Definition of organic growth
There are certainly many paths to business growth. Organic growth is one of them. It is the primary method of growth for many organisations for a number of reasons. Organic growth is achieved through the development of internal resources (BPP, 2010). It is a strategy which companies pursue by building on and developing their own capabilities.
Many writers call organic growth an internal development. It involves expansion from within a business. Many companies use this method, particularly at the beginning of their business. For some organisations, it is the only method of expansion.
How to implement organic growth strategies
Organisations can implement organic strategies in a number of ways. For example, they can develop new product ranges and/or export existing products directly overseas. Likewise, they can open new sales centres both in the domestic and the foreign markets.
Examples of organic growth
Poundland is a UK-based variety store chain founded in 1990. It offers a huge range of products, including many well known brands for just £1 (Poundland Limited, 2020). The company calls it an amazing value for its customers. Poundland pursued organic growth as its primary growth strategy. Since the beginning, the focus of the company was on opening new stores in suitable locations. In 2013, it opened its 500th store in Birmingham (UK).
There are many other businesses that have implemented successful organic growth strategies. For example, Morrison’s, Dominos, Apple, and Costa Coffee to name but a few. However, it is worth mentioning that these companies pursued other growth strategies as well in combination with organic strategies.
Advantages of organic growth
There are many advantages to grow business organically. For example, organisations do not need to search for suitable partners to merge with. Consequently, needs for making compromises with others are limited or none. As growing organically requires organisations to build on their own strengths and capabilities, they can further enhance their knowledge and learning. Likewise, they can make quick moves to take advantage of changes in the marketplace as long as their abilities permit.
Disadvantages of organic growth
Some companies may have limited internal resources and capabilities to grow their businesses. When it comes to international growth, it may be further challenging. Some people also argue that organic growth is a slow growth strategy. It may take a long time to grow through this method. Shareholders may not like it sometimes, and may prefer more rapid growth strategies such as merger and acquisition. Likewise, this strategy may not be very effective to combat extreme nature of competition.
We hope the article ‘Organic growth – definition and examples’ has been a helpful read. You may also like reading Strategic alliance – definition and types of strategic alliance. Other relevant articles for you are:
Advantages and disadvantages of a private limited company
SWOT analysis of KFC (Kentucky Fried Chicken)
If you liked any of these articles, please feel free to share with others by clicking on the icons below. Also enter your email address at the bottom of the site to ‘Join us’ free for our newly published articles and newsletters.
Last update: 27 September 2020
BPP Learning Media (2010) Business Strategy, London: BPP Learning Media Ltd
Johnson, G., Whittington, R. and Scholes, K (20O6) Exploring Corporate Strategy, 7th Edition, UK: Prentice Hall
Poundland Limited (2020) About us, available at http://www.poundland.co.uk/about-us/ (Accessed 27 September 2020)
Photo credit: www.123rf.com
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.