3.2.3 Organic growth Flashcards
What is Organic Growth?
Organic or INTERNAL GROWTH occurs when a business expands in size by opening new stores, branches, functions or plants
What is Inorganic Growth?
Inorganic growth occurs when a business expands in size by either merging with or taking over another business
What are some advantages of Inorganic Growth?
This allows a business to expand more rapidly as it is buying businesses that are already established
How would New Products help a business grow?
Extending the existing product range e.g. Trunki sit on suitcases adding other travel accessories
Widening the target market e.g. New Look bringing out a gents range
How would New markets help a business grow?
Opening new outlets across the UK
Expanding into other countries
How would New routes to market help a businesss grow?
Multi-channel distribution e.g. Debenhams strengthening its online offerings
Increasing type and location of stores
How would franchising help a business grow?
Adapting the business model to allow for quicker growth through franchises
What are some advangates of Organic Growth?
MAIN ones to Remember: Less risky More likely to be funded with retained profit Greater consistency Less threat of brand dilution
Maintain distinctive capabilities
Can be steady
Less loss of control
What are some disadvantages of Organic Growth?
MAIN Ones to focus on:
Missed opportunities from acquisitions
Lack of competiveness due to a lack of economies of scale
Pressure on leaders
- Potential for growth maybe more limited
Lack of shared expertise
Dissatisfaction from shareholders
What are the different methods of Organic Growth?
New Products New Markers New Routes to market Frachising Diversification
What are different methods or Inorganic Growth?
Mergers ans Takeovers
