In the business world, a business organization can either undergo an organic or international expansion. The organic expansion entails the process of an organization to increase its output and sales internally. One advantage of organic expansion is that a business organization can maintain its value and internal operations without interfering with its stakeholders. Also, organic expansion enables businesses to retain its market value and register reduced production and sales costs. However, organic expansion is characterized by several disadvantages. The main disadvantage of organic expansion is gradual growth due to limited access to new markets. Inorganic expansion, all the activities are internalized; thus, access to new markets and competitions are denied. On the other hand, international expansion refers to multilevel plans implemented to enable businesses to access new markets and competition from other companies. Examples of international expansions include mergers, joint ventures, licensing, franchising, and strategic alliances.
Concerning mergers, two or more existing businesses sign an agreement and agree to work jointly as one entity. The main advantage of merging is increased market share and base, which improves the whole business entity; for example, Cutco Corporation formed from the merging of W.R. case & Sons Cutlery Company (Hill & Hult, 2017). The main disadvantage of mergers is products' price increase because a monopoly is created when businesses merge. On the other hand, a joint venture refers to an agreement signed by one or more business entities to work on a collaborative project over a specified period. The venture becomes a separate entity from other activities linked to the specific venture members. The main advantage of a joint venture is sharing costs and risks, while the main disadvantage is that it might lead to a communication barrier. Licensing refers to a particular company granting another company to use its patents and trademarks (Hill & Hult, 2017). The main advantage of licensing is reduced cost of production, while its main advantage is the likelihood of losing control over a specific product. Franchising entails doing business using the brand names of other successful business companies. The main advantage of franchising is increased probability of success than starting a new business, while the main disadvantage is that an initially high cost of investment is required.
Delegate your assignment to our experts and they will do the rest.
References
Hill, C., & Hult, G. (2017). Global Business Today (10th Edition). pp. 1-560. https://bookshelf.vitalsource.com/#/books/9781307045062/cfi/156!/4/4@0.00:0.00
