Advantages And Disadvantages Of Organic Growth And Growth By Acquisition

Question 1

Advantages of organic growth

Answer 1

Permits an organisation to carefully plan its strategic growth in line with specific objectives

Question 2

Disadvantages of growth by acquisition

Answer 2

When entering new markets there may be a substantial cost involved with researching markets and/or buying expertise

Time in establishing production facilities are relatively long in comparison with growth by acquisition which may be a significant factor in consolidating a market share

Question 3

Advantages of growth by acquisition

Answer 3

Quick access to new markets and/or new technologies

Growth by acquisition may be the only way to achieve rapid growth

Question 4

Disadvantages of growth by acquisition

Answer 4

Information about the financial and other attributes of a potential acquisition target is inevitably less complete than a company’s own internal management information

Potential for significant savings is often not fully known until after the acquisition