Vertical Integration In Australia

Multinational companies can grow through availability of capital, which is much more mobile than labour. Companies can therefore establish subsidiary companies in a country where cheap labour and raw material inputs are located. Companies are able to expand by supplementing nationally endowed assets acquiring, developing and integrating strategically important assets located in other countries, thereby making their nation of origins somewhat less significant. Knowing how to adapt and change can be beneficial too, because there can be growth in certain areas of activities while cutting back on areas proving to be unprofitable. Therefore there is an advantaged for companies to acquire businesses operating overseas markets. For example, in Australia,

Most businesses in these countries had previously been government-owned. They had poor equipment and/or had no need to rent out a textile,” (UoPeople, n.d). The other major way of expanding a business is through inorganic growth, which is described as how a business grows by joining one or more companies together. This can be in form of a merger where tow companies by mutual agreement join together to share resources and their best activities. It also be by takeover where one particular business buys at least 51% shares of other business. Thus, the company a huge amount of shares has control of the business activities. Horizontal integration refers to a situation where two firms at the same stage of production join together. While vertical integration joins businesses at different stages of production. For example, if Sunlight joins with a distribution company to economise on its transport costs. This could benefit Sunlight by showing its environmental

This was an ideal acquisition because of Sunlight was a market leader in providing textile services in Denmark, Sweden, Norway, Austria, the Netherlands, Poland and Germany. Instead of Davis Service Group spending money on a new business in that geographical area, they took over Berendsen rather which was an economical move in a business sense. By taking over Berendsen’ local experience and market contacts, Davis Service Group was benefiting greatly by buying an already established business with networks and an existing customer relationships. Despite Berendsen having poor financial stability, Davis Service Group capitalised on that as it has a proven management record systems record in providing textile services. Thus, taking over Berensen gave the Group unlimited authority and control to implement top of the range business systems. Thereby reducing the cost of operation or closing down unprofitable ventures and putting Berendsen in a position to make