Business Growth and Internationalization

Businesses seek to grow for several reasons: to take advantage of economies of scale, gain market share, negotiate with greater bargaining power with suppliers and customers, and, fundamentally, survive in markets where rivals keep growing. Choose two of these reasons, explain them in your own words, and give an example of each applied to a supermarket chain.

Growth can be internal (or organic: the company grows through its own means) or external (it grows by joining with or acquiring control of other companies). Classify these decisions into one method or the other and justify your answer: building a second factory of its own, acquiring 100% of a competitor, merging with another company in the sector to form a new one, opening three owned stores in other cities, purchasing 30% of a supplier's shares, and signing a logistics alliance with another company without any change in ownership of either.

An artisan yoghurt producer launches three new yoghurt flavors; a year later it also starts making cheese, and finally, it buys a farm to supply its milk. a) State what type of growth each step represents (specialisation or diversification, pointing out whether there is backward integration in any of them). b) Explain the advantages and risks of diversifying compared to remaining specialised in a single product.

Merging, acquiring, and allying are not the same thing. Identify which operation describes each case and explain what happens to the ownership and control of the companies involved: a) two medium-sized banks merge by dissolving and creating a new bank; b) a large clothing chain buys 100% of a small brand, which becomes its property; c) a bottling company buys 25% of a recycled plastics company to secure supply; d) two airlines agree to code-share routes and sell tickets for each other, without either buying the other.

The diagram summarises the growth paths of a business, with its two main branches and specific forms. An external growth path is missing, marked with "?": think about how many restaurant chains grow without opening their own premises. Identify it, explain what it consists of, and give an example.

A very successful coffee shop wants to expand nation-wide, but does not have the capital to open its own premises nor wants to take on debt. a) Explain what the franchise system consists of and what the franchisor provides versus what the franchisee provides. b) State two advantages and two risks of growing this way for the coffee shop (speed and cost versus control over the brand and quality).

FitLife is a chain of 15 'premium' gyms that has sustained profits, but whose level of bank debt is bordering on the admissible limit after its latest investments. Its Board of Directors approves the strategic objective of reaching 30 centers within a non-extendable period of two years to block an international competitor. Three options are being considered: 1) build and open 15 self-owned gyms; 2) acquire a rival chain of 15 'low-cost' gyms facing financial difficulties; 3) franchise its commercial brand.

1. a) Analyze the feasibility of each of the three options in light of the case's constraints (two-year deadline, debt limit, and 'premium' brand positioning). Reasonably determine which ones should be discarded and why.
2. b) Recommend and justify the most appropriate path (or a coherent combination) to meet the established objective.
3. c) Design two specific control mechanisms that FitLife's management must implement to prevent the chosen option from deteriorating service quality and brand reputation.

A canning company in southeastern Mexico used to sell only in its home country. First, it began placing its surplus through a French importer; then it hired a commercial agent in France; later it opened its own commercial office there; and finally, it bought a small factory near Lyon to manufacture directly in the country. a) Order these steps as stages in the internationalization process and explain what changes in each (investment, risk, and control). b) Analyze three reasons that can drive a business to internationalize. c) Identify three risks it faces when doing so (cultural, legal, exchange rate, logistics) and how to reduce them.

Ebanistería Roble, an artisanal workshop with 12 workers, has seen its sales fall by 25% following the opening in its region of a low-cost, self-assembly furniture superstore. One of the partners proposes taking on debt to automate the workshop and lower prices by 30%, in order to compete on price with the multinational.

1. a) Refute the partner's proposal: analyze why a microenterprise makes a strategic error if it tries to compete on costs and volume against a large chain, relying on the concept of economies of scale.
2. b) Identify and justify two exclusive competitive advantages derived from its small size that the workshop could exploit to neutralize the threat of the multinational.
3. c) Design a comprehensive differentiation and focus strategy (product, pricing, and customer service) that ensures the survival and profitability of the workshop without needing to increase its size.