Organic Growth (3.2.3)

Question 1

What is organic (internal) growth?

Answer 1

Organic growth (also known as internal growth) is when a business expands from within

Question 2

What are some examples of how a business can grow organically (internally)?

Answer 2

-Gaining greater market share
-Product diversification
-Opening a new store
-Internal expansion
-Investing in new technology/production machinery

Question 3

What are the advantages of a business growing organically?

Answer 3

-The pace of growth is manageable
-Less risky as growth is financed by profits and there is industry expertise
-Avoids diseconomies of scale
-Management knows and understands every part of the business

Question 4

What are the disadvantages of a business growing organically?

Answer 4

-Pace of growth can be slow and frustrating
-Not necessarily able to benefit from economies of scale
-Access to finance may be limited

Question 5

What strategy is a good planning tool that helps businesses identify potential organic growth by analyzing their product and market strategies?

Answer 5

Ansoff’s Matrix

Question 6

What are the four parts of Ansoff’s Matrix? And which new or existing, product or market do they belong to?

Answer 6

1.Market Penetration (Ex Pr +Ex Mark)
2. Market Development (Ex Pr +New Mark)
3.Product Development (New Pr +Ex Mark)
4. Diversification (New Pr +New Mark)

Question 7

What’s a real life example of diverification?

Answer 7

Disney have diversified into several areas such as theme parks, cruise lines, television networks and movie studies