Organic/ inorganic growth

Question 1

What is organic growth?

Answer 1

achieve growth from inside the business

Question 2

How can organic growth happen?

Answer 2

• through sales.
• release new products
• find new customers
• franchise

Question 3

What are the advantages of organic growth?

Answer 3

• less risky
• no integration
  ( no culture clash or HR concerns.)

Question 4

What are the disadvantages of organic growth?

Answer 4

• slow (will have pressure form shareholders.
• less economies of scale.
• rivals may grow faster inorganically
  (lose market share)

Question 5

What is inorganic growth?

Answer 5

growth through mergers and takeovers

Question 6

What is vertical backward integration?

Answer 6

take over a supply chain
( cheaper stock and can sell to competitors.

Question 7

What is vertical forward integration?

Answer 7

takeover and merge with a company that was one of their customers and sold their products.

Question 8

What is horizontal integration?

Answer 8

merger and takeover of someone that was previously a rival in same stage of supply chain.
(economies of scale)

Question 9

What is diversification?

Answer 9

merger or takeover of two different industries from different stages of the production process.

Question 10

What are the advantages of inorganic growth?

Answer 10

• synergy
  (two businesses together are more powerful than in their separate parts- 2+2=5)
• economies of scale, horizontal integration.
• higher profits due to lower costs.