A Level Economics – external growth of firms.

With the November session of the CAIE exams approaching here are some notes/mindmap on growth of firms and mergers.

• Internal Growth – profit put back into the company

• External Growth – involves takeovers and mergers

• Horizontal Integration – achieves economies of scale and involves firms at the same stage of production.

• Vertical Integration – offers firms the chance to capture the profit margins at the other stages of production.

• Mergers And Acquisitions – ‘M&A’ A general term used to refer to the consolidation of companies. A merger is a combination of two companies to form a new company, while an acquisition is the purchase of one company by another in which no new company is formed.

Source: Cambridge International AS and A Level Revision Guide – Susan Grant