Chapter 3.2 Business Growth & Expansion. Business growth Merger: a combination of two or more...
-
Upload
shana-allen -
Category
Documents
-
view
213 -
download
1
Transcript of Chapter 3.2 Business Growth & Expansion. Business growth Merger: a combination of two or more...
![Page 1: Chapter 3.2 Business Growth & Expansion. Business growth Merger: a combination of two or more businesses to form a single firm. Reinvestment: business.](https://reader036.fdocuments.us/reader036/viewer/2022083008/56649f3b5503460f94c599ce/html5/thumbnails/1.jpg)
Chapter 3.2Chapter 3.2Chapter 3.2Chapter 3.2
Business Growth & ExpansionBusiness Growth & Expansion
![Page 2: Chapter 3.2 Business Growth & Expansion. Business growth Merger: a combination of two or more businesses to form a single firm. Reinvestment: business.](https://reader036.fdocuments.us/reader036/viewer/2022083008/56649f3b5503460f94c599ce/html5/thumbnails/2.jpg)
Business growth• Merger: a combination of two or
more businesses to form a single firm.
• Reinvestment: business owners can use their profits to update and expand their firms.
![Page 3: Chapter 3.2 Business Growth & Expansion. Business growth Merger: a combination of two or more businesses to form a single firm. Reinvestment: business.](https://reader036.fdocuments.us/reader036/viewer/2022083008/56649f3b5503460f94c599ce/html5/thumbnails/3.jpg)
Financial Statements• Income statement: a report
showing a business’s sales, expenses, net income, and cash flow for a period of time (monthly, quarterly or yearly.)
• These documents are used to evaluate future reinvestments.
![Page 4: Chapter 3.2 Business Growth & Expansion. Business growth Merger: a combination of two or more businesses to form a single firm. Reinvestment: business.](https://reader036.fdocuments.us/reader036/viewer/2022083008/56649f3b5503460f94c599ce/html5/thumbnails/4.jpg)
Cash Flow• The sum of net income and noncash
charges, such as depreciation – is the bottom line, a more comprehensive measure of profits.
• Represents the total amount of new funds generated from operations.
![Page 5: Chapter 3.2 Business Growth & Expansion. Business growth Merger: a combination of two or more businesses to form a single firm. Reinvestment: business.](https://reader036.fdocuments.us/reader036/viewer/2022083008/56649f3b5503460f94c599ce/html5/thumbnails/5.jpg)
Reinvesting Cash Flow• Helps to increase production.• Additional sales• Larger cash flow
![Page 6: Chapter 3.2 Business Growth & Expansion. Business growth Merger: a combination of two or more businesses to form a single firm. Reinvestment: business.](https://reader036.fdocuments.us/reader036/viewer/2022083008/56649f3b5503460f94c599ce/html5/thumbnails/6.jpg)
Net income• The funds left over after all of the firms
expenses, including taxes, and subtracted from its sales.
• Expenses include: cost of inventory, wages and salaries, interest payments, all other payments firm must make as part of its normal business operations (depreciation).
![Page 7: Chapter 3.2 Business Growth & Expansion. Business growth Merger: a combination of two or more businesses to form a single firm. Reinvestment: business.](https://reader036.fdocuments.us/reader036/viewer/2022083008/56649f3b5503460f94c599ce/html5/thumbnails/7.jpg)
Growth Through Mergers
• Mergers allow firms to quickly grow in size.
• When two companies merge, one gives up its separate legal identity
• Examples: Chase National Bank and Bank of Manhattan became = Chase Manhattan Bank, later Chase
![Page 8: Chapter 3.2 Business Growth & Expansion. Business growth Merger: a combination of two or more businesses to form a single firm. Reinvestment: business.](https://reader036.fdocuments.us/reader036/viewer/2022083008/56649f3b5503460f94c599ce/html5/thumbnails/8.jpg)
Types of Mergers• Horizontal:• Vertical: • Activity: create a graphic
organizer that compares the similarities and differences of the two.
![Page 9: Chapter 3.2 Business Growth & Expansion. Business growth Merger: a combination of two or more businesses to form a single firm. Reinvestment: business.](https://reader036.fdocuments.us/reader036/viewer/2022083008/56649f3b5503460f94c599ce/html5/thumbnails/9.jpg)
Reasons for merging• To grow faster• To become more efficient• To acquire or deliver a better
product• To eliminate a rival• Change image
![Page 10: Chapter 3.2 Business Growth & Expansion. Business growth Merger: a combination of two or more businesses to form a single firm. Reinvestment: business.](https://reader036.fdocuments.us/reader036/viewer/2022083008/56649f3b5503460f94c599ce/html5/thumbnails/10.jpg)
Conglomerates• A conglomerate is a firm that has at
least four businesses, each making unrelated products and none responsible for the majority of sales.
• Diversification• US decrease but Asia, Korea, Japan
strong.
![Page 11: Chapter 3.2 Business Growth & Expansion. Business growth Merger: a combination of two or more businesses to form a single firm. Reinvestment: business.](https://reader036.fdocuments.us/reader036/viewer/2022083008/56649f3b5503460f94c599ce/html5/thumbnails/11.jpg)
Multuinationals• International in scope• Manufacturing or service in a
number of countries.• Subject to laws and taxes of each
country.• Examples: General Motors, Royal
Dutch Shell, Sony
![Page 12: Chapter 3.2 Business Growth & Expansion. Business growth Merger: a combination of two or more businesses to form a single firm. Reinvestment: business.](https://reader036.fdocuments.us/reader036/viewer/2022083008/56649f3b5503460f94c599ce/html5/thumbnails/12.jpg)
• Important because they have the ability to move resources, goods, services, and financial capital across the national borders.
• Transfer new technology and generate new jobs
• Produce tax revenue• Lower-cost of production and
higher-quality outputs that global competition brings