preview

Importance Of Organic Growth

Good Essays

A business can develop by organic growth or inorganic growth a. Organic Growth: Organic growth in business refers to a company expanding its business through the use of its own resources and assets. Growing organically means a company expands without the use of mergers and acquisitions or other takeovers. An emphasis on organic growth is valued by many executives and investors since it shows a long-term, solid commitment to building the business. Organic growth can also be negative, meaning the company's business is actually contracting. Investors look at organic growth numbers to see if a company is increasing sales and revenues and if those increases are sustainable over the long term. Significance Organic growth shows how well management of a company is utilizing internal resources to increase sales and output. Mergers, acquisitions, and takeovers can provide an artificial boost to a company's sales and revenue figures; this can cloud the picture of how the company is managing its resources. By focusing on the organic growth of the company, executives and investors can see exactly how the company is meeting its goals through its own internal means. Workforce Issues Many executives prefer to grow their companies organically due to the complexity and organizational issues that result from mergers and acquisitions. One major issue is the effect of merging two company's workforces, which can often result in culture clashes and morale issues. Employees can resist changes in

Get Access