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Case Study Of Davis Service Group

Decent Essays
Many successful businesses tend to expand beyond their local frontier by growing some strategic areas of their operation while they divest from less profitable areas of their operation. There are two major ways of growing a business as discussed in the case study of Davis Service Group (DSG) and they are categorized as organic and inorganic growth.

Organic growth is said to take place within a company’s operation when it increases output by enhancing sales turnover internally. This type of growth does not take into consideration growth results from mergers or acquisitions, revenues or growth acquired from takeovers because these activities are not internally generated. An example of an organic growth of a business is when a company grows
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closing down less viable outlets and saving on fixed costs; secondly, the horizontal integration of Sunlight, a subsidiary of DSG and Berendsen provided the opportunity to pool beneficial technical expertise and knowledge from the two companies; thirdly, because DSG has tremendous experience and strategic fit in the industry, it was easier to raise the capital needed for the acquisition from the shareholders and the bank. In addition, DSG was able to deliver to shareholders expected returns on their investment and promptly servicing its debt.

What aspects of European Union markets have particularly encouraged horizontal growth of the Davis Service Group?

The factors that encouraged the horizontal growth of DSG in the EU markets are simply the facts that Sunlight, a subsidiary of DSG is in the same business sector with Berendsen; another factor is the EU markets large customer base of over 500 million potential customers and the economies of scale that afforded costs sharing for improved profitability.

What aspects of European Union markets have particularly encouraged organic as opposed to inorganic
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