GROUP

Business Growth

Introduction!

Growing a business

requires research and

planning.

Definition

To Business growth

Any firm whose business generates significant positive cash flows or earnings, which increase at significantly faster rates than the overall

economy.

Ways of Business Growth

Management structure

Financing GrowthGrowth Finance is a company’s use of debt, equity and hybrid

financing techniques to achieve business expansion in a cost-

effective manner.

Cashflow

Low profit

Over investment

Seasonal demand

Internal sourceCurrent Assets

Retained Earnings

Fixed Assets

External source

Issuing equities

&bounds

Long term obligation

Short term debts

Overtrading

High taxation

Over-investment in fixed

assets

Internal growth can come from:

Innovation – new product development, new processes, new systems, etc. which can improve the efficiency of the firm

Competitive Advantage –the means by which a firm is able to make itself stand out from its rivals –innovation could be one source of competitive advantage

Others might include:

After sales service

Quality

Price

Takeovers

One firm buying/securing a controlling interest in another,

the taken over firm may lose its identity

Example

L'Oreal and the body shop

MergersThe amalgamation of two or more firms

Each firm may retain some degree.

Example.

Metro and Macro