Organic Growth

Organic growth occurs when a business grows naturally by selling more using its own resources.

Full Giggling Squid story here.

Organic growth is much slower than a takeover or merger.

Why is organic growth seen as a safer option to a takeover or merger?

Methods of organic growth:

Finding new customers.

With the help of the dragons', Levi Roots managed to get his sauce stocked in Sainsbury's.

New products.
https://www.tyrrellscrisps.co.uk/ 

New business model such as selling online or converting shipping containers into retail use.

Franchising the business idea.
https://en.wikipedia.org/wiki/Subway_(restaurant) 

Advantages of organic growth:

1. Less expense in the short term.

Can be financed through internal funds (e.g. retained profits).

2. Less risky because of the knowledge about the business.

Builds on a business’ existing strengths (e.g. brands, customers).

3. It maintains existing management and culture.

Disadvantages of organic growth:

1. The pace of organic growth may be too slow for some stakeholders.

2. Missed opportunities for more rapid growth:

Starbucks in the UK

In May 1998, Starbucks successfully entered the European market through its acquisition of 65 Seattle Coffee Company stores in the UK.  

The two companies shared a common culture, focussing on a great commitment to customised coffee, similar company values and a mutual respect for people and the environment.

3. A lack of economies of scale which may result from a successful aquisition.