Organic Growth

Question 1

What is organic growth?

Answer 1

Organic (or internal) growth involves expansion from within a business e.g. expanding product range/ number of business units and location

Question 2

Strategies

Answer 2

• developing new product ranges
• launching existing products directly into new international markets (e.g. exporting)
• opening new business locations
• investing in additional production capacity or new technology to allow increased output and sales volume

Question 3

Examples

Answer 3

Apple, Dominos UK, Costa Coffee

Question 4

Benefits

Answer 4

• less risk than external growth
• can be financed through internal funds
• builds on a business’ strengths (e.g. brands, customers)
• allows the business to grow at a more sensible rate

Question 5

Drawbacks

Answer 5

• growth achieved may be dependent on the growth of the overall market
• hard to build market share if business is already a leader
• slow growth > shareholders may prefer more rapid growth
• franchises (if used) can be hard to manage effectively