IB Business Management Topic 1.5.5 External Growth Methods Revision Notes (SL/HL)

IB Business Management Topic 1.5.5 External Growth Methods Revision Notes (SL/HL) | RevisionDojo

Written by official IB examiners

Mergers and Acquisitions (M&As), Takeovers, Joint Ventures, Strategic Alliances, and Franchising

Imagine you own a successful local café.
You dream of expanding, but how do you choose the right path?
Should you merge with another café, acquire a competitor, or perhaps franchise your brand?

Note

This section explores five key methods of external growth: mergers and acquisitions (M&As), takeovers, joint ventures, strategic alliances, and franchising.

Mergers and Acquisitions (M&As)

Mergers: Two companies combine to form a new entity.
Acquisitions: One company purchases another, which continues to operate under the buyer's control.

Example

Disney's acquisition of Pixar combined Disney's distribution power with Pixar's creative expertise.

Risks of M&As

Cultural Clashes: Differences in company cultures can hinder integration.
High Costs: M&As often involve significant financial investment.
Regulatory Challenges: Governments may block deals to prevent monopolies.

Tip

When evaluating M&As, consider both the financial and cultural compatibility of the companies involved.

Takeovers

Definition

Takeover

A takeover occurs when one company acquires another without the target company's consent.

This is often referred to as a hostile takeover.

Example

Kraft Foods' takeover of Cadbury in 2010 was initially resisted by Cadbury's management.

Advantages of Takeovers

Rapid Growth: Immediate expansion of market share and resources.
Control of Valuable Assets: Access to patents, technology, or distribution networks.
Elimination of Competition: Reduces the number of competitors in the market.

Risks of Takeovers

Resistance from Target Company: Hostile takeovers can damage relationships and morale.
Integration Challenges: Aligning operations and cultures can be difficult.
Financial Burden: High costs and potential debt from financing the takeover.

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Definition

Paywall

(on a website) an arrangement whereby access is restricted to users who have paid to subscribe to the site.

anim nostrud sit dolore minim proident quis fugiat velit et eiusmod nulla quis nulla mollit dolor sunt culpa aliqua

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.

Duis aute irure dolor in reprehenderit

Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

Note

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam quis nostrud exercitation.

Excepteur sint occaecat cupidatat non proident

Nemo enim ipsam voluptatem quia voluptas sit aspernatur aut odit aut fugit, sed quia consequuntur magni dolores eos qui ratione voluptatem sequi nesciunt. Neque porro quisquam est, qui dolorem ipsum quia dolor sit amet, consectetur, adipisci velit.

Tip

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.

Lorem ipsum dolor sit amet, consectetur adipiscing elit.
Sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris.
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum.

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Mergers and Acquisitions (M&As), Takeovers, Joint Ventures, Strategic Alliances, and Franchising

Imagine you own a successful local café.
You dream of expanding, but how do you choose the right path?
Should you merge with another café, acquire a competitor, or perhaps franchise your brand?

Note

This section explores five key methods of external growth: mergers and acquisitions (M&As), takeovers, joint ventures, strategic alliances, and franchising.

Mergers and Acquisitions (M&As)

Mergers: Two companies combine to form a new entity.
Acquisitions: One company purchases another, which continues to operate under the buyer's control.

Example

Disney's acquisition of Pixar combined Disney's distribution power with Pixar's creative expertise.

Risks of M&As

Cultural Clashes: Differences in company cultures can hinder integration.
High Costs: M&As often involve significant financial investment.
Regulatory Challenges: Governments may block deals to prevent monopolies.

Tip

When evaluating M&As, consider both the financial and cultural compatibility of the companies involved.

Takeovers

Definition

Takeover

A takeover occurs when one company acquires another without the target company's consent.

This is often referred to as a hostile takeover.

Example

Kraft Foods' takeover of Cadbury in 2010 was initially resisted by Cadbury's management.

Advantages of Takeovers

Rapid Growth: Immediate expansion of market share and resources.
Control of Valuable Assets: Access to patents, technology, or distribution networks.
Elimination of Competition: Reduces the number of competitors in the market.

Risks of Takeovers

Resistance from Target Company: Hostile takeovers can damage relationships and morale.
Integration Challenges: Aligning operations and cultures can be difficult.
Financial Burden: High costs and potential debt from financing the takeover.

Definition

Paywall

(on a website) an arrangement whereby access is restricted to users who have paid to subscribe to the site.

anim nostrud sit dolore minim proident quis fugiat velit et eiusmod nulla quis nulla mollit dolor sunt culpa aliqua

Duis aute irure dolor in reprehenderit

Note

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam quis nostrud exercitation.

Excepteur sint occaecat cupidatat non proident

Tip

Lorem ipsum dolor sit amet, consectetur adipiscing elit.
Sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris.
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum.

Unit 1: Introduction to Business Management - Core operational components and business functions6 subtopics

Unit 2: HR Management - Motivation, Structure, Hierarchy7 subtopics

Unit 3: Financial Management - Accounting, Ratio evaluation, Core Financial Documents9 subtopics

Unit 4: Marketing Management - The 7 P's, strategies and forecasting6 subtopics

Unit 5: Operations Management - Production Methods, Production planning and management9 subtopics

BM Toolkit - Core business frameworks and tools15 subtopics

IB Business Management 1.5.5 External Growth Methods Notes

Unit 1: Introduction to Business Management - Core operational components and business functions6 subtopics

Unit 2: HR Management - Motivation, Structure, Hierarchy7 subtopics

Unit 3: Financial Management - Accounting, Ratio evaluation, Core Financial Documents9 subtopics

Unit 4: Marketing Management - The 7 P's, strategies and forecasting6 subtopics

Unit 5: Operations Management - Production Methods, Production planning and management9 subtopics

BM Toolkit - Core business frameworks and tools15 subtopics

Mergers and Acquisitions (M&As), Takeovers, Joint Ventures, Strategic Alliances, and Franchising

Mergers and Acquisitions (M&As)

Risks of M&As

Takeovers

Advantages of Takeovers

Risks of Takeovers

anim nostrud sit dolore minim proident quis fugiat velit et eiusmod nulla quis nulla mollit dolor sunt culpa aliqua

Duis aute irure dolor in reprehenderit

Excepteur sint occaecat cupidatat non proident

Unlock the rest of this chapter with a free account

Mergers and Acquisitions (M&As), Takeovers, Joint Ventures, Strategic Alliances, and Franchising

Mergers and Acquisitions (M&As)

Risks of M&As

Takeovers

Advantages of Takeovers

Risks of Takeovers

anim nostrud sit dolore minim proident quis fugiat velit et eiusmod nulla quis nulla mollit dolor sunt culpa aliqua

Duis aute irure dolor in reprehenderit

Excepteur sint occaecat cupidatat non proident

Unlock the rest of this chapter with a free account