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Discuss why do firms want to grow and means of growth
The first 200 words of this essay...
"Discuss why do firms want to grow and means of growth"
The existence of internal economies of scale provides a major force encouraging firms to enlarge. There are different ways in which firms can grow, generally they can be described as internal and external growth.
Internal growth occurs when firms use their own profits to finance an expansion of capacity. External growth occurs when firms integrate in the form of mutual agreement in the form of a merger or in the form of a takeover, where one firm acquires control of a minimum fifty-one percent of another firms equity.
There are two types of integration, vertical and horizontal, vertical integration in further split into two types, backward and forward integration.
Backward integration occurs when one firm integrates with another firm, which supplies input. Therefore firm (A) integrates with firm (B) which provides which provides firm (A's) raw material. Forward integration occurs when firm (A) integrates with firm (B), were firm (B) is the retail outlet of firm (A) products.
Horizontal integration occurs when firm (A) integrates with firm (B), were both
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