Question1

Surviving or established in market as a business is only possible through

continuous growth. Company can seek growth in two ways:

Organic growth refers to a company expanding its business through the use of
its own resources and assets without the use of mergers and acquisitions or
other takeovers. Companies like DELL CORPORATION, BEST BUY,
OUTBACK, and STEAKHOUSE AND TIFFINY are the example of organic
growth companies.

External growth is an expansion of a business through Mergers and

Acquisition (M&A).

Advantages of organic growth:

1. Represent true growth for the core of the company.

2. Indicate how efficiently management using its internal resource to expand
profit
3. Capture short term growth opportunity
4. Expand geographic footprint
5. Pursue customer segments
6. Eliminate barriers to growth
7. Manage for sales and marketing excellence.
8. No crashes in culture

Disadvantage of external growth

1. Faster way of growth though technologies incite for innovation to
accelerate business.
2. Reduce risks.
3. Increase operating efficiency
4. Improve access to financial market
5. Expand market and management capabilities
6. Allow new product development
7. Provide synergistic benefit ( the “2+2=5”effect)
8. Unites direct market through Horizontal merger
9. Unites buyers and sellers in vertical merger
10.Through conglomerate merger can relate with unrelated industries.
11.Avoid bias against small business.
Question 3
Horizontal Integration
In a business context Horizontal Integration refers to an absorption into a single
firm of several firms involved in the same level of production and sharing
resources at that level that means a business comes to control all productions of
a given product or service. A firm may diversify by horizontally in unrelated
product.

Characteristics of Horizontal Integration

 Similar type of business for similar products or services

 Same level of production
 Same supply chain management
 Same value chain

The objective of Horizontal integration is to produce a large number of the same

product or similar products and to control a large share of the market. For an
example a garment factories undoubtedly merges with another garments
factories not with oil companies.

Advantages of horizontal Integration

1. Economies of scale-producing more products reduce total average cost

can achieve greater geographical reach.
2. Synergy. Economies of scope - lower the total average cost brings
opportunity for product update or marketing by specialists as cost are
spread out.

3. Defense against substitute

4. Reduction in competition
5. Fulfilling customer expectations

Disadvantages of Horizontal Integration

1. Synergy may not be realistic.

2. Reduction in competition
3. Antitrust may arise because a  large enough share of a market becomes
focused in a small number of businesses
4. Unplanned expansion leads to harmful than beneficial.
 Vertical Integration
The term is referred to a business set up in which all the operational
processes for a product or service from raw material to customer’s hands
are controlled by a common owner. If a retail company sells its products
which they manufacture that means it is increasing its level of vertical
integration.

Advantages

1. Include the ability to secure supplies and future orders.

2. Cost reduction
3. Competitiveness
4. Reduce threat from powerful supplier
5. Higher degree of control over the entire value chain

Disadvantages

1. If lack of efficiency arises, the average total cost can increase.

2. Management or official stress may arise as lack of discipline
3. Lack of supplier competition may lead to increasing average total
cost due to low efficiency
4. Increase bureaucratic costs.

Question 4
Key factors of ASOS.COM success

 Highly improved technology

 Efficient supply chain management
 Peruse customers segmentation/ market niche (age group 16-34)
 Variety range of products of various brands
 Secure transaction through pay pal
 Efficient delivery (2009 it launched same day delivery)
  Attracting web-site for the users to explore more
 Keep updating products, brands, promotions
 Maintain good public relation
 Time worthy marketing e.g celebrities take part at cat walk or product
display in web site.

Prepared by

Hemonto K Mozumder