INORGANIC GROWTH & EXTERNAL FACTORS

How and why do firms seek to grow by means of Takeovers or Mergers?  How might changes to external factors affect a business both negatively and positively?

Use the example of Tencent - one of the world's leading tech companies - by referring to two recent Business examples from The Guardian :

Read HERE to find out Tencent's plan to buy the UK-based video gaming firm Sumo.

Read HERE to find out about how Tencent has been affected and is likely to be affected in the future by the Chinese government's increasing concerns about young people spending too many hours of the day playing computer games.

SUGGESTIONS :

- Try to get students to list their own reasons why a business involved in the video gaming industry may wish to buy up another company in the same industry.  Get them to understand the concepts of horizontal integration in this context.  

- Ask the students to spend five minutes reading the article and offering specific examples of the potential benefits to Tencent of acquiring Sumo.

- Use an Open Discussion to find out student ideas on the different external factors outside of the control of the business that may affect firms involved in the video gaming industry.  If the recent pandemic has not been mentioned, or changes in consumer tastes - perhaps introduce these two ideas to add to the other student ideas.  Link to PESTLE Analysis.

- Get students to read the article.  In pairs - they are then to produce their own SWOT analysis for Tencent - following it's purchase of Sumo.  (A mixture of internal and external factors).

Feel free to leave your own thoughts and ideas on how to add to these suggestions in the Comments section!