Growth

Question 1

Define organic growth

Answer 1

When a business seeks growth through natural means by growing their customer base, launching new product range and increasing sales

Question 2

Define external growth

Answer 2

When a business aims to grow quickly through mergers and acquisitions.

Question 3

Expain organic growth

Answer 3

• Is a slower process but enables business owner to maintain tighter control over the company
• Is a lower risk strategy but competitors might grow more quickly, becoming more powerful and putting business at risk of being taken over.
• Much depends upon how well a business utilise their existing resources to grow the firm.

Question 4

Types of organic growth

Answer 4

• New product development – By investing in research and development of new products, firm is able to attract new customers and increase sales. However, this is expensive and no guarantee of success
• Market development – By expanding into new markets with existing goods, a firm is pursuing a medium risk strategy. This can quickly increase sales but how much knowledge does firm hold about new market and customers.
• Economies of scale – As business grows are able to benefit from economies of scale increases and leads to lower costs and lower prices for customers which increase demand.