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Please read attached file before answering question!!! -provide constructive critiques along with supplemental insights. Support your critique with sound reasoning and evidence 2 pages(one for
Please read attached file before answering question!!!
-provide constructive critiques along with supplemental insights. Support your critique with sound reasoning and evidence
2 pages(one for each discussion)
APA format and citations
2 References on for each discussion
Discussion 1 Organic growth pertains to a company strengthening itself using its own resources and energy. While this method of company growth may be slower than other methods, it has the benefit of requiring low up-front costs which makes it an attractive alternative for small business owners. By developing its strong suits as a result of organic growth, companies can become more powerful competitors in their industries. Further, organic growth can also boost a company's market share as well as customer retention. What is more, businesses that grow organically have the ability to regulate their rate of growth and usually encounter fewer cultural and integration hardships than companies that select an inorganic growth strategy (Kuntz, 2014). One company that has been enormously successful in growing organically is Apple. Apple is considered to be in a league of its own in relation to capital efficiency. Competitors such as Microsoft are spending enormous amounts of money on marketing, advertising, research and design with a fraction of the results that Apple has experienced. Consequently, Apple is innovating internally at a fraction of the cost, while picking and choosing strategic investments which uniquely complement its main platforms (Cheney, 2010). However, a company expanding organically may experience slow results, much slower than if the company were to expand externally. Also, other risks of organic expansion include that expansion may outpace the ability to successfully manage, resources will be stretched too thin, capital becomes strained, or attention is averted too much from the company's core mission. Conversely, inorganic growth refers to growth via mergers, joint ventures, licensing, franchising or strategic alliances. With inorganic growth, market share and assets are instantaneously larger, new skills and information become readily available, and access to capital and entry to new markets may be easier (Kuntz, 2014). Forms of business expansion into international markets include exporting, turnkey projects, licensing franchising, joint ventures, and setting up a new wholly owned subsidiary. The advantages of exporting include circumventing the substantial costs of establishing operations in a host country, and exporting also helps a company attain experience curve and location economies. Disadvantages to exporting include that it does not make sense to export from the company's main offices if lower-cost calculations for creating the product can be found abroad, and high transport costs may make exporting uneconomical. Turnkey projects involve the contractor agreeing to manage every detail of a project for a foreign client. One advantage to a turnkey project is that companies are able to earn immense economic returns from their applicable asset. One disadvantage to turnkey projects is that a company forming a turnkey deal has no long-term interest in the foreign country. This in turn means that the country may end up being a major market for the equity interest in the operation. Further, if the company's process technology is a source of competitive advantage, then selling said technology via a turnkey project is in turn selling competitive advantage to potential adversaries. Licensing is an agreement in which a licensor grants the rights to intangible property to another party for a specified period of time. In turn the licensor gains a royalty fee from the licensee. One advantage of licensing is that the company does not have to incur the development costs and risks related to opening up shop in a foreign market. On the other hand, one disadvantage to licensing is that it does not give thorough control over manufacturing, marketing, and strategy which is necessary for realizing experience curve and location economies (Ross, Westerfield, Jaffe & Jordan, 2013, p. 158). Franchising pertains to a more long-term commitment than licensing. Therefore, franchising is a specialized form of licensing wherein the franchiser sells the intangible property to the franchisee, and mandates that the franchisee follows strict rules as to how to conduct business. One advantage to franchising is that the company is released of most of the costs and risks of introducing a foreign market by itself. Conversely, one disadvantage to franchising is quality control in that a customer staying in a Marriot in Nebraska is going to expect the same quality of room, food and service that they would receive from a Marriot in Washington, D.C (Ross, Westerfield, Jaffe & Jordan, 2013, p. 160). Joint ventures involve creating a firm that is jointly owned by two or more independent firms. One advantage to joint ventures is that a firm benefits immensely from a local partner's knowledge of the host country's competitive conditions, language, culture, political systems and business. However, joint ventures are not without their disadvantages. For one, a company that enters into a joint venture risks handing over control of its technology to its partner. Also, a joint venture does not give a firm the strict control over subsidiaries that it might require to realize location economies (Ross, Westerfield, Jaffe & Jordan, 2013, p. 161). Lastly, in a wholly owned subsidiary, the company possesses 100% of the stock. One advantage to a wholly owned subsidiary is that it reduces the risk of losing control over the company's technological competence (Ross, Westerfield, Jaffe & Jordan, 2013, p. 162). On the other hand, one disadvantage to wholly owned subsidiaries is that establishing one is considered to be the costliest method of servicing a foreign market from a capital investment viewpoint (Ross, Westerfield, Jaffe & Jordan, 2013, p. 163). References Cheney, S. (2010). Apple's incredible efficient growth. Retrieved September 22, 2016, from http://www.businessinsider.com/apple-and-efficiently-growing-its-future-2010-5 Kuntz, B.G. (2014). Organic vs. inorganic: which way to grow? Retrieved September 22, 2016, from http://www.forbes.com/sites/ey/2014/01/14/organic-vs-inorganic-which-way-to-grow/#796fd3902ac0 Mack, S. (n.d.). What is organic growth strategy? Retrieved September 22, 2016, from http://smallbusiness.chron.com/organicgrowth-strategy-57130.html Ross, S., Westerfield, R., Jaffe, J., & Jordan, B. Finance economics and decision making. [VitalSource version]. Retrieved from https://bookshelf.vitalsource.com/books/1259824306 Discussion 2 \"Organic growth is one such pathway that can help...grow from within and expand in the most natural and waste-free ways...`Organic growth is different than growth by acquisition, which involves the purchase of existing companies to expand your business's reach\" (Morello, 2016). This explanation is short and sweet, and I believe it is spot on when examining internal growth for any organization. Companies looking for organic growth need to first understand that it happens from within, and be willing to accept that their culture, vision, and direction may change; however, keeping an open mind and the will to accept change can help ensure smoother transitions during this time period. When examining Mergers and Acquisitions there are benefits and disadvantages that can directly and indirectly impact an organization. One of the major advantages with a merger or acquisition is increased market space, which in turn can lead to several additional positives. For example, expanding your footprint whether on a local or national level, can help generate orders, increase your client portfolio, and opportunities. Not only will an organization have the opportunity to share their purpose, but will not have the opportunity to have additional resources or funds that can help lift their business to the next level. On the flip side of a merger or acquisition can come several challenges such as internal differences. If two companies join together, and communication is weak, it can create tension and confusion and divide a strong workforce. Or companies may be faced with a hard decision on reducing their workforce, which is never easy. Taking a look at joint ventures also have positives and negatives associated with it; however, I believe joint ventures is a smart business path for a company that is up and coming, and looking for a mentor company to help bring them to the next level. Also by being part of a joint venture companies have access to the other's resources and technology. It also will help reduce the areas that the other is gaping, whether its marketing, customer satisfaction, or even research and development. Having the ability to lean on each other for support is a big bonus too. However, there are some downsides too such as the power struggle that can occur between the companies. Questions like - Who is in charge? What is the right direction to go? Where should we invest? Or even at the floor level with employees it can be a challenge as there could be confusion on who is leading who. Therefore, if the communication is off it can create an imbalance among the joint teams. Trying to understand licensing's benefits and disadvantages was probably the most challenging to understand. I understood the purpose of licensing, but there is also some major risk and benefits too. For example, licensing can help increase revenue and brand recognition which are both great things to have. However, licensing out your brand to others can also threaten your brand identity or the confidence that customers have in your brand. Franchising has been the most interesting for me to review. As a millennial I have always thought it would be exciting to purchase a franchise in the coffee arena. I have always wanted to have a small coffee caf, like in a small town where locals can gather, and a place this is consistent in their world. One benefit of franchising is that the brand name has the opportunity to expand in to new markets, and in turn finding new customers and new revenue streams! The downside of franchising out your business is that you are risking your reputation and assuming that franchisees will uphold your brand name and product. Also, as a franchisee you may be asked to pay royalties, which impact your return. When examining contractual actions within a business there too are positives and negative to being \"tied\" to a contract. For example, one positive is that if you need something very specific done, you have the ability to outsource the services and place a timeline on the services needed. This will help eliminate you having to add someone with a specific expertise to your payroll, simply for one job. It also gives you the option to find other sources if you are not happy with the source you have contracted. A downside to contractual business is that it can be costly, and you are at times at the mercy of their timeframe. You have to remember that your business is not the only source of revenue for contractors, and that you are not the only show in town. Finally, when examining strategic alliances, it is important to note that they help strengthen a company's footprint in the market as well in the competitive arena that they compete in. Plus, by having a strategic alliance it affords you the opportunity to improve your R&D, which in turn can help your business operations. \"In a plain view, strategic alliance just reflects the desire of enterprises to achieve their independent business objectives cooperatively. But, in the true fact of today's globalizes and complex market place, there is the need to make such a business arrangement in order to gain competitive advantages among the fierce competitors in the market place\" (Infosky, 2007). The downside of a strategic alliance is that companies will have the other company's information, and the companies can also hide their performance whether it's good or bad. One of the major downsides of this type of business is that one can recreate a processes and leave the alliance, and then steal part of the market from the company that they were so closely working with. References Infosky. (2007, March 7). Five Potential Benefits of Strategic Alliance. Retrieved September 22, 2016, from Infosky - Business Multi-Info: https://infosky.wordpress.com/200 7/03/06/five-potential-benefits-ofstrategic-alliance/ Morello, R. (2016, NA). What Is Organic Growth in Business? Retrieved September 22, 2016, from Houston Chronicle: http://smallbusiness.chron.com/or ganic-growth-business-56960.html
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