Organic growth 3.2.3

Question 1

What is organic growth?

Answer 1

Growth driven by internal expansion using reinvested profits or loans

Question 2

What is inorganic growth?

Answer 2

Involves joining two businesses together so in theory the double in size.

Question 3

How is organic growth generated?

Answer 3

• gaining greater market share
• product diversification
• opening new store
• international expansion
• investing in new technology/production machinery

Question 4

Advantages of Organic Growth

Answer 4

• pace of growth manageable
• less risky as growth is financed by profits and there is expertise in industry
• avoids diseconomies of scale
• management knows and understands every part of business
  -retain control of the business

Question 5

Disadvantages of Organic Growth

Answer 5

• pace of growth can be slow and frustrating
• not necessarily able to benefit from economies of scale
• access to finance may be limited
• may get left behind in market if growing quickly