3.2.3 Organic growth

Question 1

Organic growth

Answer 1

A business growth strategy that involves a business growing gradually using it’s own resources.

Question 2

Organic growth is AKA…?

Answer 2

Internal growth

Question 3

5 ways of growing organically

Answer 3

• New products
• New markets
• Franchising (becoming a franchisor)
• New business model e.g online presence
• New/more customers (Blue book)

Question 4

Some methods of growing organically links with what Matrix

Answer 4

Ansoffs matrix

go to flaschards

Question 5

7 advantages of growing organically

Answer 5

• Less risky than other strategies- you avoid the risks and pitfalls of merging
• Cheaper than merging ( go to flashcard 14 on 3.2.2 to see merger costs)
• retains company culture
• EOS + lower costs can be achieved due to higher production

-DEOS minimised as growth is gradual ( DEOS flashcards)

sharp increases in unit costs unlikely to happen if growth is steady and measured

• More influence comes with more market share, can start setting prices for the industry
• Can be planned unlike a takeover (?)

Question 6

3 Disadvantages of organic growth

Answer 6

• Growing slowly may meaning that a business gets lefts behind in the market : e.g competitors may be growing through mergers.
• may mean that you lose lose ability to compete effectively as you’re a smaller business compared to your rivals e.g through pricing or smaller advertising budgets ( Blue book)
• Growth may be limited and is dependent on reliability of sales forecast
• New Markets + countries can be dangerous to enter