Organic Growth - 3.2.3

Organic growth - Where a business expands through increased output, sales and market share via strategies developed within the business causing revenues and profits to grow.

Inorganic growth - Growth that comes from outside the business e.g. through a takeover or joint venture.

Organic growth	Inorganic growth
May mean increasing existing production capacity through investment in machinery and technology	May mean increasing production capacity through the merger with or takeover of another business
May mean developing and launching new products	The product range will be expanded through the takeover/merger so new product development is less necessary
May mean finding new markets	Growth can be achieved relatively quickly as employees, capacity and distribution are already in place
Is likely to take longer to achieve, as capacity will need further employees, machinery and distribution resources, which will take time

Methods of growing organically

1. New products - extending the existing product range
2. New markets - opening new outlets across the UK or expanding into other countries
3. New routes to market - multi-channel distribution or increasing the type and location of stores
4. Franchising - adapting the business model to allow for quicker growth through franchises
5. Diversification - bringing out new products in new markets

Advantages of Organic Growth	Disadvantages of Organic Growth
Less risky	Missed opportunities from acquisitions
Avoids conflicts	Potential for growth may be more limited
More likely to be funded with retained profits	Lack of competitiveness due to a lack of economies of scale (especially if competitors are growing via inorganic growths)
Greater consistency	Pressure on leaders
Less threat of brand dilution	Dissatisfaction from shareholders
Can be steady	Harder to build market share if there is already a market leader
Less loss of control	Growth may be slow
Building on the strengths of the business such as brand and customer loyalty