About the Book

Business Strategy And Planning

Question 1:

Whenever a company needs to grow, it has primarily two options before it on the way forward with growth. One of the most popular options is that of inorganic growth. Inorganic growth is defined as the type of growth which is not done using the resources from within the organizations means and sources. The growth is sourced from other organizations. Let’s work this out with an example. Suppose a consulting company which focuses on financial consulting needs to enter the real estate consulting market. It sees the opportunity to enter this market with a lot of customer base that could be brought on to make better profits. As the company itself does not have the resources to expand exponentially, it looks at other companies already conducting real estate consulting in the market. It then plans to takeover such a company through mergers or acquisitions (Larson et al, 1999). Usually, this ends up as an acquisition for the financial consulting firm. This way, the firm did not need to hire new people, establish new divisions, and conduct new product and market analysis to enter the real estate consulting market. It simple brought another company which was already doing well in the industry and now has a footprint. Inorganic growth is done and seen usually in cases where the expansion is in markets and industries where the company does not already operate in. In such cases, the company usually opts to buy talent and workplaces outright, instead of building their own separate departments and verticals for the new industry and market combination. This strategy helps the company reduce the time taken to go to markets and establish their brands. Instead they can piggyback on a brand which is already established and doing well. The company being taken over benefits from the fund that it receives which gives it better reach in the market (Reinartz et al, 2005).

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