Business growth

Question 1

What are the types of growth?

Answer 1

Organic growth
Forward and Backward integration
Horizontal integration
Conglomerate integration

Question 2

What is organic growth?

Answer 2

Also know as organic growth and it happens when a business expands its own operations rather than replying on external takeovers and mergers.

Question 3

How does organic growth occur?

Answer 3

Increasing existing production capacity through investment in capital and technology
Development and launch of a new product
Finding new markets by exporting into emerging countries such as India and South Africa
Establish new distribution channels such as online sales platform
Growing a customer base through marketing and adding new user of a product

Question 4

What are the advantages of organic growth?

Answer 4

Less risk than external growth - many takeover failed to achieve expected gains
Can be financed through internal funds
Builds on business’ strengths
Allows the business to grow at a more sensible and sustainable rate

Question 5

What are the disadvantages organic growth?

Answer 5

Growth achieved may be dependent on the growth of the overall market
Hard to build extra market share if the business is already a leader
Slow growth - shareholders may prefer more rapif growth
Franchises (if used) can be hard to manage effectively

Question 6

What is horizontal integration?

Answer 6

Horizontal integration is between businesses in the same industry at the same stage of production.