Economics for Business, Chapter 7. Growth Strategies, p. 162-187 Question 1 a) Define horizontal, vertical, and diversified growth. Briefly explain benefits and problems associated with each expansion activity. . Horizontal growth - Organic, Merger, Acquisition. Benefits: Revenue advantages; Reduced competition; Market growth; Economies of scale; Rationalization; Learning curve. Problems Vertical growth: Cost Reasons: Location benefits; Economies of scale; Problems from monopoly. Transaction costs: The cost of organizing transactions; Complete and incomplete contracts. Transaction costs increase with: Complexity; Uncertainty; Monitoring; Enforcement Reduction of transaction costs through Make or Buy. Diversified growth: Economies of Scope: Cost (A) + Cost (B) > Cost (A+B). Risk reduction: Diversified portfolio of activities; Uncorrelated business activities; Off-setting income streams. Risk reduction for shareholders or managers? Mergers Advantages: b) Provide two recent examples of each corporate growth. c) For each of your examples, identify the economic motives behind the corporate growth strategies. Reference: DAVID, BDAM 2020, Economics for Business, Chapter 7. Growth Strategies, p.162-187. McGrew-Hill UK Higher Ed. London. Available from: ProQuest Ebook Central. [28 May 2022]