
themsevels is..
Should I expand my business or stay small scale?
Some arguments for staying small are:
Some business prefer more friendly work environments
where everyone knows the boss and respects each other
More manageable levels of debt if the business if kept small
Lack of skills to manage larger organizations such as good
communication to talk to investors or in public
On the contrary, some arguments for expanding are:
The business become less dependant on one
product or one market. (Export)
Career opportunities for the workforce grow and
new managers appear who can help
If business conditions become tougher, there is less
worry in large businesses about firing people
Owners can increase their wealth in the future
If it doesnt expand it may be squeezed out of the
market completely.
t h )
g r o w
a n i c t h
( o rg ro w
r n a l a l g
Inte t e r n
d ex
an
Internal growth strategies may include:
Increasing sales by recruiting more agents,
advertising more, cutting prices.
Developing better production techniques
so that the business can produce at lower
costs, cut down prices (not profits) and
win more market share
However.
There is a limit to how much a company can
internally grow without considering external
solutions such as
Joint ventures
Strategic alliences
Mergers and acquisitions
Growth through external solutions
Joint ventures:
- New firm formed to achieve specific objactives of apartnership
loke temporary arrengement between two or more firms.
A business can work with a partner to pool resources and develop
opportunities.One business may be good at producing one product
and the other in producing a complementary one, if the sell both
they will win most of the market from competitors who cant offer
both. Some example of joint ventures are:
Microsoft and GE Joint Venture, Caradigm
Customs Unions:
Besides the free trade, a customs unions has a common
external barrier for imports. For example imposing quotes on
the number of units of a product allowed in.
Example:
MERCOSUR (Argentina, Brazil, Paraguay, Uruguay and
Venezuela)
Common markets:
Besides having the features of a customs union, a common
market not only allows the free movement of goods and
services but also of labour and capital between its members.
Countries may also introduce agreements on products.
Example
European Union
http://infomory.com/famous/famous-joint-ven
ture-companies
/
http://
www.businessdictionary.com/definition/strategi
c-alliance.html
http://
www.investopedia.com/terms/a/acquisition.as
p
http://www.rasmussen.edu/degrees/business/b
log/best-and-worst-corporate-mergers
/
https://
www.mindtools.com/pages/article/newTMC_9
0.htm
http://www.businessdictionary.com/definition/